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Southern District of New York U.S. Attorney James B. Comey was not happy Wednesday with the announcement that the state of Oklahoma has filed criminal charges against the main target of his investigation into WorldCom Inc. — former CEO Bernie Ebbers. Clearly upset by the filing of the first charges against the man who presided over the biggest accounting fraud in U.S. history, Comey released a statement that more than implied the action by Oklahoma Attorney General Drew Edmondson was a threat to his own investigation of the company. “In the name of cooperation and coordination, we are disappointed that we were not told that charges were imminent, as we have enjoyed a cooperative relationship with the attorneys general of other states,” Comey said. “We are hopeful Oklahoma’s action will not interfere with the prosecution of the five individuals already charged, four of whom have pled guilty and are awaiting sentencing in the Southern District, or with this office’s ongoing investigation into WorldCom.” The unusual statement — from a head prosecutor who has a reputation for going out of his way to avoid visible turf battles with other agencies and jurisdictions — indicated that Southern District prosecutors felt they had been sandbagged. The statement, which did not mention Edmondson by name, was officially released by the U.S. Attorney’s “Office.” Most releases from the Southern District are issued under Comey’s name. The tone of the release was one of anger as one of the major, if not the most significant case of Comey’s tenure — an investigation already complicated by the company’s bankruptcy, a raft of investor lawsuits and a civil enforcement action by the Securities and Exchange Commission — might become even more tricky with Edmondson’s decision to jump the gun. “Regarding the charges announced today by the State of Oklahoma, this office has not been contacted for evidence or access to key witnesses in our active investigation into WorldCom and its accounting fraud,” Comey said. Ebbers and five other executives, including former Chief Financial Officer Scott Sullivan, who is awaiting trial in the Southern District, were charged by Oklahoma with violating securities laws for hiding billions on its balance sheets in 2000 in a desperate bid to boost the company’s stock price. Edmondson, claiming the ultimate collapse of the stock price and the company’s subsequent bankruptcy cost the Oklahoma state pension fund $64 million, also took what he said yesterday was the “rare” but “justified” step of filing criminal charges against the company itself. “The decision to commit this fraud was a company decision,” Edmondson said. “This is not some rogue employee trying to line his own pockets.” Some of Edmondson’s statement echoed comments made by Southern District Judge Jed S. Rakoff when he approved a $750 million civil fraud penalty settlement between the company and the SEC on July 7, a settlement that was then approved by Southern District Bankruptcy Judge Arthur J. Gonzalez earlier this month. Edmondson also made reference to WorldCom’s expected emergence this fall from its bankruptcy proceeding. The fresh start sought by the company under the name MCI is vehemently opposed by AT&T and other competitors, who claim that the doctored balance sheets allowed the company to acquire assets it will retain in its new incarnation, win new contracts, and emerge an even more formidable foe. “I don’t think the company has been punished,” Edmondson said. “I think its been rewarded for its bad acts.” When the scandal first broke last year, Comey’s office moved quickly to bring criminal charges against Sullivan and four other executives David Myers, Buford Yates Jr., Betty Vinson and Troy Normand. But Ebbers apparent insulation from the decisions to hide billions in costs associated with leasing the telecommunications lines of other carriers has meant that prosecutors with Comey’s Securities and Commodities Fraud Unit have had to proceed more methodically against Ebbers, working to win the cooperation of the executives who pleaded guilty. The criminal charges filed yesterday against Myers, Yates, Normand and Vinson could complicate any cooperation agreements they have with Comey’s office. Ebbers’ lawyer, Reid Weingarten, released a statement saying he intends to beat back the Oklahoma charges. “The entire WorldCom matter has been investigated exhaustively for over a year by the FBI and the U.S. Department of Justice and no charges have been brought against Bernard Ebbers,” he said. “This is not because of any lack of prosecutorial zeal; rather, it is because of a total lack of any evidence that Mr. Ebbers committed crimes.” “It is apparent from the charging document, which contain no specific allegations of wrongdoing by Bernard Ebbers, what the local Oklahoma authorities think they have uncovered that the federal authorities have overlooked,” he said. The Associated Press contributed to this report.

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