Four former executives at telecom giant Qwest were indicted yesterday on fraud charges, fueling speculation that charges could eventually be brought against senior management.
The four defendants named in the 12-count indictment are accused of making a false purchase order that resulted in the fraudulent reporting of $33 million of revenue.
The investigation is ongoing, and many expect that charges could be forthcoming against former CEO Joe Nacchio and Phil Anschutz, the company’s founder and largest shareholder.
“That is undoubtedly what the DOJ and SEC are working on,” said Carr Conway, a former SEC investigator and senior forensic accountant at the Dickerson Financial Investigation Group. “I’ve never seen a substantial fraud case that didn’t include senior management.”
Attorney General John Ashcroft announced the indictments, and was followed by William Donaldson, the incoming head of the Securities and Exchange Commission, announcing the filing of civil fraud charges against those four men as well as four other former Qwest executives.
The civil charges allege that the employees inflated revenue by $144 million in a fraudulent attempt to meet Wall Street’s earnings expectations.
“As we continue our efforts to battle corporate fraud, our message is clear: We will protect the integrity of our markets by punishing those who falsify financial information out of sheer greed,” Ashcroft said in a statement.
Arrest warrants were issued for the following four former employees: Grant Graham, ex-CFO of Qwest’s global business unit; Thomas Hall, past senior vice president in the global business unit; John Walker, onetime vice president of the same unit; and Bryan Treadway, former assistant controller.
The four had 48 hours to turn themselves in.
In a statement, the company said: “Qwest continues in its efforts to cooperate with the government in connection with the investigations. Fundamental to the spirit of service is complete integrity in all we do. As a company and as individual employees, we hold ourselves to the highest ethical standards as we conduct our business.”