Washington, DCAnyone caught up in the Qwest securities fraudscandal would be buoyed by the news that $44 million in ill-gotten funds will be returned to victims of the crime, according to a statement released earlier this month by the US Department of Justice.
The return of money lost to investors comes some five years following the conviction, in 2007, of, the chief executive officer for Qwest Communications International Inc., on charges of securities fraud.
The stock fraud scheme is reported to have rolled out between 1999 and 2002, a time frame during which Nacchio publicly articulated revenue projections of the company that were far from realistic, leading to the company issuing statements about Qwest's financial position that were both false and misleading.
Stocks and securities rise and fall with the market, but also according to the perception of confidence within a company. Save for those with the financial capacity to swoop in and scoop up fire-sale-priced shares of a company at its lowest ebb, most investors carefully weigh their investment options and choose strong and consistent performers.
Qwest, according to the stock investment fraud press release (5/3/12), appeared robust with stock trading as high as $60 per share before the irregularities were discovered. Stock in the company soon plummeted to little more than $1 per share once those irregularities went public.
No fewer than 112,210 investors incurred substantial losses in the stock option fraud.
In addition to a sentence of 70 months in prison, Nacchio was made to forfeit the $44 million in net proceeds thought to have been gained from the stock investment fraud scheme, together with a $19 million fine which was paid, according to law, to a victim fund.
The securities fraud litigation case was investigated by the Federal Bureau of Investigation (FBI), and prosecuted by the U.S. Attorneys Office for the District of Colorado and the Justice Department's Criminal Division.
"Following his conviction for securities fraud, Mr. Nacchio was ordered to forfeit $44 million," said Assistant Attorney General Breuer, in comments issued on May 3. "Today, we are fulfilling a central objective of the Criminal Divisions Victim Asset Recovery Program and returning those funds to the victims of Mr. Nacho's crime."
"In addition to seeking criminal prosecutions to protect our financial markets, seizing and forfeiting ill-gotten gains is a priority for the FBI," said FBI Special Agent in Charge James F. Yacone. "We are hopeful the money being returned will remedy some of the damage caused by Nacchio."
It is not known if all victims of the stock investment fraud were fully compensated. That said, investing can be complex, leaving the average investor to rely on the expertise and information supplied by brokers and the actual firm seeking investment for accurate data issued in good faith. When that doesn't happen, a securities fraud law firm is often needed to facilitate compensation.
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