DENVER (AP) — Qwest Communications has agreed to pay $250 million to settle a wide-ranging fraud investigation by the Securities and Exchange Commission, the Associated Press has learned.
The SEC complaint, which has not been released publicly, contends that Qwest Communications International Inc. improperly booked millions in revenue and that senior managers sought to cover it up, a source familiar with the case said yesterday on the condition of anonymity.
The deal was expected to be announced as early as today.
Both Qwest and the SEC have approved the settlement, but the Denver company will neither admit nor deny the charges, the source said.
Qwest spokesman Tyler Gronbach said he had no information about any pending deal but said the company was cooperating with the investigation. An SEC spokesman in Denver did not return a call for comment.
The SEC began investigating Qwest in 2002 on accusations that it inflated revenue through fraudulent transactions with other telecommunications companies. Since then, the SEC has sued former and current employees, and the company restated financial results for 2001 and 2002, thus lowering revenue by $2.5 billion.
About a dozen former Qwest executives either have settled charges or have been targeted in civil or criminal cases.
The SEC complaint accuses Qwest of booking one-time revenue from the sale or trade of fiber-optic capacity as recurring revenue from operations, the source said.
It also says that Qwest booked anticipated revenue long before it materialized, that its former phone-book division delayed or moved up publication dates to artificially inflate revenue figures and that at least one senior Qwest employee pressured vendors to allow Qwest executives to invest in their initial public offerings, the source said.
The complaint is especially critical of senior Qwest managers, but does not mention any of them by name, the source said.
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