Anschutz Seeks to Settle IPO Suit, Sources Say
Billionaire financier and Los Angeles sports mogul Philip F. Anschutz is in preliminary talks with the New York attorney general to settle claims that he made more than $1 billion at the expense of Qwest Communications International Inc. shareholders, two sources familiar with the matter said Thursday.
Anschutz, founder and former chairman of the struggling Baby Bell, is one of five current and former telecommunications executives accused in a lawsuit of profiting from initial public stock offerings without disclosing potential conflicts of interest.
The negotiations, the first among the five defendants sued in the fall by Atty. Gen. Eliot Spitzer, are in an “advanced state,” one source said. The other source said no settlement was imminent and that it wasn’t known if one can be reached.
“We don’t have a comment, but, hopefully, soon we will,” said Anschutz spokesman Jim Monaghan in Denver.
Anschutz, who parlayed his father’s oil-and-gas business into riches in railroads, telecommunications, sports, entertainment and more, was not available for comment.
Darren Dopp, a spokesman for Spitzer, said only, “We’re always interested in reaching reasonable and responsive settlements.”
Spitzer’s civil lawsuit accuses five telecom executives of receiving shares of hot IPOs from Salomon Smith Barney Inc., a unit of Citigroup Inc., in the late 1990s as rewards for steering their companies’ investment banking business to the Wall Street brokerage.
The suit seeks $28 million from the group -- $4.8 million from Anschutz alone -- for the IPO sales. It also demands the $1.5 billion that they reaped by selling shares of their own companies. Spitzer charges that the gains were ill-gotten because Salomon analysts, particularly former telecom star Jack Grubman, touted them to the public as part of the scheme.
Besides Anschutz, who remains a Qwest director and its biggest shareholder, the other defendants are former Qwest Chief Executive Joseph Nacchio, former WorldCom Inc. Chief Executive Bernard Ebbers, Micromedia Fiber Networks Chairman Stephen Garofalo and former McLeod USA Chief Executive Clark McLeod.
Anschutz may have more to gain than the others from settling with Spitzer. He allegedly profited the most but could get out by paying the least as the first in what Spitzer hopes will be a domino effect. As an intensely private man, Anschutz has tried to avoid the spotlight that major litigation brings.
Though short on staff, Spitzer has gained recognition for the high-profile securities cases he has filed over questionable accounting and brokerage practices in the telecom industry and on Wall Street.
Unlike the other defendants, Anschutz, 63, has built a fortune estimated at more than $4 billion from an array of investments. In Los Angeles, he has used his Anschutz Entertainment Group to buy stakes in the Los Angeles Lakers, the Los Angeles Kings and Staples Center.
The company also owns the Los Angeles Galaxy and other professional soccer teams across the nation. And it is the developer and operator of the $130-million Home Depot National Training Center, a multi-sports complex set to open in June on 85 acres on the Cal State Dominguez Hills campus in Carson.
Anschutz created Regal Entertainment Corp. to pick up three bankrupt movie houses, including the Edwards Theatres Inc. and United Artists Theater Co. chains, and took the company public last May in an initial offering that raised $342 million.
But the core of his investments has been in oil and gas, railroads and Qwest.
Besides the money allegedly made by selling shares of 57 hot new public companies, Anschutz has sold about $2 billion worth of Qwest stock. His own fortune, though, has sunk with Qwest’s. Worth $18 billion three years ago, Anschutz has seen his holdings slide to $4.3 billion, according to Forbes magazine’s fall list of the nation’s wealthiest people.
Most of his holdings are owned through his Anschutz Co., Anschutz Investment Co. and Anschutz Corp. Besides an 18% stake in Qwest, he and his companies own interests in Union Pacific Corp., Forest Oil Corp. and a slew of smaller telecom equipment companies, software firms and other communications and high-tech ventures.
Times staff writer Walter Hamilton in New York contributed to this report, and Reuters was used in compiling it.
