The Denver Employees Retirement Plan is suing Qwest Communications International Inc., alleging that an accounting scandal in 2002 cost the plan $1.2 million, according to a lawsuit filed in U.S. District Court in Denver. Officials at the Denver plan are seeking attorneys' fees and other costs in addition to losses.
Officials of the $1.7 billion plan filed suit after determining that a proposed $400 million settlement announced last fall in an earlier class action against Qwest was "not acceptable," said Steven Hutt, executive director of the fund. "Our share of the settlement would have been less than $8,000, and we figured it made abundant sense to opt out of the settlement," Mr. Hutt said.
The new suit claims Qwest "significantly and materially" overstated revenue and earnings between March 1999 and July 2002, according to court documents. The Denver plan purchased 58,800 shares of Qwest stock during the period. Qwest restated earnings for 2000 and 2001 after the SEC issued an investigation notice in April 2002. Qwest has settled civil charges brought by the SEC and agreed to pay the SEC $250 million as part of that settlement. Joseph Nacchio, Qwest's former CEO, was indicted in late 2005 on 42 counts of insider trading after the three-year investigation.
Qwest spokesman Bob Toevs said company officials decline to comment on matters related to the pending litigation.
