A federal grand jury in Denver has indicted four former executives of Qwest Communications for fraud. The four are accused of violating Security and Exchange Commission rules through a scheme that involved recording revenue before delivering merchandise, then covering their actions with false documents.
The former Qwest executives named in the indictment are former CFO Grant Graham, former assistant controller Bryan Treadway, former senior vice president for government and educational solutions Thomas Hall, and former vice president of the same group John Walker.
In the action described in the indictments, Qwest reportedly sold equipment to the Arizona statewide school computer network and booked the revenue before delivering the merchandise. This action is in strict violation of SEC rules. The four were accused of inflating revenues by $33 million.
Attorney General John Ashcroft made the announcement of the indictment. "As we continue our efforts to battle corporate fraud, our message is clear," the attorney general said. "We will protect the integrity of our markets by punishing those who falsify financial information out of sheer greed."
Other charges are expected to be filed against other Quest employees as the investigation continues. It is estimated that Qwest revenues were inflated by at least $144 million in 2000-2001 in an attempt to meet Wall Street expectations.