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Ex-Qwest accountants seek separate trial in fraud case

DENVER — Two former Qwest Communications accountants contend their rights will be violated if they are tried on civil fraud charges at the same time as three high-ranking one-time executives, including former CEO Joe Nacchio.

Attorneys for accountants James Kozlowski and Frank T. Noyes argued in a brief filed late Tuesday it could be difficult for a jury to hear the complicated evidence at just one trial and try to sort out what applies to each defendant.

"The resulting risk of verdict against Kozlowski and Noyes predicated on confusion, frustration or spillover of inadmissible evidence is so substantial that a separate trial or severance is necessary," the two attorneys said.

Kozlowski, Noyes, Nacchio, former finance chief Robert Woodruff and former President Afshin Mohebbi are accused of committing a fraud that nearly forced Qwest Communications International Inc., a Denver-based telecommunications company, into bankruptcy.

The Securities and Exchange Commission has said the executives' actions between April 1999 and March 2002 paved the way for Qwest to improperly report approximately $3 billion in revenue that helped seal its 2000 acquisition of former Baby Bell U S West. Qwest later restated $2.2 billion in revenue.

The SEC wants repayment and civil penalties with amounts to be determined at trial. No trial date has been set.

The SEC has asked a judge overseeing the case to deny the accountants' request for a separate trial, arguing that they were senior managers with "significant responsibility" when they worked at Qwest.

The agency also says it would be inconvenient and costly if it is required to conduct two trials, noting the duplications of witnesses and evidence that would be involved.

In April, Nacchio was convicted in a separate criminal trial of 19 counts of insider trading stemming from the sale of $52 million worth of stock in 2001 at a time when he knew the company was at financial risk but didn't tell investors.

Nacchio was sentenced to six years in prison but remains free on bond pending an appeal of the conviction.