Opinion
Civil Action No. 01-cv-1451-REB-CBS, (Consolidated with Civil Action Nos. 01-cv-1472-REB-CBS, 01-cv-1527-REB-CBS, 01-cv-1616-REB-CBS, 01-cv-1799-REB-CBS, 01-cv-1930-REB-CBS, 01-cv-2083-REB-CBS, 02-cv-0333-REB-CBS, 02-cv-0374-REB-CBS, 02-cv-0507-REB-CBS, 02-cv-0658-REB-CBS, 02-cv-755-REB-CBS, 02-cv-798-REB-CBS and 04-cv-0238-REB-CBS).
September 1, 2005
LERACH COUGHLIN STOIA GELLER RUDMAN ROBBINS LLP, MICHAEL J. DOWD, SPENCER A. BURKHOLZ, THOMAS E. EGLER, SCOTT H. SAHAM, X. JAY ALVAREZ, TRIG R. SMITH, TED MINAHAN, ANDREA N. SALOW, San Diego, CA, MICHELLE M. McCARRON, Los Angeles, CA, Lead Counsel for Plaintiffs.
DYER SHUMAN, LLP, ROBERT J. DYER III, KIP B. SHUMAN, JEFFREY A. BERENS, Denver, CO, Liaison Counsel.
Pursuant to Rule 72 of the Federal Rules of Civil Procedure, Lead Plaintiffs respectfully submit this objection to Magistrate Judge Shaffer's August 22, 2005 Order denying Lead Plaintiffs' motion to compel defendants Drake S. Tempest ("Tempest") and Robert S. Woodruff ("Woodruff") (the "Objecting Defendants") to provide further responses to Interrogatory Nos. 1-3 of Plaintiffs' First Set of Interrogatories to Joseph P. Nacchio, Philip F. Anschutz, Robin R. Szeliga, Robert S. Woodruff, Drake S. Tempest, James A. Smith and Craig D. Slater ("Interrogatories"). Lead Plaintiffs object to the denial of their motion and assert that it should have been granted in full. Accordingly, Lead Plaintiffs respectfully request this Court issue an order setting aside Judge Shaffer's order and granting Lead Plaintiffs' motion in its entirety.
I. Introduction and Procedural History
On February 8, 2005, Lead Plaintiffs served their Interrogatories on the Individual Defendants. Ex. 1. Interrogatory Nos. 1-3 seek information regarding stock warrants the Individual Defendants improperly received from 16 Qwest vendors as "kickbacks" for Qwest's execution of purchase orders. On March 14, 2005, defendants Tempest and Woodruff served their responses to the Interrogatories. Exs. 4 5. Defendants Tempest and Woodruff refused to provide substantive responses to these Interrogatories, objecting on the grounds of relevance. Id. In contrast, defendant Nacchio has produced approximately two boxes of documents responsive to the Interrogatories pursuant to Fed.R.Civ.P. 33(d). These documents outline trades in the securities of each of the 16 companies referenced in Interrogatory No. 1. Lead Plaintiffs and the Objecting Defendants met and conferred on this issue and Lead Plaintiffs ultimately moved to compel further responses. See Exs. 20-22; see also Docket Nos. 683 684. On August 17, 2005, Judge Shaffer entertained oral argument on Lead Plaintiffs' motion. At the hearing, the Objecting Defendants conceded the relevance of the discovery with respect to four Qwest vendors that had also entered into Indefeasible Right of Use ("IRU") transactions with Qwest during the class period. See Aug. 17, 2005 Hearing Transcript (Docket No. 790) at 35:6-11; 54:21-24; 59:3-11. On August 22, 2005, Magistrate Judge Shaffer issued a minute order denying the motion with respect to the remaining 12 vendors. See Courtroom Minutes (Docket No. 785). Magistrate Judge Shaffer's denial of Lead Plaintiffs' motion to compel with respect to the remaining 12 vendors is erroneous and should be set aside as the discovery relates to an express allegation of the Fifth Consolidated Amended Class Action Complaint ("Complaint") and is both direct evidence of defendants' scienter and likely admissible under Rule 404(b) of the Federal Rules of Evidence ("Rule 404(b)").
See Exs. 2, 3, 15, 17 18.
Ex. 19 at 19:8-9.
The Complaint expressly alleges that in addition to selling inflated Qwest stock based upon non-public information, "[d]efendants also benefited from their positions at Qwest by receiving shares of supplier companies whose stock price these Qwest insiders could influence by purchasing decisions they caused Qwest to make." Complaint, ¶ 61. Evidence of these improper securities transactions, which occurred during the same time period, is probative of defendants' intent when they made statements which artificially inflated the value of their Qwest shares and when they sold their Qwest stock at artificially-inflated prices. Qwest, Szeliga and Nacchio have implicitly conceded the relevance of this discovery by producing documents relating to stock transactions with each of these 16 companies.
II. Factual Background
The relevance of this evidence is confirmed not only by other discovery produced in this case but also by a recent indictment returned by a federal grand jury. On February 18, 2005, ten days after the Interrogatories were served in this case, a federal grand jury sitting in the District of Colorado returned an indictment against Marc Weisberg ("Weisberg"), a former executive vice president at Qwest, that alleges Weisberg entered into a scheme to defraud Qwest and its shareholders by personally profiting from valuable investment opportunities which legally should have been for the benefit of Qwest and its shareholders. Ex. 14, ¶¶ 21-24. The indictment alleges that Weisberg, for his benefit and the benefit of others, secretly took Qwest investment opportunities relating to the very same vendors referenced in the Interrogatories, which are the subject of this motion. Id., ¶¶ 24-27. This conduct allegedly violated the Company's conflict of interest policy. Id., ¶ 9.
Evidence received as part of discovery to date also confirms Lead Plaintiffs' allegations like Weisberg, usurped Qwest investment opportunities in the very same securities. See Exs. 2, 3 15
III. Magistrate Judge Shaffer Erred in Denying Lead Plaintiffs' Motion
A. The Liberal Scope of Discovery Under Rule 26
Rule 26(b)(1) of the Federal Rules of Civil Procedure permits discovery "regarding any matter . . . that is relevant to the claim or defense of any party" or discovery of any information that "appears reasonably calculated to lead to the discovery of admissible evidence." For the purposes of Rule 26(b)(1), "`relevancy is broadly construed, and a request for discovery should be considered relevant if there is "any possibility" that the information sought may be relevant to the claim or defense of any party.'" April 19, 2005 Order (Docket No. 638) at 3 (citing McCoy v. Whirlpool Corp., 214 F.R.D. 642, 643 (D. Kan. 2003)). See also Williams v. Bd. of County Comm'rs, 192 F.R.D. 698, 702 (D. Kan. 2000) (relevancy is broadly construed and a request for discovery should be considered relevant if there is any possibility the information sought may be relevant to the subject matter of the action); Simpson v. Univ. of Colo., 220 F.R.D. 354, 358-59 (D. Colo. 2004). Relevancy under Rule 26 is extremely broad. Echostar Commc'ns Corp. v. News Corp., 180 F.R.D. 391, 394 (D. Colo. 1998). To be relevant, the information sought need not itself be admissible in court. A party meets its burden to demonstrate relevancy under Rule 26 if the party can show that the information which is sought is "reasonably calculated to lead to the discovery of admissible evidence." Fed.R.Civ.P. 26(b)(1); Echostar, 180 F.R.D. at 394.
Emphasis is added and citations are omitted here and throughout unless otherwise indicated.
B. Evidence Relating to Defendants' Improper Securities Transactions with Qwest Vendors During the Class Period Is Plead in the Complaint and Is Direct Evidence of Defendants' Scienter
Defendants' receipt of personal investment opportunities in the securities of Qwest's vendors during the class period is plead in the Complaint and is direct evidence of defendants' scienter. Lead Plaintiffs specifically allege that defendants artificially inflated the value of Qwest stock during the class period, in part so that they could sell their Qwest stock at artificially-inflated prices. See Complaint, ¶¶ 56-61. Lead Plaintiffs further allege that "[d]efendants also benefited from their positions at Qwest by receiving shares of supplier companies whose stock price these Qwest insiders could influence by purchasing decisions they caused Qwest to make." Id., ¶ 61. Because this activity is expressly alleged in the Complaint it is clearly discoverable.
Moreover, even if this conduct was not expressly alleged in the Complaint, courts have long recognized that even an uncharged act is admissible if: "(1) it was part of the scheme for which a defendant is being prosecuted, . . . or (2) it was `inextricably intertwined' with the charged crime such that a witness' testimony `would have been confusing and incomplete without mention of the prior act.'" United States v. Johnson, 42 F.3d 1312, 1316 (10th Cir. 1994) (citing United States v. Record, 873 F.2d 1363, 1372 (10th Cir. 1989)); United States v. Orr, 864 F.2d 1505, 1510 (10th Cir. 1988). A court need not even consider Rule 404(b) to determine admissibility when the "other acts . . . are so `inextricably intertwined' with the crime charged that testimony concerning the charged act `would have been confusing and incomplete without mention of the prior act.'" United States v. Treff, 924 F.2d 975, 981 (10th Cir. 1991); United States v. Richardson, 764 F.2d 1514, 1521-22 (11th Cir. 1985).
In addition to being expressly alleged in the Complaint, defendants' acceptance and sale of profitable IPO shares from companies with whom they were causing Qwest to execute lucrative purchase orders, is clearly probative of defendants' scienter, when they inflated the value of their Qwest stock and profited as a result. In this Circuit, pleading a securities fraud case requires plaintiffs to show "`(1) a misleading statement or omission of a material fact; (2) made in connection with the purchase or sale of securities; (3) with intent to defraud or recklessness; (4) reliance; and (5) damages.'" City of Phila. v. Fleming Cos., 264 F.3d 1245, 1257-58 (10th Cir. 2001) (quoting Grossman v. Novell, Inc., 120 F.3d 1112, 1118 (10th Cir. 1997)).
At trial, Lead Plaintiffs will seek to prove that defendants intentionally misrepresented Qwest's financial position and traded Qwest stock based upon material non-public information. Defendants have repeatedly denied these claims. Defendants' improper trading activity in the stock of Qwest vendors during the same time period they are alleged to have illegally sold hundreds of millions of dollars of inflated Qwest stock is clearly probative of defendants' states of mind. Put another way, defendants' willingness during the class period to improperly receive "kickback" shares in Qwest vendors for purchases defendants authorized or caused Qwest to make is clearly relevant evidence of whether they intentionally sold inflated Qwest stock based upon material non-public information. Because Lead Plaintiffs are required to prove that defendants acted with scienter when they sold their Qwest stock, evidence showing defendants' willingness to compromise their fiduciary duty to Qwest and its shareholders by entering into improper personal stock transactions with Qwest vendors is relevant to Lead Plaintiffs' § 10(b) claim. See SEC v. Happ, 392 F.3d 12, 30 (1st Cir. 2004) (improper purchase of stock in an unrelated company was properly admissible as proof of defendant's scienter or state of mind when he sold the stock in the present case).
Defendants have specifically asserted in their answers to the Complaint that they acted in "good faith" and thus dispute that they acted with the requisite scienter to be liable under § 10(b). See Defendant Robert S. Woodruff's Answer to the Fifth Consolidated Amended Complaint (Docket No. 549) at 62 and Answer of Defendant Drake S. Tempest to Fifth Consolidated Amended Class Action Complaint (Docket No. 544) at 51. Defendants have also moved to strike these allegations. Defendants motion to strike as it related to ¶ 61 of the Complaint was denied by this Court.
Likewise, this evidence is clearly probative to impeach any testimony offered by the defendants regarding their lack of scienter at the time of their massive insider selling.
C. Evidence Relating to Each of Defendants' Improper Transactions in the Securities of Qwest Vendors Will Likely Be Admissible to Prove Motive and Intent Under Rule 404(b) as Scienter Is a Requisite Element of Lead Plaintiffs' § 10(b) Claim
Even absent the express allegations of ¶ 61 of the Complaint, the information sought would still be discoverable as evidence of defendants' scienter, a required element of Lead Plaintiffs' § 10(b) claim. Because Lead Plaintiffs must prove defendants acted with fraudulent intent or recklessness when they misrepresented the financial condition of Qwest and sold Qwest securities at artificially-inflated prices, information regarding defendants' improper transactions in the securities of Qwest vendors during the class period, including each of the 16 companies referenced in Interrogatory No. 1, is likely to be admissible under Rule 404(b). Information is discoverable under the broad reach of Rule 26 if it is reasonably calculated to lead to admissible evidence. See Echostar, 180 F.R.D. at 394. Evidence of defendants' improper transactions in the securities of Qwest's vendors during the class period is likely to be admissible under Rule 404(b) as Lead Plaintiffs are required to prove that defendants acted with the intent to defraud or scienter. Accordingly, it is discoverable.
Evidence is properly admissible under Rule 404(b) to prove motive, knowledge or intent. Numerous courts within this Circuit and other circuits have held that other acts evidence is admissible under Rule 404(b) to prove state of mind as long as there is "a clear and logical connection between the `other acts' evidence and the case being tried." United States v. Kunzman, 54 F.3d 1522, 1529 (10th Cir. 1995). See Wegerer v. First Commodity Corp., 744 F.2d 719, 724 (10th Cir. 1984) (other acts evidence admissible under Rule 404(b) to show intent and knowledge); United States v. Garot, 801 F.2d 1241, 1247 (10th Cir. 1986) (admitting other acts evidence as "particularly relevant to proof of scienter"); United States v. Eufracio-Torres, 890 F.2d 266, 272 (10th Cir. 1989) (other acts evidence admissible to prove knowledge); United States v. Mills, 29 F.3d 545, 549 (10th Cir. 1994) (same); United States v. Grissom, 44 F.3d 1507, 1513 (10th Cir. 1995) (trial court properly admitted evidence of prior instances in which defendant falsified unrelated union payroll records, noting that the evidence was properly offered to show intent); United States v. Reddeck, 22 F.3d 1504, 1508-509 (10th Cir. 1994) (document evidencing prior conviction for mail fraud admissible under Rule 404(b) to show intent and knowledge in mail fraud case); United States v. Andersen, 374 F.3d 281, 290 (5th Cir. 2004) (other SEC proceedings in unrelated matters admissible under Rule 404(b) as "`prior' acts were indisputably relevant to the question of Andersen's intent in its destruction of Enron-related documents"), rev'd on other grounds, 125 S. Ct. 2129 (2005); U.S. Surgical Corp. Sec. Litig., No. 3:92cv374(AHN), 1995 U.S. Dist. LEXIS 20895, at *76 (D. Conn. Apr. 12, 1995) (civil consent decree signed by a defendant in an earlier action was admitted as evidence under Rule 404(b) to show the defendant's intent to commit securities fraud and his knowledge of SEC reporting requirements); United States v. Mahler, 579 F.2d 730, 734-36 (2d Cir. 1978) (noting that evidence of prior conviction of stock fraud was properly admitted pursuant to Rule 404(b) in an unrelated securities fraud proceeding).
In this case, evidence demonstrating that defendants profited as a result of transactions in the stock of Qwest vendors, including each of the 16 companies referenced in Interrogatory No. 1, in violation of the Company's conflict of interest policy is likely to be admissible under a Rule 404(b) theory in order to prove that defendants, during the same time period, intentionally sold Qwest stock at inflated prices based upon material non-public information. See SEC v. Happ, 392 F.3d 12, 30 (1st Cir. 2004) (improper purchase of stock in an unrelated company was properly admissible under Rule 404(b) as proof of the defendant's scienter or state of mind when he sold the stock in the present case).
See Exs. 2, 3 15
Discovery relating to defendants' receipt of warrants in Qwest vendors during the class period, some of whom were also coerced into entering into sham swap IRU transactions which enabled Qwest to meet its revenue targets, is clearly relevant to this litigation. These transactions had no legitimate business purpose other than to allow Qwest to artificially inflate its bookable revenue in order to meet the overly optimistic revenue targets communicated to investment analysts. Discovery relating to defendants' receipt of investment opportunities in these vendors in violation of Qwest's conflict of interest policy is clearly relevant as it is not only inextricably intertwined with the allegations in the Complaint but it is also likely to be admissible under Rule 404(b) to prove motive and intent. Defendants' improper receipt of profitable warrants in the stock of Qwest vendors is circumstantial evidence that defendants acted knowingly or with deliberate recklessness when they entered into the disputed IRU transactions and when they sold Qwest stock at artificially-inflated prices during the class period.
IV. Conclusion
For the above stated reasons, Lead Plaintiffs respectfully request that this Court issue an order setting aside Magistrate Judge Shaffer's order denying Lead Plaintiffs' motion to compel.
DECLARATION OF SERVICE BY MAIL
I, the undersigned, declare:1. That declarant is and was, at all times herein mentioned, a citizen of the United States and a resident of the County of San Diego, over the age of 18 years, and not a party to or interested party in the within action; that declarant's business address is 401 B Street, Suite 1600, San Diego, California 92101.
2. That on September 1, 2005, declarant served the LEAD PLAINTIFFS' OBJECTION TO THE AUGUST 22, 2005 ORDER OF MAGISTRATE JUDGE SHAFFER DENYING PLAINTIFFS' MOTION TO COMPEL FURTHER RESPONSES TO PLAINTIFFS' FIRST SET OF INTERROGATORIES [REDACTED VERSION] by depositing a true copy thereof in a United States mailbox at San Diego, California in a sealed envelope with postage thereon fully prepaid and addressed to the parties listed on the attached Service List.
3. That there is a regular communication by mail between the place of mailing and the places so addressed.
I declare under penalty of perjury that the foregoing is true and correct. Executed this 1st day of September, 2005, at San Diego, California.
EXHIBIT 1 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO
Civil Action No. 01-RB-1451(CBS) (Consolidated with Civil Action Nos. 01-RB-1472, 01-RB-1527, 01-RB-1616, 01-RB-1799, 01-RB-1930, 01-RB-2083, 02-RB-0333, 02-RB-0374, 02-RB-0507, 02-RB-0658, 02-RB-755 and 02-RB-798)
In re QWEST COMMUNICATIONS INTERNATIONAL, INC. SECURITIES LITIGATION
PLAINTIFFS' FIRST SET OF INTERROGATORIES TO JOSEPH P. NACCHIO, PHILIP F. ANSCHUTZ, ROBIN R. SZELIGA, ROBERT S. WOODRUFF, DRAKE S. TEMPEST, JAMES A. SMITH AND CRAIG D. SLATERPlaintiffs, by their counsel, pursuant to Federal Rule of Civil Procedure 33, hereby request that defendants Joseph P. Nacchio, Philip F. Anschutz, Robin R. Szeliga, Robert S. Woodruff, Drake S. Tempest, James A. Smith and Craig D. Slater answer the following interrogatories in writing under oath within 30 days of the date of service.
I. DEFINITIONS
Unless otherwise stated, the terms set forth below are defined as follows:
1. "You" and "your" refer to the person responding to these Interrogatories, his or her agents, attorneys, accountants, employees, partners or other persons occupying similar positions or performing similar functions, all other persons acting or purporting to act on his or her behalf, or any entity owned or controlled by the person responding to these Interrogatories.
2. "Qwest" or the "Company" means defendant Qwest Communications International, Inc., and its predecessors, successors, parents, subsidiaries, divisions or affiliates (foreign or domestic) and their respective current and former officers, directors, agents, attorneys, accountants, employees, partners or other persons occupying similar positions or performing similar functions, and all other persons acting or purporting to act on its behalf.
II. RELEVANT TIME PERIOD
All requests herein refer to the period from January 1, 1999 through February 14, 2002 (the "Relevant Period"), unless otherwise specifically indicated, and shall include all documents and information that relate to such period, even though prepared or published outside of the Relevant Period.
III. INTERROGATORIES
INTERROGATORY NO. 1:
Identify by date, type, quantity and price all securities transactions, including any purchases, sales and/or acquisitions
INTERROGATORY NO. 2:
For any securities transaction identified in your response to Interrogatory No. 1, please state the following:
(a) the acquisition price;
(b) the sale price;
(c) the number of shares acquired; and
(d) the number of shares sold.
INTERROGATORY NO. 3:
For any warrants identified in your response to Interrogatory No. 1, please state the following:
(a) the acquisition price;
(b) the amount of any discount received;
(c) the number of warrants received;
(d) the number of shares acquired;
(e) the number of shares sold; and
(f) the sale price.
INTERROGATORY NO. 4:
Identify all transactions you entered into for any Qwest security from January 1, 1999 through February 14, 2002. For each transaction, state the date, quantity, price and type of the transaction.
INTERROGATORY NO. 5:
For any securities transaction identified in your response to Interrogatory No. 4, please state the following:
(a) the acquisition price;
(b) the sale price;
(c) the number of shares acquired; and
(d) the number of shares sold.
INTERROGATORY NO. 6:
For any options identified in your response to Interrogatory No. 4, please state the following:
(a) the acquisition price;
(b) the amount of any discount received;
(c) the number of options received;
(d) the number of shares acquired;
(e) the number of shares sold; and
(f) the sale price.
INTERROGATORY NO. 7:
Identify the IRU side agreement binder referenced by Robin R. Szeliga during her testimony before the United States Congress.
DATED: February 8, 2005 LERACH COUGHLIN STOIA GELLER RUDMAN ROBBINS LLP WILLIAM S. LERACH MICHAEL J. DOWD SPENCER A. BURKHOLZ THOMAS E. EGLER DANIEL S. DROSMAN SCOTT H. SAHAM TRIG R. SMITH RAY A. MANDLEKAR SUSAN G. TAYLOR THOMAS E. GLYNN
401 B Street, Suite 1600 San Diego, CA 92101 Telephone: 619/231-1058
LERACH COUGHLIN STOIA GELLER RUDMAN ROBBINS LLP JASON R. LLORENS 9601 Wilshire Blvd., Suite 510 Los Angeles, CA 90210 Telephone: 310/859-3100 310/278-2148 (fax)Lead Counsel for Plaintiffs
DYER SHUMAN, LLP ROBERT J. DYER III KIP B. SHUMAN JEFFREY A. BERENS 801 East 17th Avenue Denver, CO 80218-1417 Telephone: 303/861-3003
Liaison Counsel
DECLARATION OF SERVICE BY MAIL
I, the undersigned, declare:1. That declarant is and was, at all times herein mentioned, a citizen of the United States and a resident of the County of San Diego, over the age of 18 years, and not a party to or interest in the within action; that declarant's business address is 401 B Street, Suite 1600, San Diego, California 92101.
2. That on February 8, 2005, declarant served the PLAINTIFFS' FIRST SET OF INTERROGATORIES TO JOSEPH P. NACCHIO, PHILIP F. ANSCHUTZ, ROBIN R. SZELIGA, ROBERT S. WOODRUFF, DRAKE S. TEMPEST, JAMES A. SMITH AND CRAIG D. SLATER by depositing a true copy thereof in a United States mailbox at San Diego, California in a sealed envelope with postage thereon fully prepaid and addressed to the parties listed on the attached Service List.
3. That there is a regular communication by mail between the place of mailing and the places so addressed.
I declare under penalty of perjury that the foregoing is true and correct. Executed this 8th day of February, 2005, at San Diego, California.
Counsel For Defendant(s)
Scott B. Schreiber* Timothy Atkeson* John A. Freeman Joshua D. Franklin Kwame Clement Arnold Porter LLP Arnold Porter 370 Seventeenth Street, Suite 4500 555 Twelfth Street, N.W. Denver, CO 80202-1370 Washington, DC 20004 303/863-1000 202/942-5000 303/832-0428 (Fax) 202/942-5999 (Fax)
Terry W. Bird* Jonathan D. Schiller* Vincent J. Marella David Boyd Mark Drooks Alfred Levitt Bird, Marella, Boxer Wolpert, P.C. Boies, Schiller Flexner, LLP 1875 Century Park East, 23rd Floor 5301 Wisconsin Avenue, N.W., Suite 800 Los Angeles, CA 90067-2561 Washington, DC 20015-2015 310/201-2100 202/237-2727 310/201-2110 (Fax) 202/237-6131 (Fax) W. Shapiro* David Boies* John F. Cove, Jr. Boies, Schiller Flexner, LLP Boies, Schiller Flexner, LLP 333 Main Street 1999 Harrison Street Armonk, NY 10504 Oakland, CA 94612 914/749-8200 510/874-1005 914/749-8300 (Fax) 510/874-1460 (Fax)
Wesley R. Powell* James E. Nesland* Clifford Chance US LLP Paul Schwartz 31 West 52nd Street Steven G. Sklaver New York, NY 10019 Cooley Godward, LLP 212/878-8000 380 Interlocken Crescent, Suite 900 212/878-8375 (Fax) Broomfield, CO 80021-8023 720/566-4000 720/566-4099 (Fax)
Bruce F. Black * Mark C. Hansen * Michael J. Hofmann Neil M. Gorsuch Holme Roberts Owen LLP Kellogg, Huber, Hansen, Todd, Evans Figel, 1700 Lincoln Street, Suite 4100 P.L.L.C. Denver, CO 80203 1615 M Street, N.W., Suite 400 303/861-7000 Washington, DC 20036 303/866-0200 (Fax) 202/326-7900 202/326-7999(Fax)
Walter W. Garnsey, Jr. * Robert N. Miller * Kelly Haglund Garnsey Kahn LLC Stephanie E. Dunn 1441 Eighteenth Street, Suite 300 Perkins Coie LLP Denver, CO 80202-1255 1899 Wynkoop Street, Suite 700 303/296-9412 Denver, CO 80202 303/293-8705(Fax) 303/291-2300 303/291-2400(Fax)
Terence C. Gill * Charles A. Stillman * Marcy M. Heronimus Kimo S. Peluso Sherman Howard L.L.C. Stillman Friedman, P.C. 633 Seventeenth Street, Suite 3000 425 Park Avenue Denver, CO 80202 New York, NY 10022 303/297-2900 212/223-0200 303/298-0940(Fax) 212/223-1942(Fax)
Counsel For Plaintiff(s)
Robert J. Dyer III William S. Lerach Kip B. Shuman Spencer A. Burkholz Jeffrey A. Berens Thomas E. Egler Dyer Shuman, LLP Lerach Coughlin Stoia Geller Rudman 801 East 17th Avenue Robbins LLP Denver, CO 80218-1417 401 B Street, Suite 1600 303/861-3003 San Diego, CA 92101-4297 303/830-6920(Fax) 619/231-1058 619/231-7423(Fax)
Joe R. Whatley, Jr. Whatley Drake, LLC
2323 Second Ave., North Birmingham, AL 35203 205/328-9576 205/328-9669(Fax)
EXHIBIT NO. 2 OMITTED FROM REDACTED VERSION EXHIBIT NO. 3 OMITTED FROM REDACTED VERSION EXHIBIT NO. 4 OMITTED FROM REDACTED VERSION EXHIBIT NO. 5 OMITTED FROM REDACTED VERSION EXHIBITS 6-13 INTENTIONALLY OMITTED EXHIBIT 14EXHIBIT
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO
Criminal Case No. 05-CR-081RB
UNITED STATES OF AMERICA, Plaintiff,
v.
1. MARC B. WEISBERG, Defendant.
INDICTMENT 18 U.S.C. §§ 1343 and 1346 18 U.S.C. §§ 1957 and 2 18 U.S.C. §§ 1956(a) (1) (B) (i) and 2 18 U.S.C. §§ 982, 981, 28 U.S.C. § 2461 (c), and 21 U.S.C. 853 (p)
COUNTS 1-8
The Grand Jury charges that:INTRODUCTION AND BACKGROUND
At all times relevant to Counts 1 through 8 of this Indictment:
1. Qwest Communications International, Inc. and its subsidiaries (collectively, "Qwest") was a telecommunications company providing services to customers throughout the United States. Qwest was a publicly held corporation, whose stock was available to the investing public through the New York Stock Exchange.
2. Defendant MARC B. WEISBERG was a corporate officer and employee of Qwest. While employed at Qwest, Defendant MARC B. WEISBERG held the titles of Senior Vice President and Executive Vice President.
3. Defendant MARC B. WEISBERG's duties at Qwest included managing and directing Qwest's corporate development group. Defendant MARC B. WEISBERG was responsible for, among other things, evaluating, securing, and managing corporate investments for the benefit of Qwest and its shareholders.
A. Qwest Corporate Investments
4. Pursuant to Qwest company policy and at the direction of Defendant MARC B. WEISBERG, Qwest invested in private technology companies before or at the time they became publicly traded companies. Many of these investments were made through Qwest's subsidiary U.S. Telesource, Inc.
5. One type of investment opportunity made available to Qwest by various companies included the right to purchase stock through a directed share program ("DSP") at the time of the companies' initial public offering ("IPO"). A DSP allowed a company about to go public to make available a limited number of shares of stock to investors of their choosing, before the IPO, at a fixed opening price established by underwriters.
6. During 1999 to 2001, DSP stock in technology companies was generally in high demand, and presented a lucrative investment opportunity because share prices often rose significantly upon trading on a public exchange. During this time period, Qwest made profitable investments in several DSPs offered by technology companies, including Akamai Technologies, Inc. and Redback Networks Inc. ("Redback").
7. Defendant MARC B. WEISBERG also coordinated Qwest's pre-IPO private placement investments in various technology companies, which included obtaining preferred shares, options, and/or warrants in such companies.
8. Prior to entering into a commercial transaction or relationship with a technology company, Qwest often also negotiated for equity in that technology company. Defendant MARC B. WEISBERG was responsible for negotiating and approving the equity component of Qwest's commercial transactions and executing documents connected with the transaction. Because the acquisition of equity was often an essential or important component of a commercial transaction, Defendant MARC B. WEISBERG, on behalf of Qwest, had the authority and ability to either reject or approve large commercial transactions.
B. Personal Investment Opportunities
9. In order to retain key personnel in a competitive job market, in some circumstances Qwest permitted employees to invest in companies with whom Qwest was or contemplated doing business ("Qwest vendors"). All such investments, however, were subject to and restricted by the company's conflict of interest policy, which, among other things, required employees and officers to disclose all potential conflicts of interest and prohibited employees and officers from attempting to exploit or exploiting for personal benefit Qwest business opportunities.
10. Personal investments in Qwest vendors were also restricted by the duties of loyalty and good faith owed by Qwest officers to Qwest and its shareholders. These duties required corporate officers, including Defendant MARC B. WEISBERG, among other things, to act honestly and faithfully in all their dealings with Qwest, to act in the best interests of Qwest, and to make full and fair disclosure to Qwest of any personal interests or profit they expected to derive or had derived from any transaction in which they participated in the course of their employment.
11. When a Qwest vendor made personal investment opportunities available, Qwest intended to and did allocate those opportunities in an equitable fashion among certain members of the Qwest executive team, consistent with the company's goal of employee retention.
THE SCHEME
12. Beginning on or about March 1, 1999, and continuing through on or about September 14, 2001, in the State and District of Colorado and elsewhere, defendant MARC B. WEISBERG knowingly devised and intended to devise a scheme: (a) to defraud Qwest and Qwest shareholders, including a scheme to deprive Qwest and its shareholders of their intangible right to Defendant MARC B. WEISBERG'S honest services; and (b) for obtaining money and property by means of materially false and fraudulent pretenses, representations and promises.
13. As part of the scheme, Defendant MARC B. WEISBERG secretly used his position, power, and influence as a Qwest corporate officer to personally profit, and attempt to personally profit, by seeking and obtaining valuable investment opportunities for himself and others at the expense and to the detriment of Qwest and its shareholders and in a manner not authorized by or in the best interests of Qwest and its shareholders, in violation of his duties as a Qwest officer and employee. Defendant MARC B. WEISBERG accomplished this scheme by: (a) secretly taking Qwest's corporate investment opportunities for personal gain; (b) improperly depriving Qwest of its right to allocate DSP shares and concealing the extent of his personal investments; and (c) improperly conditioning Qwest business on the receipt of personal investment opportunities and using unauthorized tactics to obtain personal investment opportunities.
A. Secretly Taking Qwest's Corporate Investment Opportunities for Personal Gain
14. As part of the scheme, Defendant MARC B. WEISBERG engaged in the following conduct:
(a) On or about September 22, 1999, Alteon Web Systems ("Alteon") offered Qwest an opportunity to purchase 10,000 shares of its highly sought-after stock through Alteon's DSP. Defendant MARC B. WEISBERG secretly took this opportunity for the benefit of himself and others and to the economic detriment and without the authorization of Qwest.
(b) In or around May 2000, ONI Systems Corp. ("ONI") offered Qwest an opportunity to purchase 100,000 shares of its highly sought-after stock through ONI's DSP. Defendant MARC B. WEISBERG secretly took this opportunity for the benefit of himself and others and to the economic detriment and without the authorization of Qwest.
15. Defendant MARC B. WEISBERG made material omissions and materially false representations, and used false pretenses, in furtherance of the aforementioned conduct, including but not limited to the following:
(a) Defendant MARC B. WEISBERG failed to disclose and made misleading statements to Qwest, Qwest executives, and members of Qwest's Board of Directors concerning the nature and existence of corporate investment opportunities made available to Qwest by Alteon and ONI.
(b) Defendant MARC B. WEISBERG failed to disclose and made misleading statements to Qwest, Qwest executives, and members of Qwest's Board of Directors concerning the manner by which he obtained personal investment opportunities in Alteon and ONI.
(c) Defendant MARC B. WEISBERG made misleading statements to ONI and Alteon concerning and in connection with his acceptance of personal investment opportunities.
(d) Defendant MARC B. WEISBERG attempted to destroy and did cause the destruction of personal and corporate records reflecting his conduct.
16. Defendant MARC B. WEISBERG profited in excess of $720,000 as a result of his personal investments obtained fraudulently through the conduct set forth above in paragraphs 14 and 15 of this Indictment.
B. Improperly Depriving Qwest of its Right to Allocate DSP Shares and Concealing the Extent of Weisberg's Personal Investments
17. As part of the scheme, Defendant MARC B. WEISBERG engaged in the following conduct:
(a) On or about April 6, 1999, Defendant MARC B. WEISBERG caused Rhythms NetConnections Inc. ("Rhythms"), a Qwest vendor, to allocate DSP stock to his parents, father-in-law, children, and secretary without the knowledge or authorization of Qwest, thereby depriving Qwest of its right to allocate at least 3,300 Rhythms DSP shares in the best interest of the corporation and its shareholders.
(b) On or about May 15, 2001, Defendant MARC B. WEISBERG caused Tellium, a Qwest vendor, to allocate 10,000 shares of DSP stock to himself by use of a nominee entity "Mandalay Retreat LLC" without the knowledge or authorization of Qwest, thereby depriving Qwest of its right to allocate at least 10,000 Tellium DSP shares in the best interest of the corporation and its shareholders.
(c) On or about May 15, 2001, Defendant MARC B. WEISBERG secretly caused Tellium, a Qwest vendor, to allocate DSP stock to his wife's personal trainer, brother-in-law, and secretary without the knowledge or authorization of Qwest, thereby depriving Qwest of its right to allocate at least 3,000 Tellium shares in the best interest of the corporation and its shareholders.
18. Defendant MARC B. WEISBERG made material omissions and materially false representations, and used false pretenses, in furtherance of the aforementioned conduct, including but not limited to the following:
(a) Defendant MARC B. WEISBERG failed to disclose and made false representations to Qwest, Qwest executives, and members of Qwest's Board of Directors concerning the extent of his interest in Tellium and his allocation of Tellium and Rhythms investment opportunities to unauthorized individuals.
(b) Defendant MARC B. WEISBERG made false and misleading statements, and made material omissions to Tellium and Rhythms concerning and in connection with his acceptance of personal investment opportunities.
(c) Defendant MARC B. WEISBERG attempted to destroy and did cause the destruction of personal and corporate records reflecting his unlawful conduct.
19. Defendant MARC B. WEISBERG and his family, friends, and others profited in excess of $186,000 as a result of the concealed personal investments obtained fraudulently through the conduct set forth above in paragraphs 17 and 18 of this Indictment.
C. Improperly Conditioning Qwest Business on the Receipt of Personal Investment Opportunities and Using Unauthorized Tactics to Obtain Investment Opportunities
20. As part of the scheme, Defendant MARC B. WEISBERG engaged in the following conduct:
(a) On or about March 1, 1999, and continuing through on or about April 4, 1999, while negotiating and directing the negotiations of a multi-million dollar commercial transaction with Rhythms on behalf of Qwest, Defendant MARC B. WEISBERG secretly used his position, power, and influence as a Qwest executive to obtain personal investment opportunities in Rhythms in a manner not authorized by or in the best interests of Qwest, including making receipt of personal investment opportunities in Rhythms a condition of said transaction.
(b) In or around April of 1999, and continuing through on or about May 17, 1999, while negotiating and participating in a multi-million dollar commercial transaction with Redback on behalf of Qwest, Defendant MARC B. WEISBERG secretly used his position, power, and influence as a Qwest executive to obtain personal investment opportunities in Redback in a manner not authorized by or in the best interests of Qwest.
(c) On or about August 13, 1999, and continuing through on or about January 11, 2000, while negotiating and directing the negotiations of a multi-million dollar commercial transaction with Tellme Networks, Inc. ("Tellme") on behalf of Qwest, Defendant MARC B. WEISBERG secretly used his position, power, and influence as a Qwest executive in an attempt to obtain personal investment opportunities in Tellme in a manner not authorized or in the best interests of Qwest, including making receipt of personal investment opportunities in Tellme a condition of said transaction.
(d) In or around October 1999, and continuing through on or about November 23, 1999, while participating in a commercial relationship with CacheFlow, Inc. ("CacheFlow") on behalf of Qwest, Defendant MARC B. WEISBERG secretly used his position, power, and influence as a Qwest executive to obtain personal investment opportunities in CacheFlow in a manner not authorized by or in the best interests of Qwest.
(e) On or about October 14, 1999, and continuing through September 20, 2000, while negotiating and participating in a multimillion dollar commercial transaction with CoSine Communications, Inc. ("CoSine") on behalf of Qwest, Defendant MARC B. WEISBERG secretly used his position, power, and influence as a Qwest executive to obtain personal investment opportunities in CoSine in a manner not authorized by or in the best interests of Qwest.
(f) On or about May 29, 2001, and continuing through on or about July 17, 2001, while negotiating and participating in a commercial transaction with Mahi Networks ("Mahi") on behalf of Qwest, Defendant MARC B. WEISBERG secretly used his position, power, and influence as a Qwest executive to obtain stock options for himself in Mahi, in a manner not authorized by or in the best interests of Qwest.
21. Defendant MARC B. WEISBERG made material omissions and materially false representations, and used false pretenses, in furtherance of the aforementioned conduct, including but not limited to the following:
(a) Defendant MARC B. WEISBERG failed to disclose and made misleading statements to Qwest, Qwest executives, and members of Qwest's Board of Directors concerning the manner by which he obtained personal investment opportunities in Qwest vendors.
(b) Defendant MARC B. WEISBERG failed to disclose and made false statements to Qwest concerning his financial interest, and attempts to obtain a financial interest, in certain Qwest vendors.
(c) Defendant MARC B. WEISBERG intimidated and threatened to fire a Qwest employee who attempted to disclose Defendant MARC. B. WEISBERG's conduct as it related to at least one Qwest vendor.
(d) Defendant MARC B. WEISBERG caused the creation of false and misleading documents to conceal his financial interest in certain Qwest vendors.
(e) Defendant MARC B. WEISBERG influenced and participated in the commercial relationship between Qwest and Qwest vendors set forth in paragraph 20, above, in which he was personally invested, in a manner prohibited by Qwest.
(f) Defendant MARC B. WEISBERG made false and misleading statements concerning the purpose and nature of business expenses charged to Qwest and reimbursed to Defendant MARC B. WEISBERG.
(g) Defendant MARC B. WEISBERG attempted to destroy and did cause the destruction of personal and corporate records reflecting his conduct.
22. Defendant MARC B. WEISBERG had a net profit in excess of $2,000,000 as a result of personal investments obtained fraudulently through the conduct set forth above in paragraphs 20 and 21 of this Indictment.
23. On or about June 13, 2003, in an attempt to cover up and conceal the scheme, Defendant MARC B. WEISBERG made false representations to Qwest and its counsel concerning his financial interests in certain Qwest vendors.
USE OF THE WIRES
24. On or about the following dates, in the State and District of Colorado and elsewhere, Defendant MARC B. WEISBERG, for the purpose of executing the scheme described above, knowingly transmitted and caused to be transmitted in interstate commerce by means of wire communication certain writings, signs, signals, pictures, and sounds, as set forth below:
COUNT Date Nature of Wire Communication
1 March 14, 2000 Telephone call from Colorado to California connected with an investment in Cosine
2 March 20, 2000 Fax from Colorado to Massachusetts connected with transferring funds for an investment in Cosine
3 May 19, 2000 Telephone call from Texas to Colorado connected with an investment in ONI
4 May 20, 2000 Telephone call between Colorado and Texas connected with an investment in ONI
5 June 1, 2000 Fax from Colorado to California connected with transferring funds for an investment in ONI
6 April 27, 2001 E-mail from Colorado to New Jersey to obtain allocations of stock in Tellium's DSP
7 May 15, 2001 Fax from Colorado to California providing Thomas Weisel Partners with Defendant MARC B. WEISBERG'S trading authorization connected to the purchase of Tellium DSP stock
8 May 16, 2001 Fax from Colorado to California directing Thomas Weisel Partners to open an account for David Fujii in connection with the purchase of Tellium DSP stock
Each of the foregoing counts was in violation of Title 18, United States Code, Sections 1343 and 1346.
COUNT 9
The Grand Jury charges that:
25. On or about June 14, 2000, in the State and District of Colorado and elsewhere, Defendant MARC B. WEISBERG knowingly engaged in and willfully caused a monetary transaction in criminally derived property which was of a value greater than $10,000.00, which involved the use of a financial institution which was engaged in, and activities of which affected, interstate commerce in any way and degree, that is, the wire transfer of funds in the amount of $350,000 from Defendant MARC B. WEISBERG's Summit Capital Group account at Smith Barney Citigroup to his Bear Sterns account, in part to arrange for the purchase of a Mercedes Benz vehicle, such property having been derived from specified unlawful activity of wire fraud in violation of Title 18, United States Code, Section 1343, as set forth in this Indictment.
The foregoing count was in violation of Title 18, United States Code, Sections 1957 and 2.
COUNT 10
The Grand Jury charges that:
26. On or about May 25, 2001, in the State and District of Colorado and elsewhere, Defendant MARC B. WEISBERG knowing that property involved in a financial transaction represented the proceeds of unlawful activity, conducted a financial transaction and willfully caused a financial transaction involving the use of a financial institution which was engaged in, and activities of which affected interstate commerce in any way and degree, which in fact involved the proceeds of a specified unlawful activity, that is, the wire transfer of funds in the amount of $155, 285 from Defendant MARC B. WEISBERG's Mandalay Retreat account at Thomas Weisel Partners to the account of Residential Systems, Inc. at U.S. Bank for miscellaneous electrical services and products provided at Defendant MARC B. WEISBERG's residence in Grand Cayman Island, knowing that the transaction was designed in whole and in part to conceal and disguise the nature, the location, the source, the ownership, and the control of the proceeds of the specified unlawful activity of wire fraud in violation of Title 18, United States Code, Section 1343, as set forth in this Indictment.
The foregoing count was in violation of Title 18, United States Code, Sections 1956 (a) (1) (B) (i) and 2.
COUNT 11
The Grand Jury charges that:
27. On or about June 7, 2001, in the State and District of Colorado and elsewhere, Defendant MARC B. WEISBERG knowing that property involved in a financial transaction represented the proceeds of unlawful activity, conducted a financial transaction and willfully caused a financial transaction involving the use of a financial institution which was engaged in, and activities of which affected interstate commerce in any way and degree, which in fact involved the proceeds of a specified unlawful activity, that is, the wire transfer of funds in the amount of $61, 068 from Defendant MARC B. WEISBERG's Mandalay Retreat account at Thomas Weisel Partners to his Mandalay Retreat account at Bear Stearns, in part for miscellaneous interior design and electrical services and product provided for Defendant MARC B. WEISBERG's residence in Grand Cayman Island, knowing that the transaction was designed in whole and in part to conceal and disguise the nature, the location, the source, the ownership, and the control of the proceeds of the specified unlawful activity of wire fraud in violation of Title 18, United States Code, Section 1343, as set forth in this Indictment.
The foregoing count was in violation of Title 18, United States Code, Sections 1956 (a) (1) (B) (i) and 2.
COUNT 12 (CRIMINAL FORFEITURE ALLEGATION)
The Grand Jury charges that:
Upon conviction of one or more of the offenses alleged in Counts 1-11 of this Indictment, Defendant MARC B. WEISBERG shall forfeit to the United States, pursuant to 18 U.S.C. § 982, 18 U.S.C. § 981 (a) (1) (C), 18 U.S.C. § 1956 (c) (7), 18 U.S.C. § 1961 (1), and 28 U.S.C. § 2461 (c), any property involved in, and any property constituting or derived from proceeds obtained directly or indirectly as a result of said violations, including but not limited to the following:
1. Money Judgment
A sum of money equal to $2,906,000 in United States currency, representing the amount of funds constituting proceeds obtained directly or indirectly as a result of the offenses of wire fraud in violation of 18 U.S.C. §§ 1343 and 1346, and funds involved in the offenses of money laundering in violation of 18 U.S.C. §§ 1956, 1957 and 2.
2. Real Property
The real property known as Mandalay Villa #5 (1947 West Bay Road 5), Grand Cayman, Cayman Islands.
3. Substitute Assets
If any of the above-described forfeitable property, as a result of any act or omission of the defendant (s):
(a) cannot be located upon the exercise of due diligence;
(b) has been transferred or sold to, or deposited with, a third party;
(c) has been placed beyond the jurisdiction of the court;
(d) has been substantially diminished in value; or
(e) has been commingled with other property which cannot be divided without difficulty; it is the intent of the United States, pursuant to 21 U.S.C. § 853 (p) as incorporated by 18 U.S.C. § 982 (b), to seek forfeiture of any other property of said defendant up to the value of the forfeitable property described above, including but not limited to the following:
(i) The real property known as 100 South University Blvd., #8, Denver, Colorado 80209; and
(ii) The real property known as Mandalay Villa #5 (1947 West Bay Road 5) Grand Cayman, Cayman Islands.
SIGNATURE
EXHIBIT NO. 15 OMITTED FROM REDACTED VERSION EXHIBIT 16 INTENTIONALLY OMITTED EXHIBIT NO. 17 OMITTED FROM REDACTED VERSION EXHIBIT NO. 18 OMITTED FROM REDACTED VERSION EXHIBIT NO. 19 OMITTED FROM REDACTED VERSION EXHIBIT 20
Scott H. Saham ScottS@lerachlaw.com
May 26, 2005
VIA E-MAIL
Diana J. Nehro, Esq. Paul H. Schwartz, Esq. STILLMAN FRIEDMAN, P.C. COOLEY GODWARD LLP 425 Park Avenue 380 Interlocken Crescent, Suite 900 New York, NY 10022 Bloomfield, CO 80021-8093
Wesley R. Powell, Esq. Martin D. Litt, Esq. Clifford Chance US LLP Holme Roberts Owen LLP 31 West 52nd Street 1700 Lincoln Street, Suite 4100 New York, New York 10019-6131 Denver, CO 80203
Re: In re Qwest Communications International, Inc. Sec. Litig. Civil Action No. 01-RB-1451(CBS)
Dear Counselors:
I am writing to inform you that plaintiffs have set up a telephonic meet and confer conference with Judge Shaffer for June 3, 2005 at 10:30 a.m. (MT). As we have previously discussed, such a conference is required to finalize the meet and confer process as to Plaintiffs' First Set of Interrogatories to the Individual Defendants relating to the receipt of stock or warrants for the purchase of stock in Qwest vendors. The toll free dial-in number for the conference is as follows: 877/214-0402 and the participant code is 988511. Please call in by 10:20 a.m. so that we may contact the Judge in a timely fashion.
Thank you for your attention to this matter. Please do not hesitate to contact me if you have any questions. Defendant(s) Plaintiff(s) Plaintiff Stichting Pensioenfonds Counsel
Sincerely yours, SCOTT H. SAHAM SHS: Ilf cc: The Hon. Craig B. Shaffer (Via hand delivery) All counsel (via e-mail) QWEST (LEAD) Service List — 5/18/2005 (201-067) Scott B. Schreiber Timothy Atkeson John A. Freeman Joshua D. Franklin Kwame Clement Arnold Porter LLP Arnold Porter 370 Seventeenth Street, Suite 4500 555 Twelfth Street, N.W. Denver, CO 80202-1370 Washington, DC 20004 303/863-1000 202/942-5000 303/832-0428(Fax) 202/942-5999(Fax) Terry W. Bird Alfred Levitt Vincent J. Marella Jonathan D. Schiller Mark Drooks David Boyd Bird, Marella, Boxer Wolpert, P.C. Boies, Schiller Flexner, LLP 1875 Century Park East, 23rd Floor 5301 Wisconsin Avenue, N.W., Suite 800 Los Angeles, CA 90067-2561 Washington, DC 20015-2015 310/201-2100 202/237-2727 310/201-2110(Fax) 202/237-6131(Fax) David W. Shapiro David Boies John F. Cove, Jr. Boies, Schiller Flexner, LLP Boies, Schiller Flexner, LLP 333 Main Street 1999 Harrison Street Armonk, NY 10504 Oakland, CA 94612 914/749-8200 510/874-1005 914/749-8300(Fax) 510/874-1460(Fax) Wesley R. Powell James E. Nesland Clifford Chance US LLP Paul Schwartz 31 West 52nd Street Jeff Smith New York, NY 10019 Cooley Godward, LLP 212/878-8000 380 Interlocken Crescent, Suite 900 212/878-8375(Fax) Broomfield, CO 80021-8023 720/566-4000 720/566-4099(Fax) Bruce F. Black Mark C. Hansen Michael J. Hofmann Neil M. Gorsuch Holme Roberts Owen LLP Kellogg, Huber, Hansen, Todd, Evans Figel, 1700 Lincoln Street, Suite 4100 P.L.L.C. Denver, CO 80203 1615 M Street, N.W., Suite 400 303/861-7000 Washington, DC 20036 303/866-0200(Fax) 202/326-7900 202/326-7999(Fax) Eric S. Goldstein Robert N. Miller Roberta A. Kaplan Stephanie E. Dunn Marguertie S. Dougherty Perkins Coie LLP Paul, Weiss, Rifkind, Wharton Garrison LLP 1899 Wynkoop Street, Suite 700 1285 Avenue of the Americas Denver, CO 80202 New York, NY 10019-6064 303/291-2300 212/373-3000 303/291-2400(Fax) 212/757-3990(Fax) Frederick J. Baumann Terence C. Gill James M. Lyons Marcy M. Heronimus Rothgerber Johnson Lyons LLP Sherman Howard L.L.C. 1200 17th Street, Suite 3000 633 Seventeenth Street, Suite 3000 Denver, CO 80202-5839 Denver, CO 80202 303/623-9000 303/297-2900 303/623-9222(Fax) 303/298-0940(Fax) Charles A. Stillman Kimo S. Peluso Stillman Friedman, P.C. 425 Park Avenue New York, NY 10022 212/223-0200 212/223-1942(Fax) Robert J. Dyer III William S. Lerach Kip B. Shuman Spencer A. Burkholz Jeffrey A. Berens Thomas E. Egler Dyer Shuman, LLP Lerach Coughlin Stoia Geller Rudman 801 East 17th Avenue Robbins LLP Denver, CO 80218-1417 401 B Street, Suite 1600 303/861-3003 San Diego, CA 92101-4297 303/830-6920(Fax) 619/231-1058 619/231-7423(Fax) Joe R. Whatley, Jr. Whatley Drake, LLC 2323 Second Ave., North Birmingham, AL 35203 205/328-9576 205/328-9669(Fax) Jay W. Eisenhofer Clyde A. Faatz Geoffrey C. Jarvis Christopher J.W. Forrest Michael J. Barry Hamilton and Faatz, A P.C. Grant Eisenhofer, P.A. 1600 Broadway, Suite 500 1201 North Market Street, Suite 2100 Denver, CO 80202-4905 Wilmington, DE 19801 303/830-0500 302/622-7000 303/860-7855(Fax) 302/622-7100(Fax)EXHIBIT 21
Cooley Godward LLP In Re Qwest Communications International, Inc. Securities Litigation, Case No. 01-RB-1451 (CBS) (D. Colo.) ATTORNEYS AT LAW Palo Alto, CA 650 843-5000 380 Interlocken Crescent Reston, VA Suite 900 703 456-8000 Broomfield, CO San Diego, CA 80021-8023 858 550-6000 Main 720 566-4000 San Francisco, CA Fax 720 566-4099 415 693-2000 June 9, 2005 www.cooley.com VLA FACSIMILE AND MAIL (619) 231-7423 PAUL H. SCHWARTZ (720) 566-4082 schwantzph@cooley.com Scott H. Saham, Esq. Lerach Coughlin Stoia Geller Rudman Robbins LLP 401 B Street, Suite 1600 San Diego, CA 92101-4297 Re: Dear Scott:I write as a follow-up to our meet-and-confer conference call with Magistrate Judge Shaffer on Friday, June 3, 2005. In the spirit of compromise and cooperation, Mr. Tempest is willing to provide information in response to your interrogatories with respect to the three vendors which you indicated to Judge Shaffer had purchased IRUs from Qwest at some point. Although we feel even those vendor investments have no bearing whatsoever on this case, in order to move the process forward, we will provide such information, subject to your identifying the three vendors. As for the remaining vendors, we see no conceivable connection between personal investments of Mr. Tempest and the issues in this case, and we continue to object to the interrogatories to that extent.
PHS: dlf
EXHIBIT 22
Scott H. Saham ScottS@lerachlaw.com
June 9, 2005
VIA FACSIMILE
Paul H. Schwartz, Esquire COOLEY GODWARD LLP
380 Interlocken Crescent, Suite 900 Bloomfield, CO 80021-8093
Re: In re Qwest Communications International, Inc. Sec. Litig. Civil Action No. 01-N-1451 (PAC)
Dear Paul:
As we discussed, after having reviewed your June 9, 2005 letter to me, it is clear that the parties are still at an impasse regarding plaintiffs' First Set of Interrogatories, Nos. 1-3. Plaintiffs' position remains that each of the vendor transactions are relevant to this litigation. Thank you for your attention to this matter.
Sincerely yours,
SCOTT H. SAHAM
SHS: IIf