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Qwest investors may get checks next week

Jeff Smith, Rocky Mountain News

Published July 27, 2007 at midnight

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The Securities and Exchange Commission said Thursday it's ready to disburse $267 million to 200,000 Qwest investors who lost billions of dollars toward the end of former CEO Joe Nacchio's era.

The money is the first chunk to be returned to investors who saw Qwest stock plummet from $66 in March 2000 to barely a dollar in the summer of 2002. The motion to distribute the money starting next week comes as Nacchio is to be sentenced today on insider-trading charges.

The SEC fund stems from Qwest's $250 million civil fraud settlement with federal regulators in the fall of 2004, settlements by five former Qwest executives, and interest.

The settlements were with former Chief Financial Officer Robin Szeliga ($702,000) and former executives Augie Cruciotti ($350,000), Gregory Casey ($1.65 million excluding interest), William Eveleth ($105,575) and Roger Hoaglund ($300,000), according to court filings.

Their payments covered civil penalties and "ill-gotten gains."

Szeliga's total included $125,000 of restitution stemming from her plea to one count of insider trading.

Checks will go proportionally to investors who bought Qwest stock between July 27, 1999, and July 28, 2002.

"That's a good thing, not only for Qwest retirees but also shareholders in general," said Nelson Phelps, executive director of the Association of U S West Retirees. "As we all know, it's just pennies on the dollar, but it's something, and we're pleased they're finally distributing that."

The SEC filed an unopposed motion in U.S. District Court for permission to distribute the funds. The court was expected to approve the motion but hadn't as of Thursday afternoon.

Qwest stockholders from the Nacchio era still are waiting for their cut of a $400 million class-action shareholder settlement agreed to in late 2005 and approved by a federal judge last fall.

That distribution has been held up because of an appellate court challenge by Nacchio and former Qwest Chief Financial Officer Robert Woodruff, who claim it's unfair they have been excluded from the class-action settlement.

Attorneys for the shareholders in the class-action case have been paid their fee of $60 million, further irking some investors waiting for their money.

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