SEC begins distributing $267 million to defrauded Qwest investors

DENVER — Federal regulators have begun distributing $267 million to investors who lost money when Qwest Communications International Inc.'s stock collapsed in 2002 amid allegations of accounting fraud.

About 200,000 investors who purchased Qwest securities between July 27, 1999, and July 28, 2002, would receive payments, according to a statement from the Securities and Exchange Commission. The distribution process began Wednesday and is expected to be completed within five days.

Money for payments comes mainly from $250 million paid by Qwest to settle allegations of accounting fraud. Qwest did not acknowledge any wrongdoing.

Additional money came from SEC settlements with several former Qwest executives, including Robin Szeliga, who also paid restitution after pleading guilty to one felony count of insider trading.

SEC regulators alleged that Qwest improperly reported more than $3 billion in revenue and excluded $231 million in expenses to meet "ambitious revenue and earnings projections." The phone company later restated $2.2 billion in revenue.

SEC regulators expect two civil cases, including one pending against former CEO Joe Nacchio and other executives, will add more money to the SEC fund used to pay Qwest investors.

Nacchio was sentenced to six years in prison and $71 million in fines and forfeitures last week after he was convicted in April of 19 counts of insider trading.

Nacchio, 58, was denied bail during his appeal and is expected to begin his prison term within two months.