updated 2/18/2005 6:18:40 PM ET 2005-02-18T23:18:40

Federal prosecutors accused a former Qwest Communications International Inc. executive Friday of illegally arranging $2.9 million in gains for himself and others by secretly cashing in on investment opportunities at the expense of the company and its shareholders.

Marc B. Weisberg, a former senior vice president, was charged with eight counts of wire fraud and three counts of money laundering.

If he is convicted, prosecutors want Weisberg to forfeit the $2.9 million in alleged gains, including cash and a villa in the Cayman Islands.

Weisberg, 47, surrendered to the FBI and was escorted to court in handcuffs for an initial appearance. He was released on a $1 million unsecured bond, surrendered his passport and agreed not to leave the United States.

He left court without comment but separately issued a statement through his attorneys saying, “I look forward to clearing my good name when the facts of this case come out in court.”

Federal prosecutors declined comment.

Weisberg is at least the fifth former Qwest executive to face federal charges as a result of an ongoing Justice Department investigation.

Weisberg was responsible for managing corporate investments and negotiating equity agreements for Qwest and its shareholders.

That included programs in which companies that are about to go public make some shares available to investors of their choosing. Such stock can become lucrative because share prices typically rise after public trading begins.

Weisberg is accused of using his position between 1999 and 2001 to obtain such investment opportunities from several vendors or potential vendors for himself, his parents, father-in-law, children, his wife’s personal trainer, a brother-in-law and a secretary, among others.

Weisberg is also accused of taking personal advantage of some investment opportunities that vendors would offer Qwest.

At the time, the company used such opportunities as incentives to retain top employees under strict reporting conditions. Prosecutors alleged Weisberg did not inform the company when he made the diversions and destroyed accompanying personal and corporate records.

In some instances, Weisberg tried to arrange the investment opportunities while negotiating contracts with the companies involved, a violation of Qwest policy, the indictment said.

The indictment said companies whose stocks were involved included Alteon Web Systems, ONI Systems Corp., Tellium, Rhythms and Rhythm NetConnections Inc.

Each wire fraud count carries a sentence of up to five years and a fine of up to $250,000. The money laundering counts carry sentences of 10 to 20 years and fines of $250,000 each.

Legal challenges
The Denver-based Qwest Communications International Inc. has been faced with legal challenges since 2002 when the Securities and Exchange Commission began an inquiry into accounting irregularities.

Last fall, Qwest agreed to pay a $250 million fine to settle civil fraud charges. The SEC accused Qwest of a “massive financial fraud” for falsely reporting sales or trades of capacity on its fiber-optic cables as recurring revenue. Qwest agreed to the settlement without admitting wrongdoing.

Separately, former midlevel manager Thomas Hall pleaded guilty in September to falsifying documents and was sentenced to probation. Grant Graham pleaded guilty in May to being an accessory after the fact to wire fraud with reckless indifference. He has not been sentenced.

John Walker and Bryan Treadway were acquitted in April of criminal fraud and conspiracy.

Weisberg earlier was named in a lawsuit filed by Qwest investors accusing former company executives of misleading investors and fraudulent accounting, but a federal judge dismissed him as a defendant in January 2004.

His indictment came a day after Qwest said it would submit a renewed — and possibly sweetened — bid for MCI Inc . after being snubbed by the long-distance company in favor of a $6.7 billion cash-and-stock bid from Verizon Communications Inc. earlier this week. MCI accepted the Verizon proposal even though it was believed to be substantially less than the Qwest bid.

Qwest shares closed up 11 cents, or 2.9 percent, to $3.95 Friday on the New York Stock Exchange.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Discuss:

Discussion comments

,

Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 4.71%
$30K home equity loan FICO 5.26%
$75K home equity loan FICO 4.70%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.42%
13.42%
Cash Back Cards 17.94%
17.94%
Rewards Cards 17.14%
17.14%
Source: Bankrate.com