Free Motion to Consolidate Cases - District Court of Colorado - Colorado

Case 1:04-cv-00781-REB-KLM

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UNITED STATES DISTRICT COURT DISTRICT OF COLORADO __________________________________ SHRINERS HOSPITALS FOR CHILDREN, : Civil Action Colorado Corporation : Docket Number : Plaintiff, : MDL 1788 : -against: JURY TRIAL : DEMANDED ARTHUR ANDERSEN & COMPANY, an : Accounting firm, whose legal status: is a limited liability partnership : : QWEST COMMUNICATIONS : INTERNATIONAL, INC., a Delaware : Corporation having its principal : office and place of business in : Denver, Colorado : : QWEST CAPITAL FUNDING, INC., a : Delaware Corporation, : PHILIP F. ANSCHUTZ : GREGORY M. CASEY : STEPHEN M. JACOBSEN : AFSHIN MOHEBBI : JOSEPH P. NACCHIO : FRANK L. NOYES : CRAIG D. SLATER : JAMES A. SMITH : ROBIN R. SZELIGA : DRAKE S. TEMPEST : MARC B. WEISBERG : LEWIS O. WILKS : and "DOES" numbers 1 through 10, : : Defendants. : : ___________________________________: C O M P L A I N T

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Plaintiff, for its Complaint against the defendants herein, respectfully shows to this court and alleges the facts which support its claims set forth in this Complaint on information and belief except as to the facts relating to its purchases and sales of the securities of QWEST COMMUNICATIONS INTERNATIONAL, INC. by the plaintiff which are based upon the incorporation of the relevant business records of the plaintiff into this Complaint. THE PARTIES TO THIS ACTION 1. Plaintiff is a Charitable Corporation duly

authorized and existing under the laws of the State of Colorado having its office and principal place of business at 2900 South Rocky Point Drive, Tampa Florida 33607.
2. Plaintiff brings this action as an individual and not as a class action under both Federal and State Law. 3. This action is brought solely in behalf of the single named plaintiff herein and is thus obviously brought in behalf of less than Fifty Separate Parties. 4. This action is obviously not a "covered class action" and plaintiff is thus entitled to include State Claims herein.

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5. The plaintiff is considered to be a citizen of the State of Colorado under the "diversity of citizenship" statutes with respect to Federal Jurisdiction by reason of its State of Incorporation therein and is also considered to be a citizen of the State of Florida by reason of the location of its principal place of business being in the State of Florida. 6. Defendant QWEST COMMUNICATIONS INTERNATIONAL,

INC., hereinafter termed QWEST, is a corporation duly organized and existing under the laws of the State of Delaware. It has its principal office and place of business at 1801 California Street, Denver Colorado 80202. This defendant is also considered to be a citizen and resident of the State of Colorado under Federal Law. 7. Defendant QWEST CAPITAL FUNDING INC., hereinafter QWEST CAPITAL is a wholly owned subsidiary of the defendant QWEST and was an authorized agent of the defendant QWEST in issuing various bonds for the benefit of QWEST. While this defendant is individually liable for the wrongful acts involved in this Complaint with respect to various debt securities of QWEST, the defendant QWEST is also full and completely liable for the acts of its subsidiary named herein. 8. In any event QWEST CAPITAL FUNDING INC. is completely under the domination and control of the defendant

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QWEST and could also be considered to be an "alter ego" of the defendant QWEST. 9. QWEST CAPITAL FUNDING INC also shares facilities and personnel with the defendant QWEST. 10. Defendant ARTHUR ANDERSEN & COMPANY, hereinafter termed ANDERSEN, is a purported limited liability partnership having at least one partner resident in the State of Colorado. Because the partnership, in the course of its business improperly and grossly negligently certified the financial statements of QWEST as set forth hereinafter in this Complaint, all of the partners of the defendant ANDERSEN are liable for the wrongs involved since the limited liability of an LLP does not apply to the liabilities set forth in this Complaint, in whole or in part because the liabilities set forth herein are, in effect, tort liability of the individual partners of the partnership participating in the wrongs involved and also of the partnership itself. 11. Defendant PHILIP F. ANSCHUTZ was Co-Chairman

and a director of QWEST. This defendant was the founder of QWEST and, through various ANSCHUTZ entities is the controlling stockholder of QWEST. In May 1999 ANSCHUTZ sold 33.3 Million Shares of QWEST stock for 1.6 Billion Dollars in proceeds. In May 2001 ANSCHUTZ entered into two forward sales contracts for which he received $179,000,000 in

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exchange for promising to deliver 4.6 million shares of QWEST stock in 2001. This transaction, which was essentially a stock sale, permitted the defendant ANSCHUTZ to continue to vote his shares and to evade the reporting requirements of the SEC with respect to insider stock sales. Defendant ANSCHUTZ sold at least 408,000,000 shares of QWEST common stock prior to the date of the filing of this Complaint. 12. Defendant GREGORY M. CASEY, hereinafter

termed CASEY, is presently a citizen and resident of the State of Texas. He now resides in Houston, Texas. He was, at the time of the acts of wrongdoing alleged in this Complaint, the Executive Vice President of the Wholesale Business Unit of QWEST from 1998 to and through November 2001. Defendant CASEY was responsible for all of QWEST's IRU sales during his employment with QWEST. 13. Defendant STEPHEN M. JACOBSEN was Executive Vice President of the GLOBAL BUSINESS MARKETS Division of QWEST. He was the immediate supervisor of one of the defendants in the prior SEC Complaint and the prior Complaint of the plaintiff with respect to the "GENUITY" transaction and was aware of the improper recognition of the GENUITY transaction. This defendant sold 1,136,900 shares of QWEST stock for proceeds of $49,570,000 during the period of wrongdoing set forth in this Complaint.

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14. Defendant AFSHIN MOHEBBI, hereinafter termed MOHEBBI is presently a citizen and resident of the State of California residing at Danville, California. This defendant was president and chief operating officer of QWEST from May 1999 to and including June 30, 2000. s a result of the merger of US WEST with QWEST the position of Chief Operating Officer was eliminated and from June 39, 2000 to April 2001 this defendant was President of Network Services and World Wide Operations of QWEST. In April 2001 the position of Chief Operating Officer was re-established by QWEST and this defendant was again designated as President and Chief Operating Officer of QWEST. This defendant remained in this latter position until December 2002. 15. Defendant FRANK L. NOYES, hereinafter termed NOYES is a citizen and resident of the State of Arizona and resides in Phoenix Arizona. This director was a Senior Manager of QWEST and director of its financial reporting between April 1999 to September 2000. This defendant left QWEST in September 2000 but returned in April 2001 as a Senior Director of Finance for QWEST. From April 1999 to September 2000 this defendant assisted in drafting QWEST's 10-Q SEC reports and QWEST's 10-K SEC reports for 1999. 16. Defendant CRAIG D. SLATER was a director of the defendant QWEST, the president of the defendant ANSCHUTZ's investment company and Executive Vice-President

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of ANSCHUTZ COMPANY and the ANSCHUTZ CORPORATION. ANSCHUTZ related entities rent space to QWEST and provide Corporate Transportation Services to QWEST. QWEST and an ANSCHUTZ entity have a joint venture called QWEST DIGITAL MEDIA. ANSCHUTZ COMPANY holds 284,000,000 of QWEST and is QWEST's largest shareholder. During the period of wrongdoing defendant SLATER sold 866,771 shares of QWEST for proceeds of $38,400,000. Defendant SLATER signed SEC Registration Statements of QWEST for Sept 17, 1999, July 12, 2001, and October 30,2001. 17. Defendant JAMES A. SMITH was Executive Vice President of the SMALL BUSINESS AND CONSUMER MARKETS Division of QWEST. During the period of wrongdoing this defendant sold 281,826 shares of the common stock of QWEST and received proceeds of $11,480,000. 18. Defendant ROBIN R. SZELIGA, hereinafter termed SZELIGA, is a citizen of the State of Colorado residing in Littleton Colorado. This defendant was Chief Financial Officer amd Executive Vice-President-Finance of QWEST from March 2001 to July 2002. From 1998 to March 2001 this defendant held various executive positions with QWEST including Senior Vice President of financial planning and analysis and reporting. While employed by QWEST she signed all of the materially false and misleading QWEST's 10-Q SEC reports and QWEST's 10-K annual SEC report for the years

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2000 and 2001. She also signed false and misleading representation letters to QWEST's outside auditors. She also drafted and received all earnings releases and took various other actions which will be set forth in this Complaint. 19. Defendant DRAKE S. TEMPEST was Executive Vice President, General Counsel, Chief Administrative Officer and Secretary of QWEST. During the period of wrongdoing he sold 466,600 shares of the common stock of QWEST and received proceeds of $20,880,000. He signed the July 12, 2001 SEC Registration Statement. 20. Defendant MARC B. WEISBERG was Executive Vice President of the Corporate Division of QWEST until Sept 2001. He was responsible for mergers and acquisitions of QWEST and was involved in the prior merger with US WEST. He participated in at least one unlawful transaction that will be further set forth in this Complaint. In June 2001 WEISBERG and QWEST employee MICHAEL PERUSSE persuaded HAMID ANSARI a Vice President of SONUS NETWORKS and BROADBAND UTILITY RESOURCES to buy a $20,000,000 IRU from QWEST. In return QWEST was to buy $33,600,000 gear from SONUS. During the period of wrongdoing WEISBERG sold 793,750 shares of the common stock of QWEST for proceeds of $37,840,000. He also received stock from QWEST suppliers including CoSine Communications. He also served on the Board of Directors of QWEST Suppliers Tellium and Advanced Radio Networks.

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21. Defendant LEWIS O. WILKS was president, Internet and Multi-Media Markets until October 2000. At that time he became Executive Vice President, Internet Business Development and Chief Strategy Officer of QWEST. He was a long time friend of THOMAS HALL who was indicted in connection with the "ARIZONA" transactions. He made various public laudatory statements concerning defendant NACCHIO. He resigned in September 2001. During the period of wrongdoing he sold 1,415,000 shares of QWEST common stock and received proceeds of $65,160,000. He also benefited by selling shares in QWEST suppliers. 22. ROBERT S. WOODRUFF, hereinafter termed WOODRUFF, is a citizen of the State of Colorado residing in Englewood Colorado. This party was Chief Financial Officer and Executive Vice President of Finance until his retirement in March 2001. While he was Chief Financial Officer he signed the materially false and misleading QWEST 10-Q reports filed with the SEC and the 1999 QWEST 10-K SEC reports. He drafted the materially false and misleading QWEST 2000 10-K SEC report. He filed false management representation letters to QWEST's outside auditors. He drafted an approved QWEST's earnings releases and committed other wrongs as set forth in this Complaint. 23. ROBERT S. WOODRUFF is not named as party to this Complaint because in the related class action brought

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against him no class has yet been either certified or has been refused certification. Pursuant to a prior determination of this Court in related actions this Court has determined that the "toll" of the Statutes of Limitation in a related class action with respect to a subsequently filed individual action does not apply until the individual action is filed only after the class involved is either certified or has been refused certification. While the related class action has been certified with respect to parties so certified it has not been so certified with respect to the defendant NACCHIO or with respect to WOODRUFF. The plaintiff's claims against WOODRUFF will be deferred until WOODRUFF is either certified or refused certification by this Court in the said related class action. 24. Defendant JOSEPH P. NACCHIO, hereinafter

termed NACCHIO, is a citizen and resident of the State of New Jersey. He resides in Mendham, New Jersey. This defendant was Chief Executive Officer and Chairman of the Board of Directors of QWEST from January 1997 to June 2002. This defendant signed materially false and misleading QWEST's 10-K SEC reports for 1999, 2000, and 2001 which were filed with the SEC and false management representation letters to QWEST's outside auditors. This defendant also reviewed and approved all of QWEST's 10-Q SEC reports set

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forth in this Complaint as well as QWEST's purported earnings released etc. which will be set forth in this Complaint. The claims of this Complaint against the defendant NACCHIO are limited to claims under the laws of the state of Colorado for breach of fiduciary duties, acting as a constructive trustee, for common law fraud and deceit and for unjust enrichment. The claims were concealed from the plaintiff and were not disclosed until the filing of a Civil Complaint by the SEC and a subsequent Criminal Complaint against the defendant NACCHIO on or about March 15, 2005. Any other remaining claims against this defendant are contained in the prior class action complaint that was filed against this defendant and in which a class with respect to this defendant has neither been certified or has been refused certification. The remaining claims against this defendant will be filed when this Court determines whether or not a class should be certified with respect to this defendant. 25. The defendants set forth as "DOES" numbers 1 through 10 are parties presently unknown to the plaintiff who participated in the wrongful acts set forth in this complaint. These parties will be identified or dropped from this litigation if they cannot be identified after full discovery is taken of the present parties to this action. THE PROCEDURAL HISTORY OF THIS ACTION

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26. The following sets forth the relevant prior matters material to this action. A. In 2001, a Civil Action under docket number 01-RB-1451 a putative class action was filed in this Court against the defendant QWEST and others. B. Thereafter a number of other similar putative class actions were filed in this Court and were given civil docket numbers 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, and 02-RB-755. C. These putative class actions were consolidated by this Court into docket number 01-RB-1451. D. Thereafter motions to dismiss these actions were made by the defendants and were granted by this Court with leave to amend. Eventually a Fifth Amended and Consolidated Complaint was filed by the putative class plaintiffs and was essentially sustained by this Court as sufficient. E. In 2004 the plaintiff herein, based upon the specific information filed in a prior Complaint of the SEC, filed an individual non class Complaint in this Court against the defendant QWEST and other defendants not involved in the present Complaint, which filing was less than two years from the filing of the 2004 Complaint. This Complaint was given docket number 04-RB-781.

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F. Defendant QWEST and others moved to dismiss the plaintiff's 2004 individual Complaint upon the ground that these claims were essentially contained in the prior 2001 putative class action and that the "toll" of the Statute of Limitations by reason of the filing of a prior class action relating to a subsequently filed individual action does not apply until the prior class action is either certified or certification is refused. G. In response to the defendants' motion to dismiss the plaintiff also sought leave to amend its complaint to include other claims presented in the prior class action but not included in the 2004 individual action. H. In an extensive opinion the District Court ruled that the claims presented in the SEC action were not presented in the plaintiff's 2004 individual action but the Court also held that any claims which the plaintiff would intend to present which included the claims presented in the prior class action would be time barred unless presented only after class certification in the prior class action was granted or refused. I. Thereafter in 2006 the District Court issued an Order provisionally certifying a settlement class with respect to the pending class action but excluding from the certification thereof the defendant NACCHIO and WOODRUFF since claims against these defendants were not settled and

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therefore were not included in the proposed settlement class. The Court also provided a limited period of time for any putative class member to exclude itself from the proposed settlement. J. The plaintiff duly and timely excluded itself from the proposed settlement class and other putative class members filed objections to the proposed settlement, class certification and the award of attorneys' fees and expenses. The plaintiff did not file objections to the said proposed settlement, etc. since by excluding itself from the proposed class it would have no standing to object thereto. K. On September 29th, 2006, in an opinion and order, the District Court overruled objections made to the proposed settlement and to the settlement class and approved the proposed settlement and awarded attorneys' fees and expenses to plaintiff's counsel. L. The District Court's Order was incorporated into a judgment entered on October 3rd, 2006 and the time for appeal from said Judgment will not expire until November 5th. 2006. M. By subsequent Order this Court has determined that any pending claims against the defendant NACCHIO will not be determined until the disposition of the pending criminal action wherein this party is a defendant.

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N. The plaintiff, under the prior determination of this Court in a related action is barred from proceeding against WOODRUFF until a class is certified or certification is refused with respect to this party. O. The claims against the defendant NACCHIO in this Complaint are limited to claims under the laws of the State of Colorado for violation of fiduciary duties, being a constructive trustee, for common law fraud for negligent misrepresentation, and for unjust enrichment. THE PLAINTIFF'S LOSSES 27. The purchases and sales of QWEST securities set forth in this Complaint during the period of wrongdoing set forth herein were made by independent investment advisers employed by the plaintiff who had discretionary authority to purchase and sell QWEST securities under guidelines issued by the plaintiff. The investment advisers who purchased and sold QWEST common stock during the period of wrongdoing were the following: NAME OF INVESTMENT ADVISER 1. 2. 3. 4. 5. 6. Bank One First Hawaiian 1st Madison Fifth Third Fleet Harbor

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7. 8. 9.

Invesco Key Trust Mellon

10. NBC-Dayton 11. Pacific Century 12. PNC 13. Revised Retirement 14. State Street 15. Trusco 16. Wells Fargo 17. Transition Acct 28. The losses of the plaintiff during the period of wrongdoing involved relating to the plaintiff's transactions in the securities of QWEST involving both its common stock and bonds amounted to Twenty Million Forty Seven Thousand Three Hundred Fourteen Dollars and Forty Three Cents ($20,047,314.43) plus appropriate interest and possible punitive damages and attorneys' fees provided for under State Laws involved. 29. The complete set of transactions of the plaintiff, during the period of wrongdoing, is set forth as Exhibit A to this Complaint, affixed hereto and incorporated herein by this reference.

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SUBJECT MATTER JURISDICTION OF THIS ACTION 30. This Court acquires jurisdiction of the subject matter of this action as follows: a. With respect to the claims set forth in this Complaint under the United States Securities Laws this Court is given jurisdiction by Statute. The jurisdiction of this Court is exclusive with respect to claims under the Securities Act of 1934. The jurisdictional section relative to this action is 15 USC 78aa. b. With respect to claims set forth in this Complain under the laws of the State of Colorado or of the common law this Court acquires jurisdiction pursuant to principles of pendent jurisdiction because the claims set forth herein under State Laws and the common law are substantially related to the claims made herein under the Securities Laws of the United States. PERSONAL JURISDICTION OVER THE DEFENDANTS 31. This Court acquires personal jurisdiction over the defendants as follows: a. With respect to the defendant QWEST because it has its principal place of business within the District of Colorado and further because the transactions set forth in the complaint herein had their principal connection with the District of Colorado.

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b. With the defendant ARTHUR ANDERSEN & COMPANY because it had one or more partners within the District of Colorado during the time of the wrongs involved in this Complaint and further because the acts complained herein had their principal connection with the District of Colorado. c. With respect to the individual defendants who are residents of the District of Colorado or who were resident of the District of Colorado at the time of the commission of the wrongful acts set forth in this Complaint because of their residence within the District of Colorado. d. With respect to any of the defendants who were not residents of the District of Colorado at any time because the transactions complained of in this Complaint had their principal connection with the State of Colorado and furthermore because said transactions comprised torts committed within the State of Colorado. THE VENUE OF THIS ACTION 32. The venue of this action is proper in the District of Colorado for the following reasons: a. The acts of wrongdoing charged in this Complaint took place primarily within the District of Colorado. b. The principal defendant QWEST and a number of the individual defendants are residents of the District

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of Colorado or resided in the District of Colorado at the time of the commission of the wrongs involved. c. The related claims under State Law and of the common as set forth in this Complaint are based on the laws of the State of Colorado and the decisional laws of the Courts of the State of Colorado relating to such State claims. THE TIME PERIOD OF THE WRONGS 33. The period of time where the wrongful acts set forth in this Complaint were committed commenced on May 24, 1999 and continued until at least March 15, 2005 and possibly are still continuing. There was no full disclosure of the wrongs involved until March 15, 2005 when the Securities and Exchange Commission filed its Civil Complaint against the defendant NACCHIO, et. al. in this Court. A subsequent Criminal Proceeding was filed against the defendant NACCHIO in this Court. A partial disclosure of some of the wrongs involved was made in the prior pending putative class action. THE RELEVANT STATUTE OF LIMITATIONS AND THE TOLLING THEREOF

34. The relevant Statutes of Limitation relating to the claims set forth in this Complaint under the Securities and Exchange Act of 1934 is two years from the discovery of the wrongdoing and limited to five years prior

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to the date of the commencement of this action. The relevant Statute is set forth in 28 USC 1658(b). In the present action, with respect to the Federal Securities Claims made against the defendants herein the plaintiff relies on the "toll" of the relevant Statutes of Limitations by reason of the filing of the prior putative Securities Class Action and the subsequent class certification against all parties herein except as to the defendant NACCHIO. 35. The plaintiff also relies, as against all defendants, on the general "toll" of the Colorado State Statutes of Limitations for the following reasons: a. Concealment of the relevant facts and circumstances by the defendants herein. b. Failure to discover the facts relating to discovery of the fraud by the plaintiff because of the actions of the defendants. c. Continuing wrongs relating to the facts involved committed by the defendants. 36. By prior decision of this Court, there is no "toll" of the relevant Federal Statute of Limitations if an individual action is filed prior to the certification of a class in a putative class action and the individual plaintiff "opts out" therefrom. Under the relevant Federal Law as determined by the decision in Erie RR vs. Tompkins

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the determination of the "toll" of the relevant Colorado State Law is reserved to the Courts of Colorado. 37. In the present case a prior Order was issued by this Court tentatively certifying the putative class action is a Certified Class Action with a prior time set forth for any class member to "opt out" therefrom. In accordance with this Court's direction the plaintiff duly "opted out" therefrom within the time set by the Court. 38. A hearing was held by this Court on May 19, 2006 where the Court considered the prior objections filed to the prior tentative Class Certification Order of this Court and objection thereto. A subsequent decision approving the proposed settlement and class certification was made on September 29th 2006 and a judgment entered on October 3rd, 2006. 39. Because this Court set a prior Bar Date for the filing of an "opt out" request the filing of the "opt out" request by the plaintiff herein the plaintiff was required to file such request within the required time. However, in the plaintiff's opinion the date when the period of "toll" of the relevant Statutes of Limitation had expired was October 3rd, 2006. (the date of the entry of judgment approving the proposed class settlement). The plaintiff is thus permitted to rely upon the prior "toll" of the relevant Statute of Limitations with respect to the claims set forth

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in this Complaint involved in the prior class action from the date of its filing until October 3rd, 2006. 40. This action is being filed within the relevant time period permitted by at least one of the relevant Statutes of Limitations involved herein. 41. The relevant Colorado Statute of Limitations for suits under the Colorado Securities Laws is three years from the discovery of the acts of wrongdoing involved and no more than five years from the date of the commencement of the wrong. The five year period of limitations provided under the Colorado Securities Act is tolled by reason of its being a related claim to the claims set forth in a pending putative class action. 42. The relevant Statute of Limitations under Colorado Law for suits for Negligent Misrepresentation is normally two years with no absolute earlier time bar and subject to various "tolling" principles. 43. Under Colorado State Law if the acts of wrongdoing involve continuous acts of wrongdoing then the relevant Statute of Limitations does not commence to run until the termination of the wrongdoing involved. 44. Colorado State Law further provides that if the Acts of Wrongdoing are concealed then the relevant Colorado Statute of Limitations does not commence to run until the wrongdoing is fully disclosed.

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45. The relevant Colorado Statute of Limitations for common law fraud is three years from the date of discovery of the fraud. There is no earlier absolute time bar. 46. The Colorado Statute of Limitations for breaches of Fiduciary Duties and for acting as a constructive trustee is three years from the discovery of the acts of wrongdoing involved with no earlier time bar. 47. Colorado decisional law also holds that a "toll" of any Colorado Statute of Limitation not only applies to the claims presented but to any similar claims even if based on other legal theories. 48. The "toll" of the relevant Statutes of Limitation based upon the filing of the class action involved herein also "tolls" any relevant periods of limitation under Colorado State Law. 49. Plaintiff relies in this action upon the "toll" of the relevant Statutes of Limitation under Federal and Colorado State Law by reason of the prior filing of the putative class action and further relies on the doctrines of "continuing wrong" and "concealment" as further grounds for the "tolling" of the relevant Statutes of Limitations. 50. This Complaint includes a number of significant allegations contained in the co-pending certified Class Action Complaint, the SEC Complaint against

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QWEST, the SEC Complaint against Nacchio, et. al. dated March 15, 2005, the criminal indictment against (US vs. NACCHIO.) Any other allegations set forth in the above actions which may be material to the claims set forth in this Complaint are incorporated by reference herein. 51. This action involves a concerted plan and conspiracy by the defendants named herein including the idividual defendants with respect thereto during the time of their employment by QWEST, and within the scope of their employment by QWEST, to orchestrate a plan and conspiracy to inflate the public market value of QWEST securities in excess of their real value by overstating the financial position of QWEST, primarily by inflating the real earnings of QWEST and to inflate its apparent earnings, and thereby to inflate the market value of QWEST securities. The details of this plan and conspiracy will be set forth in subsequent factual allegations of this Complaint. 52. Because the defendant NACCHIO knew that the market value of QWEST securities was inflated he was able to sell securities of QWEST at inflated prices making large sums of money by so doing. 53. The primary method in which this plan and conspiracy was carried out, was to fail to disclose significant information with respect to the business of QWEST, its financial position and its earnings, to file

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false and misleading financial statements with the Securities and Exchange Commission, utilizing material adverse undisclosed non public information to sell their holdings of QWEST stock into the public market and also to inflate the public market price of QWEST stock by the issuance of false and misleading financial information to hoodwink analysts into recommending the purchase or retention of QWEST Securities. THE FALSE AND MISLEADING SEC REPORTS AND THEIR EFFECT ON THE PUBLIC MARKET VALUE OF QWEST SECURITIES

54. Probably the most significant factor utilized by analysts and other parties in determining the public market value of publicly traded securities is the reported earnings of the company involved and, in addition, the "growth" in reported earnings from one year to the next. 55. The defendants either filed, or were instrumental in the filing, of the following false and/or misleading reports with the United States Securities and Exchange Commission or, in connection with the said reports, failed to disclose significant facts which, at the time that said reports were filed, were necessary to make said reports not misleading. These reports were the following: a. The 10-K SEC annual report of QWEST for the period ending December 31, 1999.

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b. The 10-K SEC annual report of QWEST for the period ending December 31, 2000. c. The 10-K SEC annual report of QWEST for the period ending December 31, 2001. d. The 10-Q SEC quarterly reports of QWEST for the period ending March 31, 1999. e. The 10-Q SEC quarterly reports of QWEST for the period ending June 30, 1999. f. The 10-Q SEC quarterly report of QWEST for the period ending September 30, 1999. g. The 10-Q SEC quarterly reports of QWEST for the period ending March 31, 2000. h. The 10-Q SEC quarterly reports of QWEST for the period ending June 30, 2000. i. The 10-Q SEC quarterly reports of QWEST for the period ending September 30, 2000. j. The 10-Q SEC quarterly reports of QWEST for the period ending March 31, 2001. k. The 10-Q SEC quarterly report of QWEST for the period ending June 30, 2001. l. The 10-Q SEC quarterly reports of QWEST for the period ending September 30, 2001. m. The 10-Q SEC quarterly reports of QWEST for the period ending March 31, 2002.

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n. The 8-K SEC significant matters report dated June 30, 2000. o. The 8-K SEC significant matters report dated July 6, 2000. p. The 8-K SEC significant matters report dated September 7, 2000. q. The 8-K SEC significant matters report dated October 31, 2000. r. The 8-K SEC significant matters report dated December 21, 2000. s. The 8-K SEC significant matters report dated February 26, 2001. t. The 8-K SEC significant matters report dated March 22, 2001. u. The 8-K SEC significant matters report dated June 5, 2001. v. The 8-K SEC significant matters report dated June 19, 2001. w. The 8-K SEC significant matters report dated June 20, 2001. x. The 8-K SEC significant matters report dated July 24, 2001 (amended). y. The 8-K SEC significant matters report dated August 7, 2001 (amended).

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56. QWEST also issued purported earnings releases which were false and misleading and which were relied upon by purchasers of QWEST securities. Such releases were issued on April 21, 1999, July 27, 1999, October 27, 1999, February 7, 2000, April 19,2000, July 19, 2000, October 24, 2000, January 24, 2001, April 24, 2001 and July 24,2001. 57. False and misleading Registration Statements were filed with the United States Securities and Exchange Commission which incorporated any of the above material and management representation letters dated March 15, 2000, March 17, 2000, August 11, 2000, Nov. 14, 2000, Jan. 24, 2001, March 16, 2001, May 15, 2001, August 14, 2001, Nov. 14, 2001 and March 31, 2002. 58. Analyst conference calls were made by QWEST personnel on April 21, 1999, July 27, 1999, Oct. 27, 1999, Feb. 2,2000, April 19, 2000, July 19, 2000, Oct. 24, 2000, Jan. 24, 2001, April 24, 2001, June 19, 2001, June 20, 2001, July 24, 2001, Sept. 10, 2001 which embodied the false and misleading earnings information set forth herein., 59. Television appearances were made by QWEST personnel which included the false and misleading earning information involved on April 26, 2001, May 25, 2001, and June 19, 2001. 60. Other facts and damage theories will be set forth in this Complaint in subsequent paragraphs.

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61. By reason of the Acts of Wrongdoing set forth in this Complaint this action is brought against the defendants, jointly and severally, because of wrongdoing connected with the false and misleading financial information relating to the defendant QWEST. This financial information included the dissemination of false and misleading financial reports of the defendant QWEST which were participated in by the individual defendants in the scope of their employment. The said false and misleading financial information. including the reports involved, were disseminated to actual and potential public stockholders and bondholders of QWEST. 62. These reports were disseminated through earnings releases, through the United States Mails, and through other transmission means involving interstate commerce and the required SEC reports involved were filed with the United States Securities and Exchange Commission during the time periods set forth herein. 63. The wrongful acts involved herein were deliberately and wrongfully concealed by the defendants and as yet have not been fully and completely discovered. The earliest date when the wrongful acts involved herein could have been even partially discovered by the exercise of reasonable diligence was February 2003 when the United States Securities and Exchange Commission filed its

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Complaint against certain of the defendants herein. A more full and complete presentation of the wrongful acts set forth herein was made on March 15,2005 when the SEC filed its complaint against NACCHIO, et, al, and the filing of a subsequent Criminal Indictment against the defendant NACCHIO. 64. In any event the related putative class action was filed which included some of the allegations made in this Complaint which had acted as a "toll" of the relevant Statute of Limitations. 65. The wrongful acts on the part of the defendant also consisted of a series of wrongful acts committed over an extensive period of time and thus represented a "continuing violation" causing the relevant Statutes of Limitation to be "tolled" until the wrongful acts involved have been terminated. 66. The acts of wrongdoing set forth in this Complaint as known to the plaintiff at the time of the commencement of this action commenced in 1999 and continued until March 15, 2005. 67. The wrongs set forth in this Complaint were

willfully, deliberately, negligently, or grossly negligently performed by QWEST through management personnel acting within the scope of their employment.

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68.

Plaintiff purchased the said QWEST common

stock and bonds during the said period of wrongdoing without knowledge on its part or on the part of its investment advisers of the false and/or misleading nature of the public information supplied by QWEST. 69. As detailed subsequently in this complaint

because the defendant QWEST, through its senior management acting within the scope of their employment, made false and misleading public information, the said individual defendants are jointly and severally liable, in addition to the actual damages sustained by the plaintiff, for additional punitive damages as may be fixed by the trial jury in this action. Plaintiff suggests a punitive damage award of an appropriate multiple of the specific losses actually sustained by the plaintiff in this case. 70. The plaintiff through its investment

advisers, directly or constructively relied upon the said false and misleading representations in purchasing the securities of QWEST during the period of wrongdoing set forth in this Complaint. 71. The defendant QWEST through its senior

management personnel acting within the scope of their employment, knew, should have known, negligently, grossly negligently or recklessly failed to discover that said representations were false and misleading.

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72.

Plaintiff purchased the securities of QWEST

on a public stock market during the period of wrongdoing set forth in this complaint. 73. The public stock market upon which the common

stock of QWEST is publicly traded is an efficient public market wherein the reported market value thereof is determined by the public reports and press releases issued by companies listed on the said public stock exchange. 74. Significant components of the public

determination of the market value of such publicly traded common stock listed upon the said public stock exchange are the reported revenue, earnings, and revenue and earnings growth set forth in the information issued by such listed companies. 75. Also significant are the projections of the

future earnings and revenues of such listed companies. 76. The public market value of QWEST common stock

and bonds was thus inflated by the issuance of the aforesaid false and/or misleading public information by the defendant QWEST through senior management personnel acting within the scope of their employment. 77. The defendant QWEST provides

telecommunications and internet services to its customers. 78. By reason of the foregoing plaintiff has

suffered the damages set forth in this Complaint. A DETAILED PRESENTATION OF THE WRONGDOING

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SET FORTH IN THIS COMPLAINT

79.

On July 18, 1999 the corporation now known as

QWEST COMMUNICATIONS INTERNATIONAL, INC. entered into a merger agreement with US West, Inc. one of the local telephone companies divested from AT & T. The merger agreement was completed on June 30, 2000. US West was the surviving Company after the merger and changed its name to QWEST COMMUNICATIONS INTERNATIONAL, INC., which is one of the defendants in this action. 80. QWEST through its officers and directors reported its fiscal results including its purported revenues, earnings and growth rates to the public both annually and in each fiscal quarter. These results were reported in documents filed with the United States Securities and Exchange Commission, hereinafter the "SEC", and in press releases and in direct communications with investment advisers and analysts 81. QWEST, through its officers and directors, also issued financial guidance known as "targets" to the investing public concerning the purported future revenue growth and earnings. 82. The shares of QWEST purchased by the plaintiff at the time of the commission by the defendants of the Acts of Wrongdoing involved were publicly traded on the New York Stock Exchange. QWEST also initiated an official policy

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that prohibited officers, directors and employees of QWEST from trading QWEST securities based on inside information. 83. The reported revenues of QWEST were either recurring revenue or non recurring revenue. Recurring revenue was defined as revenue derived by QWEST from a customer during the life of a contract each month as it rendered services to such customer. Non recurring revenue resulted from on time transactions reported at the end of each quarter. 84. As of December 4, 2000 to September 10, 2001 QWEST's financial targets were unreasonable, extremely "aggressive", and a huge "stretch". 85. In order to meet these unreasonable targets QWEST would have to significantly increase its recurring revenues during the first months of 2001. 86. In point and in fact the recurring revenues were under performing from early 2001 and were not significantly increasing in order to meet QWEST's publicly reported targets. 87. Furthermore in point and in fact there were undisclosed risk factors relating to recurring and non recurring revenues that made achievement of the reported targets questionable. 88. Also in point and in fact the gap between QWEST's publicly stated reported targets and QWEST's

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recurring revenue was increasing causing QWEST to rely on risky and unsustainable one time transactions and QWEST's non recurring revenues were insufficient to close the discrepancy between QWEST's publicly reported revenue targets and QWEST's actual performance. 89. Beginning about August 2000 defendant NACCHIO was specifically and repeatedly warned that there were material and unpublished financial problems which made it highly unlikely that QWEST would achieve its published financial goals. 90. NACCHIO became additionally aware in January 2001 of additional non public information with respect to the ability of QWEST to meet its published financial goals. 91. Beginning about January 2, 2001 and continuing through and including September 10, 2001 defendant NACCHIO within the District of Colorado and elsewhere in the United States, knowingly and willfully, directly and indirectly, by actions within the State of Colorado and by actions outside the State of Colorado involving torts affecting parties resident within the State of Colorado and by the facilities of interstate commerce and by the facilities of a National Securities Exchange and through the mails utilized a manipulative and deceptive device, scheme, artifice and/or contrivance in contravention of the securities laws of the

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State of Colorado, the Securities Laws of the United States, the common law, the laws of negligence, gross negligence negligent misrepresentation common law fraud, breach of fiduciary duties and unjust enrichment in order to defraud purchasers of QWEST securities who were unaware of the insider information known by defendant NACCHIO. 92. Defendant NACCHIO, in violation of law as set forth above, including Rule 10-b-5 of the United States Securities and Exchange Commission, sold the following securities of QWEST during the following dates thereby damaging parties who were not aware of the information held by defendant NACCHIO. 93. These acts also constituted a breach of the fiduciary duties owed by defendant NACCHIO to stockholders of QWEST who purchased securities of QWEST at inflated prices because they were unaware of the insider information known by defendant NACCHIO. 94. The following are the sales of the common stock of QWEST based on NACCHIO's knowledge of undisclosed non public adverse financial information of QWEST. SALES BY NACCHIO OF QWEST COMMON STOCK PAGE ONE TRADE DATE 1/2/01 1/26/01 NUMBER OF SHARES SOLD 196,723 7,500 SALE PRICE PER SHARE $39.8394 $43.2800 GROSS SALE PRICE $7,837,436.29 $ 324,600.00

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1/29/01 1/30/01 2/01/01 2/5/01 2/6/01 2/7/01 2/8/01 2/9/01 2/12/01 2/13/01 2/13/01 2/15/01 2/20/01 2/21/01 2/22/01 2/23/01 2/26/01 1/22/27/01

92,500 70,000 10,000 70,000 30,000 20,000 90,000 10,000 70,000 30,000 180,000 70,000 11,500 11,500 11,500 11,500 11,500 11,500

$43.1356 $43.3571 $41.7500 $40.2261 $41.3967 $41.00 $40.7822 $40.50 $40.9857 $41.3433 $41.6898 $40.1857 $37.4763 $37.3670 $36.4497 $34.8355 $38.1230 $37.8861

$3,999,043.00 $3,034,997.00 $ 417,500.00 $2,815,827.00 $1,241,901.00 $ 820,000.00

$3,670,398.00 $ 405,000.00

$2,868,999.00 $1,240,299.00 $7,504,164.00 $2,812,999.00 . $ $ $ $ $ $ 430,977.45 429,720.50 419,171.55 400,608.25 438,414.50 435,690.15

SALES BY NACCHIO OF QWEST PAGE TWO TRADE DATE 1/3/01 2/28/01 3/1/01 4/26/01 NUMBER OF SHARES SOLD 160,000 11,500 11,500 350,000 SALE PRICE PER SHARE $40.209 $37.2978 $35.1291 $38.8559

COMMON STOCK

GROSS SALE PRICE $ 6,433,488.00 $ $ 428,924.70 403,984.65

$13,599,565.00

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4/27/01 4/30/01 5/1/01 5/3/01 5/7/01 5/9/01 5/10/01 5/11/01 5/14/01 5/15/01 5/31/01

300,000 110,000 100,000 50,000 70,000 30,000 43,200 20,000 56,800 105,000 75,000

$39.6716 $41.1182 $40.8353 $39.0852 $38.3086 $38.00 $38.00 $37.2250 $37.6367 $37.7667 $38.30

$11,901,480.00 $ 4,523,002.00 $ 4,083,530.00 $ 1,954,260.00 $ 2,681,602.00 $ 1,140,000.00 $ 1,641,600.00 $ 744,500.00

$ 2,137,764.56 $ 3,965,503.50 $ 2,872,500.00

95. At the same time that the defendant NACCHIO was selling his QWEST stock based on inside information the plaintiff was purchasing QWEST stock without having knowledge of the said inside information. Thus the plaintiff was purchasing his QWEST stock at inflated prices as follows:

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TRADE DATE

NUMBER OF PURCHASE PRICE SHARES PER SHARE PURCHASED 19,000 2,100 3,610 17,700 1,790 1,690 5,000 780 $46.2865 $45.2951 $41.9975 $40.780 $40.4600 $38.8241 $40.76 $38.2600

GROSS PURCHASE PRICE

CORRESPONDING SALE DATE OF NACCHIO

Jan. 24, 2001 Jan. 25, 2001 Jan. 26,2001 Feb. 8, 2001 Feb. 15, 2001 April 26, 2001 May 1, 2001 May 10, 2001

$ 879,443.50 $ 95,119.71

Jan 24,2001 Jan 25, 2001 Jan 26,2001 Feb 8, 2001 Feb. 15, 2001 April 26,2001 May 1, 2001 May 10, 2001

$ 151,610.98 $ 721,818.39 $ $ 72,423.40 65,612.73

$ 203,800.00 $ 29,842.80

96. In addition to the purchases of the plaintiff set forth herein other purchases were made by the plaintiff that were affected by the sales made by the defendant NACCHIO based on inside information. 97. Furthermore had the plaintiff known of the sales made by the defendants based on inside information it would not have purchased any shares of the common stock of the defendant QWEST or any debt securities of the defendant QWEST during the period of wrongdoing set forth in this Complaint. INSIDER TRADING CONDUCTED BY DEFENDANTS OTHER THAN NACCHIO 98. By reason of the knowledge of the defendants, other than defendants NACCHIO and WOODRUFF, relating to the false and misleading financial information publicly

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disseminated by the defendant QWEST, these defendants, with knowledge of the adverse undisclosed information sold shares NAME OF DEFENDANT of QWEST into the public market as follows: DATE OF NUMBER OF SALES PRICE TOTAL SALE PRICE CORRESPONDING SALE SHARES SOLD PER SHARE PURCHASE BY PLAINTIFF PAGE ONE SZELIGA JACOBSEN JACOBSEN JACOBSEN JACOBSEN JACOBSEN JACOBSEN JACOBSEN JACOBSEN JACOBSEN JACOBSEN JACOBSEN JACOBSEN TEMPEST TEMPEST TEMPEST TEMPEST TEMPEST TEMPEST TEMPEST 4/30/01 4/25/00 4/26/00 5/01/00 7/21/00 7/24/00 7/26/00 7/28/00 8/02/00 8/04/00 8/10/00 1/26/01 4/26/01 11/10/99 05/05/00 05/09/00 05/10/00 07/25/00 08/07/00 08/09/00 10,000 100,000 16,300 33,700 100,000 65,200 90,000 200,000 43,500 201,200 12,000 150,000 25,000 25,000 25,000 10,000 10,000 10,000 5,000 5,000 $41.00 $42.56 $44.51 $44.00 $54.40 $54.18 $48.09 $49.66 $49.00 $48.79 $48.85 $42.39 $39.06 $37.25 $44.05 $44.82 $43.38 $51.64 $51.50 $50.38 $ 410,000

$ 4,256,000 $ 725,513

$ 1,482,800 $ 5,440,000 $ 3,532,536 $ 4,328,100 $ 9,932,000 $ 2,131,500 $ 9,816,548 $ 586,200 01/26/01 04/26/01

$ 6,358,500 $ $ 976,500 931,250

$ 1,101,250 $ $ $ $ $ 448,200 433,800 516,400 257,500 251,900

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TEMPEST NAME OF DEFENDANT

10/30/00 DATE OF SALE

62,500

$49.34

$ 3,083,750 TOTAL SALE PRICE CORRESPONDING PURCHASE BY PLAINTIFF

NUMBER OF SALES PRICE SHARES SOLD PER SHARE PAGE TWO

TEMPEST TEMPEST TEMPEST TEMPEST TEMPEST TEMPEST TEMPEST TEMPEST TEMPEST TEMPEST TEMPEST TEMPEST WEISBERG WEISBERG WEISBERG WEISBERG WEISBERG WEISBERG WEISBERG WEISBERG WEISBERG

10/30/00 10/30/00 10/30/00 11/08/00 11/15/00 11/17/00 11/17/00 01/29/01 01/29/01 01/31/01 04/26/01 04/26/01 05/05/00 05/10/00 05/11/00

25,000 5,000 32,500 25,000 25,000 7,000 25,000 40,000 50,000 50,000 1,100 3,500 20,000 10,000 20,000

$49.80 $49.00 $49.25 $45.25 $42.26 $42.39 $42,39 $43.18 $43.18 $42.57 $39.00 $38.65 $43.97 $43.38 $44.38 $53.23 $50.00 $50.00 $45.50 $45.43 $45.39

$ 1,245,000 $ 245,000

$ 1,600,625 $ 1,131,250 $ 1,056,500 $ 296,730 11/15/00

$ 1,059,750 $ 1,727,200 $ 2,159,000 $ 2,128,500 $ $ $ $ $ 42,900 135,275 879,400 433,800 887,600 04/26/01 04/26/01

08/08/00 293,600 08/30/00 10/31/00 11/07/00 11/08/00 11/09/00 37,000 25,100 25,000 35,000 50,000

$15,628,328 $ 1,850,000 $ 1,255,000 $ 1,137,500 $ 1,590,050 $ 2,269,500 11/09/00

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WEISBERG WEISBERG NAME OF DEFENDANT

01/26/01 01/29/01 DATE OF SALE

67,000 14,300

$42.33 $42.97

$ 2,836,110 $ 614,471

NUMBER OF SALES PRICE SHARES SOLD PER SHARE PAGE THREE

TOTAL SALE PRICE CORRESPONDING PURCHASE BY PLAINTIFF

WEISBERG SMITH SMITH SMITH SMITH SMITH SMITH SMITH CASEY CASEY CASEY CASEY SLATER SLATER SLATER SLATER SLATER SLATER SLATER SLATER SLATER

01/29/01 196,750 08/04/00 08/04/00 02/01/01 04/26/01 04/26/01 04/26/01 7,782 25,364 40,550 15,672 10,177 9,349

$42.97 $50.00 $50.00 $42.00 $39.00 $39.00 $39.00 $39,00 $30.562 $54.746 $47.00 $45.281 $43.81 $44.38 $50.00 $50.00 $49.58 $49.58 $50.71 $49.92 $45.25

$ 8,454,348 $ 389,100

$ 1,268,200 $ 1,703,100 $ $ $ 611,208 396,903 364,611 04/26/01 04/26/01 04/26/01 04/26/01

04/26/01 172,932 07/29/99 160,000 07/21/00 480,000 11/03/00 11/08/00 04/25/00 04/26/00 07/25/00 07/28/00 27,500 60,000 10,000 10,000 9,850 10,000

$ 6,744,348 $ 4,889,920 $26,278,080 $ 1,292,500 $ 2,716,860 $ $ $ $ 438,100 443,800 492,500 500,000

10/30/00 165,150 10/30/00 11/03/00 11/03/00 11/08/00 34,850 50,000 90,000 21,921

$ 8,188,137 $ 1,727,863 $ 2,535,500 $ 4,492,800 $ 991,925

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SLATER SLATER NAME OF DEFENDANT

01/26/01 01/31/01 DATE OF SALE

75,000 40,000

$43.63 $42.30

$ 3,272,250 $ 1,692,000

01/26/01

NUMBER OF SALES PRICE SHARES SOLD PER SHARE PAGE FOUR

TOTAL SALE PRICE CORRESPONDING PURCHASE BY PLAINTIFF

SLATER WILKS WILKS WILKS WILKS WILKS WILKS WILKS WILKS WILKS WILKS WILKS WILKS WILKS WILKS WILKS WILKS WILKS WILKS WILKS

04/26/01 350,000 11/03/99 11/03/99 11/03/99 11/03/99 11/03/99 11/04/99 11/04/99 11/04/99 11/04/99 11/04/99 11/04/99 11/04/99 11/04/99 11/04/99 11/04/99 11/04/99 11/04/99 11/05/99 11/05/99 5,000 6,000 5,000 5,000 4,000 5,000 4,000 10,000 5,000 25,000 5,000 5,000 1,000 10,000 5,000 5,000 10,000 5,000 25,000

$38.94 $38.81 $34.75 $33.88 $34.69 $33.75 $33.94 $34.69 $35.50 $34.38 $35.38 $34.88 $34.50 $34.81 $35.31 $34.00 $34.75 $35.88 $36.81 $36.38

$13,629,000 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 169,050 208,500 169,400 173,460 135,000 169,700 138,760 355,000 171,900 884,500 174,400 172,500 34,810 353,100 170,000 173,750 350,000 184,050 909,500

04/26/01

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WILKS WILKS WILKS NAME OF DEFENDANT

11/05/99 11/05/99 11/05/99 DATE OF SALE

20,000 15,000 10,000

$36.44 $36.50 $36.25

$ $ $

728,800 547,500 362,500

NUMBER OF SALES PRICE SHARES SOLD PER SHARE PAGE FIVE

TOTAL SALE PRICE CORRESPONDING PURCHASE BY PLAINTIFF

WILKS WILKS WILKS WILKS WILKS WILKS WILKS WILKS WILKS WILKS WILKS WILKS WILKS WILKS WILKS WILKS WILKS WILKS

05/08/00 05/08/00 07/21/00 07/24/00 11/04/99 07/26/00 07/28/00 07/31/00

25,000 75,000 60,000 5,000 5,000 20,000 70,600 60,000

$45.28 $43.77 $54.79 $54.00 $34.00 $47.69 $50.21 $48,40 $47.48 $48.46 $48.13 $49.19 $50.39 $47.25 $45.08 $42.39 $41.10 $41.45

$ 1,132,000 $ 3,282,750 $ 3,287,400 $ $ $ 270,000 170,000 953,800

$ 3,544,826 $ 2,904,000 $ 6,647,200 $ 4,574,624 $ 481,300

08/01/00 140,000 08/02/00 08/03/00 94,400 10,000

08/04/00 200,000 08/07/00 230,000 11/03/00 11/09/00 10,000 15,000

$ 9,838,000 $11,589,700 $ $ 472,500 676,200 11/09/00 01/26/01

01/26/01 150,000 02/12/01 02/14/01 40,000 10,000

$ 6,358,500 $ 1,644,000 $ 414,500

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99. In addition to the purchases of the common stock of QWEST made within the appropriate time periods at the time that the defendants NACCHIO, WOODRUFF, JACOBSEN, CASEY, SLATER, SMITH, SZELIGA, TEMPEST, WEISBERG and WILKS were selling shares of QWEST common stock based on inside information the plaintiff would not have purchased any shares of the common stock of QWEST during the time period that the adverse inside information relating to QWEST common stock as previously set forth was not disclosed since the plaintiff would not have purchased any of the said shares had it been aware of said undisclosed information. 100. Since the plaintiff was a stockholder of

QWEST at the time that said adverse inside information was not disclosed the defendants NACCHIO and WOODRUFF violated their fiduciary duties owed to the plaintiff. 101. During the period of wrongdoing set forth in this Complaint the defendants herein, jointly and severally, committed a continuous series of wrongful acts which will be specifically detailed subsequently in this Complaint and which caused losses and damage to the plaintiff. 102. The defendant ARTHUR ANDERSEN & COMPANY, through its partners and other employees, committed willful and/or negligent acts in improperly certifying various financial statements of QWEST. The specific acts of

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wrongdoing attributed to the defendant ARTHUR ANDERSEN & COMPANY will be set forth hereinafter in this Complaint. 103. The plaintiff purchased the common stock of QWEST without knowledge of the wrongful acts committed by the defendants and relied on the financial reports involved herein in making its determination to purchase the said common stock. 104. Subsequent to the merger of US West into QWEST, which was effective in July 2000, the shares of QWEST, which was the surviving company in the prior merger between US West and QWEST were publicly traded on the New

York Stock Exchange. 105. The public market value of the shares of the merged QWEST was dependant on the published financial reports of US WEST issued immediately prior to the date of the said merger, financial reports issued subsequent to the date of the said merger, and press releases and public statements made by authorized personnel of QWEST. 106. The information involved was contained in the following: a. The 10-K SEC annual report of QWEST for the period ending December 31, 1999. b. The 10-K SEC annual report of QWEST for the period ending December 31, 2000.

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c. The 10-K SEC annual report of QWEST for the period ending December 31, 2001. d. The 10-Q SEC quarterly reports of QWEST for the period ending March 31, 1999. e. The 10-Q SEC quarterly reports of QWEST for the period ending June 30, 1999. f. The 10-Q SEC quarterly report of QWEST for the period ending September 30, 1999. g. The 10-Q SEC quarterly report of QWEST for the period ending March 31, 2000. h. The 10-Q SEC quarterly report of QWEST for the period ending June 30, 2000. i. The 10-Q SEC quarterly report of QWEST for the period ending September 30, 2000. j. The 10-Q SEC quarterly report of QWEST for the period ending March 31, 2001. k. The 10-Q SEC quarterly report of QWEST for the period ending June 30, 2001. l. The 10-Q SEC quarterly report of QWEST for the period ending September 30, 2001. m. The 10-Q SEC quarterly report of QWEST for the period ending March 31, 2002. n. The 8-K SEC significant matters report of QWEST dated June 30, 2000.

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o. The 8-K SEC significant matters report of QWEST dated July 6, 2000. p. The 8-K SEC significant matters report of QWEST dated September 7, 2000. q. The 8-K SEC significant matters report of QWEST dated October 31, 2000. r. The 8-K SEC significant matters report of QWEST dated December 21, 2000. s. The 8-K SEC significant matters report of QWEST dated February 26, 2001. t. QWEST dated The 8-K SEC significant matters report of

March 22, 2001. u. The 8-K SEC significant matters report of

QWEST dated June 5, 2001. v. The 8-K SEC significant matters report of QWEST dated June 19, 2001. w. The 8-K SEC significant matters QWEST dated June 20, 2001. x. The 8-K SEC significant matters report of QWEST dated July 24, 2001 (amended). y. The 8-K SEC significant matters report of QWEST dated August 7, 2001 (amended). z. QWEST's press releases issued on April 21, 1999, July 27, 1999, October 27, 1999, February 7, 2000, April 19,2000, July 19, 2000, October 24, 2000, January 24, report of

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2001, April 24, 2001 and July 24,2001. aa. QWEST Management representation letters dated March 15, 2000, March 17, 2000, August 11, 2000, Nov. 14, 2000, Jan. 24, 2001, March 16, 2001, May 15, 2001, August 14, 2001, Nov. 14, 2001 and March 31, 2002. bb. Analyst conference calls made by QWEST personnel on April 21, 1999, July 27, 1999, Oct. 27, 1999, Feb. 2,2000, April 19, 2000, July 19, 2000, Oct. 24, 2000, Jan. 24, 2001, April 24, 2001, June 19, 2001, June 20, 2001, July 24, 2001, and Sept. 10, 2001 cc. Television appearances made by QWEST personnel on April 26, 2001, May 25, 2001, and June 19, 2001. DETAILS OF THE WRONGDOING COMMITTED BY THE DEFENDANTS 107. On August 18, 1999 QWEST entered into a merger agreement which provided that US WEST would merge into QWEST with QWEST being the surviving corporation. 108. This transaction was to be a stock exchange transaction with US WEST stockholders to receive $69.00 per share. 109. If the share price of QWEST stock was below $38.70 per share prior to the date of the merger QWEST would have to pay the difference in price in cash to US WEST stockholders.

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110. The merger agreement was terminable if the said price of QWEST stock was below $22.00 per share. 111. In order to artificially inflate the public market price of QWEST stock so as to avoid the required cash payment to US WEST stockholders or to possibly cause the merger agreement to be terminate QWEST entered into a plan and scheme to inflate the public market price of QWEST stock. 112. In furtherance of this plan and scheme QWEST artificially inflated the stock price of QWEST by issuing various false and misleading statements relating to the financial position of QWEST, 113 Throughout 1999 QWEST misrepresented its revenue with respect to IRU sales (Indefensible Rights of Use) by improperly recognizing revenue with respect to business involved with Star Telecommunications in March 1999, Electric Lightwave in June 1999 and CIAS Internet, Novo Networks and ICG Communications in September 1999 by falsely representing these business operations as more profitable than they actually were. 114. The revenues were improperly inflated by QWEST multi year contracts in the quarter that the contracts were signed rather than allocating the potential revenue to the year that the revenue was actually earned.

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115. In April 2000 QWEST reported its first quarterly financial results which were false by reason of their concealment of major reciprocal transaction which allowed QWEST to inflate QWEST's reported results. 116. Thereafter various other false and misleading statements were made by QWEST with respect to its operating results as follows: a. In October 2000 and in January 2001 QWEST reported strong financial results for the third and fourth quarters of 2000 by inclusion of non operating sales of capacity and manipulated directory services revenues by changing the shipping date and terms of various directories. b. In 2001 QWEST by reason of its false financial results, was able to claim that it was not suffering the various business problems suffered by other telecommunication companies. 117. QWEST concealed the fact that large portions of its commercial service revenues were derived from purported sales which involved forward contracts to be performed over a long period of time. 118. These purported revenue amounts were recognized at the time of the execution of the forward contracts involved rather than carried as revenue at the time that the contracts were to be performed.

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119. QWEST also entered into "swap" deals with GLOBAL CROSSING and ENRON shortly before the close of the operative quarter in order to inflate revenues. Many of these deals had no real business purpose but were entered into in order to inflate revenues. 120. In 2000 and 2001 QWEST purportedly sold $450,000,000 in equipment to KMC and reciprocally agreed to pay large sums to KMC for internet services relating to this equipment. From a business standpoint the transaction made no sense because QWEST also offers internet services.

121. The plan and scheme permitted QWEST to report the revenue from the purported sale of