Lawsuits Against ICG Revived

A federal bankruptcy court has revived three lawsuits accusing ICG Communications of racial discrimination and corporate misconduct in the company's Southern California offices.

A federal bankruptcy court has revived three lawsuits accusing ICG Communications of racial discrimination and corporate misconduct in the companys Southern California offices.

Three suits, covering nine plaintiffs, were filed two years ago against ICG by Manning, Marder & Wolfe of Los Angeles, a firm that normally defends corporations over employment issues. But the lawsuits were put on hold late last year, when ICG filed for bankruptcy in Delaware.

Last week, the court overseeing that case approved the law firms request to proceed with its suits, which seek some $150 million in damages.

Evidence in the lawsuits could shed new or additional light on the fall of what was once the nations largest competitive local exchange carrier, said John Marder, a partner of the law firm.

Marder said the lawsuits, scheduled for trial in January, are now in the discovery process, and depositions are being taken from former ICG executives and former principals in the Southern California offices.

The allegations revolve around a number of firings or demotions of plaintiffs with Hispanic names in ICG sales offices in Los Angeles and San Diego. Two of those employees were fired to make room for Ashley Bryan, the daughter of former ICG Chairman and CEO J. Shelby Bryan, according to the lawsuits.

The sales offices have come under scrutiny over allegations by former ICG employees — including security personnel and internal auditors — that employees falsified sales data with the companys knowledge, took massive unearned commissions and ran private, competing enterprises using ICGs corporate information and facilities.

Former employees in California told Interactive Week earlier this year that those who resisted these techniques or complained about them to officials in Denver were fired or transferred.

ICG did not return calls seeking comment on the suits.

Defendants in the cases include Holly Horchover, ICGs Southern California sales executive, who was manager of the Southern California field offices and a close friend of one of the principal salesmen who was eventually fired by the company for running an operation competing against ICG.

Attempts to reach Horchover for comment have been unsuccessful.

According to the complaints, Horchover fired or demoted two employees in order to create a position for Bryans daughter. He is a prominent fund-raiser for national Democrat political candidates, including former President Bill Clinton and Vice President Al Gore.

Before Bryan stepped down as CEO in August 2000, he and others persuaded Liberty Media Chairman John Malone and Hicks Muse Tate and Furst Chairman Thomas Hicks to invest a combined $730 million in the company. ICG managed to burn through nearly $2.8 billion in debt before filing for Chapter 11 bankruptcy protection late last year, with $2.7 billion in assets.

Allegations of phony sales figures and improper conduct by executives surfaced in the wake of the companys bankruptcy, lawsuits by institutional and individual shareholders, and preliminary inquiries by the Securities and Exchange Commission.

Former employees also said ICGs books were "cooked" to make it appear as though the company was selling more service lines than it actually was, and they accused executives of padding expense accounts and failing to keep track of hundreds of millions of dollars in network equipment.

ICG has consistently denied the charges. The company has been seeking exit financing to emerge from federal bankruptcy court in Delaware.