Denver billionaire Philip Anschutz is negotiating to settle a lawsuit brought against him last year by New York Attorney General Eliot Spitzer, according to sources familiar with the talks.
Spitzer in September sued Qwest founder Anschutz, former Qwest chief executive Joe Nacchio and three executives from other companies. He accused the five of accepting stock in newly public companies from Salomon Smith Barney in exchange for steering their companies’ investment-banking business to Salomon.
Anschutz spokesman Jim Monaghan on Thursday declined to comment on possible settlement talks, first reported by Reuters news service. Reuters did not identify the sources of the information.
One source told The Denver Post that if any settlement is reached, the money would most likely go to charity, not shareholders.
Previously, Anschutz’s representatives decried the merits of the many lawsuits leveled at Qwest, describing Anschutz as a convenient target. Anschutz is said to have vowed not to cave in to Qwest-related lawsuits that name him as a defendant.
“It may well be that someone in his position would just want to put behind him a lawsuit involving a very broad New York law that doesn’t really have any affect on any of the other federal civil or criminal investigations of Qwest,” said Sean Connelly, a Denver lawyer and former federal prosecutor.
Spitzer’s lawsuit alleges that Anschutz, Nacchio, former WorldCom CEO Bernard Ebbers, McLeodUSA founder Clark McLeod and Metropolitan Fiber Networks chairman Stephen Garofalo made cumulative profit of $28.2 million from selling stock bought with preferential access granted by Salomon.
According to Spitzer’s lawsuit, Anschutz made profit of $4.8 million from selling the shares; Ebbers, $11.5 million; Nacchio, $1 million; Garofalo, $1.5 million; and McLeod, $9.4 million. In turn, Salomon reaped investment-banking business of $240 million from those companies, including $37 million from Qwest, according to the suit.
Anschutz representatives say he received none of the shares personally. Rather, his investment company did and Anschutz was unaware of the transaction, they say.
As a director of his company, not an active executive, Anschutz is different from the other defendants. For that reason, Spitzer’s case against him is thought to be weaker than the others.
A spokeswoman for Nacchio did not return a message seeking comment Thursday. Qwest’s board ousted Nacchio as CEO in June.
When Spitzer filed the suit, Anschutz representatives said Qwest’s board of directors, of which Anschutz and two of his employees are members, did not select Qwest’s investment bankers. Nacchio’s attorney denied any special relationship between Qwest and Salomon.