DENVER – Qwest Communications International Inc. (Q) has agreed to settle fraud allegations from federal regulators for $250 million, a union official said Friday.
John Thompson, a Communications Workers of America vice president, said he was notified by a company official of the tentative settlement with the Securities and Exchange Commission (search). He said he did not have specifics.
"I would rather have the money for use internally, but I'm very much relieved it's over," Thompson said.
Qwest spokesman Bob Toevs said he could not comment, saying only that the company was cooperating with the SEC and the Justice Department (search).
SEC officials in Denver did not immediately return a call seeking comment.
Justice Department spokesman Jeff Dorschner said he had not heard of a settlement with Qwest. "If there were to be a settlement, it would no way impact the Justice Department investigation," he said.
Qwest was launched in 1988 by billionaire investor Philip Anschutz as a fiber-optic network company. In 2000, it got into the local phone business with the $38 billion takeover of U S West, the main carrier in 14 Western and Midwestern states since the 1984 breakup of AT&T.
As the telecom industry faltered, analysts questioned Qwest's financial performance. Soon regulators and lawmakers were investigating whether Qwest artificially boosted its performance through questionable deals with other telecoms.
The SEC began investigating the Denver-based company in 2002, looking specifically at swaps in which Qwest sold items to customers around the same time those customers sold items back to Qwest; changes in publication dates for its phone directories that allowed revenue from the directory unit to be booked in a certain quarter; and when revenue was booked on long-term transactions involving optical capacity assets.
Qwest restated its financial results for 2001 and 2002, lowering revenue by about $2.5 billion, and former chief executive Joe Nacchio stepped down in June 2002. He has denied wrongdoing.
Qwest earlier this year put up about $500 million in reserves for ongoing litigation in shareholder lawsuits and securities investigations.
The SEC and some shareholders have sued former and current employees.
Qwest's stock rose 8 cents to $2.96 a share on the New York Stock Exchange (search).