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Investor Lawsuit Against CenturyLink Alleges Securities Violations

Lawsuit

A new proposed class-action lawsuit alleges CenturyLink investors “suffered significant losses” after the company failed to disclose alleged overbilling and overcharging for services until after the news broke publicly.

Federman and Sherwood filed the suit on behalf of bondholder Inter-Marketing Group last week in the U.S. District Court for the Southern District of New York. Glen Post, CenturyLink’s president and CEO; Stewart Ewing, its chief financial officer; and David Cole, its controller, were named individual defendants in the suit.

CenturyLink is in the process of acquiring Level 3 Communications, and the deal is expected to be final on Wednesday.

Class-action suits have been filed against CenturyLink in Alabama, Arizona, California, Colorado, Idaho, Nevada, Oregon and Washington, in addition to a suit filed by Minnesota Attorney General Lori Swanson and numerous investor class-action suits.

According to Inter-Marketing Group’s suit, CenturyLink made “materially false and/or misleading statements and/or failed to disclose material adverse facts about its business, operations and compliance policies,” specifically allowing its employees to “add services or lines to accounts without customer permission, resulting in millions of dollars in unauthorized charges to customers.”

CenturyLink’s  revenues “were the product of illicit conduct and were unsustainable,” according to the suit.

CenturyLink's Mark Molzen

CenturyLink’s Mark Molzen

The flurry of class-action suits follows a lawsuit filed in Arizona by former employee Heidi Heiser, who said she was fired from her job as a CenturyLink customer service and sales agent days after notifying Post of the alleged billing scheme.

Mark Molzen, CenturyLink spokesman, said the allegations in these lawsuits are “completely inconsistent with our company policies, culture and unifying principles, which include honesty and integrity.”

“It’s worth noting that once an initial class action is filed, it is common practice for law firms to seek other jurisdictions to file similar lawsuits, so unfortunately we could see more of the same,” he said. “However speculative or unfounded we think these claims may be, we are treating them very seriously. Our position is clear — we aim to operate our business with the highest levels of honesty and integrity. And while we will defend ourselves against unfounded claims, if we find we have made mistakes that we haven’t addressed, we will fairly address them. Not because of the threat of litigation, but because that is what we require of ourselves.”


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