Qwest CFO’s settlement falls through

Former Qwest Communications finance chief Robin Szeliga will face trial after all, after her attorneys were unable to reach an expected settlement with attorneys from the Securities and Exchange Commission.

A tentative settlement had been announced earlier. Szeliga is one of seven former Qwest executives, including former CEO Joe Nacchio, who have been accused of orchestrating a multi-billion financial fraud. She has admitted to illegal insider trading and is expected to be a government witness against other Qwest officials.

In announcing the settlement withdrawal, Szeliga’s attorney did not explain the change other than to say that no settlement was reached.

Szeliga was named Qwest’s interim CFO in February of 2001 and assumed the job two months later. The SEC alleges Qwest executives committed fraud during a period between April 1999 and March 2002, improperly reporting approximately $3 billion in revenue that enabled the company to acquire U S West in 2000. Some of that revenue was actually merely capacity swaps, and all of it was later restated.

Separately, the Denver Post reported Thursday that federal prosecutors have indicated they will not try to prove accounting fraud in their insider trading case against Nacchio. The former Qwest CEO faces 42 counts of illegal insider trading for $100.8 million in stock for allegedly knowing that Qwest was in worse financial shape than he and other executives were publicly reporting.

In a court filing Thursday, the prosecutors said they have evidence against Nacchio from his own electronic calendars, minutes of the Board of Directors’ meetings, and internal Qwest documents showing what Nacchio knew of Qwest’s financial condition.