SEC Sues Ex-Qwest Chief Nacchio
Bernie Ebbers isn't the only boom-era CEO facing the music Tuesday.
Securities regulators filed a long-awaited civil case against former
Qwest
(Q)
CEO Joe Nacchio, alleging that he led a scheme to boost revenue by $3 billion over several years.
The
Securities and Exchange Commission
charged Nacchio and eight others in three civil cases filed in Denver, where Qwest is based. Nacchio has repeatedly denied wrongdoing regarding Qwest's past accounting practices.
The SEC claimed that between 1999 and 2002, the Qwest defendants "engaged in a multifaceted fraudulent scheme designed to mislead the investing public about the company's revenue and growth."
Nacchio left Qwest in 2002 as the company faced accounting and business practices probes from the SEC and Justice Department. The Denver telco later restated its financials over the covered period to reduce revenue by some $2.5 billion.
In October, Qwest agreed to pay $250 million to settle the SEC's civil charges of a "massive financial fraud" at the company. Qwest is currently trying to buy
MCI
(MCIP)
over the objections of the long-distance telco and suitor
Verizon
(VZ) - Get Report
.
The SEC says Nacchio and others "made numerous false and misleading statements about Qwest's financial condition in annual, quarterly and current reports, in registration statements that incorporated Qwest's financial statements, and in other public statements, including earnings releases and investor calls."
Also named as defendants are former financial chiefs Robert S. Woodruff and Robin R. Szeliga, former chief operating officer Afshin Mohebbi, former executive vice president of wholesale markets Gregory M. Casey, former senior vice president of pricing and offer management Roger B. Hoaglund, former senior vice president of finance William L. Eveleth, former director of financial reporting James J. Kozlowski, and former senior manager of financial reporting Frank T. Noyes.
The complaints seek injunctions, disgorgement of ill-gotten gains plus prejudgment interest, and civil penalties against all of the defendants, and officer/director bars against Nacchio, Woodruff, Szeliga, Mohebbi, Casey and Eveleth.
"Joseph Nacchio and others at Qwest wanted the company's shareholders to believe that the company was doing better than it actually was," said the SEC's Steve Cutler. "Today's enforcement action once again tells corporate executives that they will be held personally accountable when they keep the truth from the marketplace."
On Tuesday, Qwest slipped 6 cents to $3.85.