U.S. Securities and Exchange Commission

Litigation Release No. 18374 / September 29, 2003

Accounting and Auditing Enforcement Release No. 1878 / September 29, 2003

Civil Action No. 03-D-1925 (MJW) (D. Colo.)

   Today, the Securities and Exchange Commission (the "Commission")
   instituted, and simultaneously settled, a cease-and-desist proceeding
   against Loren D. Pfau, a resident of Evergreen, Colorado and former
   employee of Qwest Communications International, Inc. ("Qwest"). In
   addition, the Commission filed a related action for civil penalties
   against Pfau in the United States District Court for the District of
   Colorado.

   In the Order, (), the Commission found that in the final days of each
   quarter from December 2000 through June 2001, Qwest used Indefeasible
   Right of Use ("IRU") agreements to sell fiber-optic cable from its
   telecommunications network as a means to meet aggressive revenue
   targets. An IRU is an irrevocable right to use a specific amount of
   fiber for a specified time period. Qwest accounted for IRUs as
   sales-type leases and recognized nearly the entire amount of the IRU
   revenue "up-front" at the time of contract execution, rather than over
   the life of the IRU agreement. Qwest employees and management commonly
   referred to IRU sales as "gap fillers," in other words, a means to
   make up the shortfall between the aggressive revenue projections as
   publicly announced by Qwest and the actual revenue earned.

   Specifically, the Commission found that in three IRU transactions
   executed between December 2000 and June 2001, Pfau, then a Qwest sales
   manager, along with Qwest senior management, provided secret side
   agreements allowing the purchasers of fiber-optic cable to exchange
   (or "port") the fiber purchased for different fiber at a later date.
   The explicit purpose of making the side agreements secret was to
   conceal from Qwest's accountants and outside auditors the purchasers'
   ability to port, since such exchange rights would have defeated, under
   generally accepted accounting principles, the up-front revenue
   recognition sought by Qwest. According to the Commission's findings,
   Qwest improperly recognized from the three IRU transactions $26.6
   million of revenue in the first and second quarters of 2001. As a
   result, Qwest's quarterly reports for the first and second quarters of
   2001, and its annual report for 2001, contained materially false
   information.

   Without admitting or denying the findings in the Commission's Order,
   Pfau has agreed to settle the Commission's claims by consenting to the
   entry of an administrative order requiring him to cease and desist