A federal jury in Denver indicted the four men on 12 fraud counts for allegedly misreporting a purchase order for equipment bought by the Arizona School Facilities Board, but held for later delivery. According to Ashcroft, the company counted the revenue in its reporting before the merchandise was delivered, then knowingly filed false documents to cover up its actions.
“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 our of sheer greed,” Ashcroft said in a statement.
Among those charged were Grant Graham, 37, the former chief financial officer for Qwest’s global business unit; 51-year-old Thomas Hall, a former unit senior vice president; John Walker, 41, a former vice president in the government and educational solutions group; and 37-year-old Bryan Treadway, an assistant controller.
The four are charged with securities fraud, wire fraud, making false statements and conspiracy. Several of the charges carry possible 10-year prison terms and up to a million dollars in fines.
Ashcroft said the four have 48 hours to surrender to authorities.
The indictments came after a joint investigation by the Securities and Exchange Commission and the Justice Department’s Corporate Fraud Task Force. However, U.S. Attorney John Suthers said Tuesday’s announcement brought an end to only part of the task force’s inquiry.
“Today’s indictment concludes only the first phase of the Qwest investigation by the Justice Department,” Suthers said in a statement. “There are several other aspects of Qwest’s corporate conduct and the conduct of its executives that are the subject of continuing investigation.”
Justice Department investigators have also examined whether Qwest improperly inflated revenues by swapping network capacity with Global Crossing Ltd. — another telecommunications company plagued by scandal, the Associated Press reported.
Also Tuesday, the SEC filed civil fraud charges against eight current and former Qwest officials, alleging they inflated company revenues by some $144 million in 2000 and 2001.
The lawsuit includes the Arizona School Facilities Board incident, as well as a transaction in which Qwest officials allegedly characterized one transaction with Internet service provider Genuity, Inc. as two separate contracts.
Quest allegedly improperly accounted for $100 million in revenue and claimed $80 million in pre-tax earnings for the quarter ending Sept. 30, 2000, the commission said in a statement.
The SEC said it seeks anti-fraud injunctions, civil money penalties, and the divestment of ill-gotten gains in its lawsuit. The SEC may also seek to have some of the defendants barred from serving as an officer or director of a public company.