Former Qwest Executive Sentenced In Revenue-Inflation Scheme

A federal judge sentenced a former Qwest Communications executive to probation and a $5,000 fine Tuesday and said no one charged in the government's highly touted investigation of fraud at

February 9, 2005

3 Min Read
Network Computing logo

DENVER (AP) -- A federal judge sentenced a former Qwest Communications executive to probation and a $5,000 fine Tuesday and said no one charged in the government's highly touted investigation of fraud at the telecommunications giant will go to prison.

Thomas Hall, who pleaded guilty last year to a single misdemeanor count of falsifying documents, was the first person sentenced in a case then-Attorney General John Ashcroft announced as an example of the government's intolerance of white-collar crime. Two years ago, a grand jury indicted four executives on 12 felony counts each.

Two of the men, Bryan Treadway and John Walker, were acquitted last year and a jury deadlocked on charges against Hall. Grant Graham was acquitted of three counts and later pleaded guilty to a felony charge of being an accessory after the fact to wire fraud. He is likely to receive a sentence identical to Hall's later this year.

``I accept full responsibility for my actions,'' Hall said, with his wife and other family in court. ``I did not mean to harm anybody, but people were harmed.''

U.S. District Judge Robert Blackburn said it would be unfair to sentence Hall to prison for a misdemeanor and while ordering probation for Graham on a felony.The judge said he disagreed with government arguments that Hall had ``any more than a truly limited, almost pinch-hitting role'' in the scheme to inflate Qwest revenues by $34 million in 2001. He said probation was sufficient for someone who expressed contrition and regret and he believed was unlikely to commit more wrongdoing.

Blackburn also said he considered the financial and emotional toll the case has taken on Hall, who said he has lost his house, two jobs and more than two-thirds of his net worth.

``This is the way it should have gone all along,'' said Hall's wife, Ann Hall. ``The relief is absolutely enormous.''

Hall, a former senior vice president in Qwest's global business unit, and Graham, the unit's former chief financial officer, are cooperating with prosecutors who are still looking into Denver-based Qwest, interim U.S. Attorney William Leone told the judge.

Hall, Graham, Walker and Treadway were accused of using a $100 million deal to connect Arizona's public schools to the Internet to report revenues the company had not yet earned from equipment sales to help them meet internal revenue targets.Blackburn said the person most likely to have been convicted in the scheme was former Qwest accountant Doug Hutchins, who was granted immunity in exchange for testifying against Hall and the others.

``He created out of whole cloth a delivery schedule but for which this transaction would have failed early on,'' Blackburn said.

Qwest Communications International Inc. did not receive any money from selling computer equipment to Arizona's school system until about six months after it reported the revenue to shareholders and the government.

Hall's attorney, Jeffrey Springer, said Qwest's losses from the transaction were far lower than the government's claim of about $4.5 million. He said his client was a reluctant participant in the scheme.

Leone said Hall helped perpetuate a corporate culture that urged all Qwest employees to do whatever was necessary to hit or exceed revenue targets. He asked the judge to order one year in prison and a fine of $100,000 _ the legal maximum _ to deter similar crimes.``At some point, your honor, this has got to stop and the business community has got to get the message this is intolerable,'' he said.

Blackburn said the ``draconian'' social, financial and professional consequences Hall suffered after he was indicted would serve as an adequate deterrent for executives considering similar activity.

Stay informed! Sign up to get expert advice and insight delivered direct to your inbox

You May Also Like

More Insights