Ex-Execs Indicted in Qwest Probe

Four former executives at Qwest Communications International Inc. were indicted Tuesday on 12 counts stemming from allegations of artificial inflation of revenue at the company, the leading local phone provider in 14 states.

Federal prosecutors accused the four of devising a scheme to falsely recognize more than $33 million of additional revenue in the second quarter of 2001, a time of weak sales for Qwest. The executives allegedly booked millions of dollars before receiving payment from the Arizona School Facilities Board for wiring schools to the Internet.

The indictments charge the four with conspiracy, securities fraud, filing false reports with the SEC, making false statements to accountants and wire fraud. If convicted, they could face up to 10 years in prison and fines of $1 million, U.S. Atty. Gen. John Ashcroft said.

Meanwhile, the Securities and Exchange Commission filed a simultaneous civil suit against the four plus three other former and one current executive at the Denver-based telephone company.

The SEC suit, filed in U.S. District Court in Denver, accused the eight of inflating the company’s revenue by about $144 million in 2000 and 2001. It seeks unspecified civil penalties and the return of ill-gotten gains.

Prosecutors said they would continue investigating Qwest and its executives.

Named in the criminal indictment and the civil suit were Grant Graham, 37, former chief financial officer for Qwest’s global business unit; Bryan Treadway, 37, a former assistant controller at Qwest; Thomas Hall, 51, a former senior vice president for the government and educational solutions group within the global business unit; and John Walker, 41, former vice president in that group.

Also named in the civil suit were Joel Arnold, a former executive vice president of the global unit who resigned in December 2001; William Eveleth, Qwest senior vice president of finance and chief financial officer of corporate planning and operational finance; Douglas Hutchins, director of finance for global business and later senior director of quality until he resigned in October 2002; and Richard Weston, senior vice president of strategic sales, who left Qwest in May 2002.