Fraud Trial of Ex-Qwest Execs to Begin Today

Four former Qwest Communications International Inc. executives head to federal court today for jury selection in the first criminal trial arising from probes of questionable accounting at the telecommunications company.

Prosecutors say the men -- charged with conspiracy and fraud -- devised a scheme that allowed Qwest to improperly book $34 million from a computer equipment sale. Prosecutors say they conspired to lie about the deal and hid the facts from then-auditor Arthur Andersen.

The case is the first stemming from investigations that ultimately forced Qwest to erase $2.5 billion in revenue from its books and prompted former Chief Executive Joseph Nacchio to quit under pressure in 2002. The trial is expected to last a month.

At issue is a $100-million deal with the Arizona School Facilities Board in the second quarter of 2001.

The board hired the Denver-based company to build a network for Internet access to schools statewide.

Grant Graham, Thomas Hall, John Walker and Bryan Treadway are accused of rushing to get equipment for the project delivered by the end of the quarter so revenue could be booked right away, and then claiming Arizona officials wanted it done that way.

In the process, the four are accused of ordering equipment Arizona officials hadn’t agreed to buy and of keeping a warehouse open on a Saturday, the final day of the quarter, to make it appear the material was received on time.

The men booked revenue from the sale before the computer equipment was installed, hoping to meet lofty profit targets and help their own performance reviews and bonuses, prosecutors say.

If convicted, the men could face years in prison and millions of dollars in fines.

Defense attorneys are expected to argue the charges were the result of political pressure to crack down on corporate scandals, and that more-senior Qwest executives found nothing wrong with the transaction.