Former Qwest Communications executive
Marc Weisberg pleaded guilty Wednesday to wire fraud and agreed to
cooperate with federal prosecutors trying to convict former Chief
Executive Joseph Nacchio of illegally dumping more than $100 million in
stock.
Weisberg, a former senior vice president who oversaw investments,
mergers and acquisitions for Denver-based Qwest Communications
International Inc., pleaded guilty to a single count of fraud. He had
faced eight counts of wire fraud and three counts of money laundering.
The plea came a week after Nacchio was indicted on 42 counts of insider
trading and on the same day that Enron’s former top accountant, Richard
Causey, pleaded guilty to securities fraud and agreed to cooperate with
prosecutors investigating the Houston company.
“In today’s atmosphere, there is simply too great a risk that a jury
may be persuaded to paint Mr. Weisberg with the broad brush of alleged
impropriety at Qwest,” defense attorneys Stephen Peters and Gary Lozow
said in a statement.
Prosecutors declined comment. They have said their investigation of
Qwest is substantially complete with Nacchio’s indictment.
Weisberg, who is free on $1 million unsecured bond, faces a March 3
sentencing hearing.
Prosecutors have said Weisberg’s case was not directly connected to the
accounting scandal that forced Qwest to restate billions in revenue.
Instead, they accused Weisberg of improperly earning $2.9 million for
himself, family members and friends from 1999 to 2001 by demanding that
vendors offer them shares in other companies in return for doing
business with Qwest, the telephone provider for 14 mostly Western
states.
In a plea agreement filed with a federal judge, Weisberg admitted to
buying stock in a California company in March 2000 and failing to report
the deal to Qwest. He sold the stock in 2001 at a loss of about
$529,000, the document said.
Prosecutors said they will seek 60 days of in-home detention, two years
of probation and a $250,000 fine against Weisberg, 48. He had faced
decades in prison, huge fines and forfeiture of $2.9 million if
convicted of the original charges.
Weisberg joins former Qwest Chief Financial Officer Robin Szeliga as a
potential witness in future cases. She pleaded guilty in July to one
count of insider trading and agreed to cooperate with investigators. In
addition, former Qwest President Afshin Mohebbi has been granted
immunity and is expected to testify.
The plea deal could mean prosecutors are concerned about their case
against Nacchio or it could mean Weisberg can provide important
testimony, said Jacob Frenkel, a former federal prosecutor and former
lawyer for the Securities and Exchange Commission.
“The government would certainly love to be able to expand its
indictment against Mr. Nacchio,” he said. “The government wants to have
cooperating senior executives in the fold as cooperating witnesses
because corporate fraud cases are difficult cases to prove and they
almost always turn on the help of senior insiders.
(Prosecutors) need to know who was saying what to whom.” The charges
against Nacchio and the deal with Weisberg come three years after the
government trumpeted the first indictments in the Qwest investigation as
an example of the crackdown on white-collar crime.
Nacchio is accused of illegally selling off $101 million in stock over
five months in 2001 after learning the company might not meet its
financial goals and keeping that information from stockholders.
Prosecutors have refused to discuss who allegedly warned Nacchio about
revenue problems at Qwest.
The government has said Qwest and some of its former executives
participated in a massive fraud between April 1999 and March 2002 by
falsely reporting one-time sales or trades of capacity on its
fiber-optic cables as recurring revenue.
The fraud allowed Qwest to improperly book approximately $3 billion in
revenue that eased its 2000 merger with U S West Inc.
and helped various executives to reap millions in “ill-gotten” profits,
the government has said. Qwest later restated earnings from 2000 and
2001 to erase about $2.2 billion in revenue.
Last month, Qwest said it would pay $400 million to settle the claims
of tens of thousands of shareholders who purchased Qwest securities. The
company earlier agreed to pay $250 million to settle Securities and
Exchange Commission charges of fraud without admitting wrongdoing.
-On the Net: Qwest Communications International Inc.:
http://www.qwest.com
