DENVER — After issuing a tearful apology for an "error in judgment," former Qwest finance chief Robin Szeliga was sentenced Friday to two years' probation, six months of home detention and a $250,000 fine for insider trading during the company's multibillion-dollar accounting scandal.
Szeliga, the highest-ranking executive from Qwest to plead guilty in the government's case, is expected to be a key witness in the trial of former Qwest CEO Joseph Nacchio, who faces 42 counts of insider trading. U.S. Attorney Bill Leone called Szeliga's help in that case "very substantial."
U.S. District Judge Walker Miller agreed with prosecutors who asked for a lenient sentence because of her cooperation in the investigation into Denver-based Qwest Communications International Inc.
"It is my practice to give careful consideration, considerable weight, to the parties' agreement because they know considerably more about the case than I will ever know," Miller said. He said the request for leniency was legal, though he questioned attorneys on both sides how Szeliga's plea deal compared with other Qwest cases.
"I do not divorce this conduct from the overall illegality," Miller said. "There does seem to be a culture of — I would use the word — greed."
The single insider trading charge carries a maximum penalty of 10 years in prison and a $1 million fine. Szeliga has also agreed to pay $125,000 in restitution, the amount she earned on the improper stock trade in 2001.
"We had to do a lot of soul searching and study" to arrive at the sentencing recommendation for Szeliga, Leone said. Szeliga said she "strayed from the Lord's guidance" and would accept whatever punishment she received.
"My life is forever changed by this mistake," Szeliga said in a soft voice that trembled at times. "I have had to come to grips with my own failings and demons."
Terry Bird, her attorney, said Szeliga "is unemployed and unemployable." He said she has lost a job since leaving Qwest because she was a "headline risk" and has kept busy by teaching yoga and through volunteer work.
In previous cases, former Qwest executive Marc Weisberg received probation and a $250,000 fine for wire fraud. Of four former midlevel executives accused of improperly booking revenue in an Arizona schools deal, two were acquitted, another was sentenced to probation and a fourth is expected to receive probation.
Qwest earlier agreed to pay $250 million to settle SEC charges of fraud in a deal that did not cover individual officials — including Nacchio.
As with the WorldCom and Enron cases, cooperation from a former executive like Szeliga is expected to help prosecutors as they put Nacchio on trial.
"The government needs her assistance," Houston securities lawyer Thomas Ajamie said before the hearing. "You can never have too many insiders testifying when you are trying to nail the CEO."
Nacchio is accused of selling $101 million in stock in 2001 based on inside knowledge that Qwest would be unable to meet revenue targets because it had improperly used nonrecurring revenue to meet those goals.
Each count carries a penalty of up to 10 years in prison and a $1 million fine. Nacchio has pleaded not guilty and remains free on bail. A motions hearing is set for Aug. 25 in Denver.
In a pending civil case, Szeliga, Nacchio and other former executives are accused of orchestrating massive financial fraud at Qwest.
The SEC has said the fraud at Qwest occurred between April 1999 and March 2002, allowing it to improperly report approximately $3 billion in revenue that later was restated.