The U.S. Attorneys office in Denver is examining reports of fraud and criminal activity inside ICG Communications.
Published reports based on an Interactive Week investigation into allegations of misconduct at ICG were sent “to our head of white- collar crime investigations” for evaluation, said Jeff Dorschner, spokesman for U.S. Attorney Richard Spriggs in Denver.
Corporate officials at ICG last week again refused to talk to Interactive Week about allegations by former employees, supported by internal corporate documents, that ICG falsified sales reports and other revenue data to present a misleading picture of its financial condition to investors. Before it sought bankruptcy protection last fall, ICG had been the largest competitive local exchange carrier in the country.
ICG CEO Randall Curran and company spokeswoman Susan Koehler told The Associated Press and Denver newspaper reporters that the company had itself been the “victim” of internal criminal activity. They said all employees involved had been terminated.
Curran, named CEO to take the Denver company into bankruptcy late last year, denied that any fraud or misrepresentation of financial information had occurred.
“I had my eyes wide open when I first got here, and have also done some internal things to determine whether we have reason to believe this, and we have no knowledge of anything that would support a claim of fraud,” he told the Denver Post.
Curran said that the Securities and Exchange Commission is not currently conducting an investigation into the company, and that he does not foresee upcoming issues with the SEC.
Fred Chavez, a senior special counsel at the SEC based in Denver, said that the agency could neither confirm nor deny that an investigation of ICG is ongoing.
“The company can say whatever it likes,” Chavez said. But he pointed out that companies are not notified when informal SEC investigations are undertaken.
“Just hypothetically, say we had a complaint from an individual that there were irregularities in inventory controls, for instance, and that was backed up by another source inside the company with a reason to know. We would likely conduct our own inquiries,” Chavez said. “But we would do a lot of investigation before we ever talked to corporate officers.”
Chavez said companies only learn of SEC formal inquiries when their officials receive subpoenas for information.
A former employee at ICG said two SEC investigators have already conducted interviews about issues ranging from missing inventory to theft of company equipment, and other criminal activity.
Sources also said that evidence detailing illegal activity at ICG was given in April to FBI investigators, who forwarded that information to Denver-based SEC investigators.
ICG filed for bankruptcy protection last November. The company announced late last week that it was cutting off residential service to customers in Colorado, Ohio and Texas as part of its effort to reorganize.