The former chief executive of US telecoms giant Qwest Communications, Joseph Nacchio, has been indicted on 42 counts of insider trading.
Former executives massaged Qwest's revenue figures
This is the first criminal charge against Mr Nacchio in the US government's four-year-old probe.
Mr Nacchio is charged with selling more than $100m of Qwest stock after he had been warned that the firm would miss revenue targets.
Prosecutors are demanding he returns the profits he allegedly made.
"Nacchio's stock sales accelerated in January 2001 as he became aware of additional material, non-public information," the indictment said.
The government also alleged that former Qwest executives were involved in false accounting between 1999 and 2002, allowing Qwest to inflate its revenues by about $3bn (£1.56bn).
This helped it buy up regional phone rival US West, the government alleges.
Qwest was subsequently forced to revise its earnings for the period, erasing about $2.2bn in revenue and its executive soon became the target of legal action.
Six former Qwest executives have already been charged in the fraud investigation including the company's former chief financial officer Robin Szeliga.
Robin Szeliga is due to testify in the latest case, along with former sales executive Gregory Casey, who has settled charges made against him by the Securities and Exchange Commission.
Joseph Nacchio, 56, joined Qwest in 1997 from AT&T. He was ousted by the board in June 2002 but he has always said he did nothing improper.
Denver-based Qwest is the fourth largest regional phone carrier in the US.