New York State Comptroller files suit against Qwest Communications

By Scott Files

Published on April 20, 2006

The suit which was filed in Manhattan, alleges that Qwest's revenue and earnings were "significantly and materially" inflated and overstated in the period covering March 31, 1999 thru July 28, 2002.

"Defendants' unlawful conduct was intended to, and did, artificially inflate the value and price of Qwest's securities," to the detriment of the New York State Common Retirement Fund, the lawsuit said. Mr. Hevesi is the sole trustee of the fund, a large pension fund for New York public employees.

The New York Pension Fund is the lead plaintiff in a similar lawsuit against WorldCom and its former executives, outside auditors and underwriters. The fund could recover more than $6.1 billion as a result of the suit against WorldCom.

Qwest has declined comment in the matter instead saying the company's policy was not to speak about pending litigation. Arthur Andersen is also not commenting on the lawsuit.

Qwest has been involved in several other lawsuits recently. One such case, in Colorado, resulted in Qwest agreeing to pay $400 million to settle a separate shareholder lawsuit in federal court. The company also previously agreed to pay $250 million to settle civil charges brought by the Securities and Exchange Commission.

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