X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
U.S. Attorney General John Ashcroft flew to New York Tuesday to announce criminal charges against former WorldCom CEO Bernard Ebbers, one of several company executives accused of presiding over an $11 billion accounting scandal that sent the telecommunications giant into bankruptcy. The afternoon press conference came hours after WorldCom’s former chief financial officer, Scott Sullivan, pleaded guilty to securities fraud and filing false documents with the Securities and Exchange Commission in an effort to hide WorldCom’s enormous expenses and declining profits from investors and the public over a period of almost two years, ending in 2002. Sullivan, 42, who could face 25 years in prison, has agreed to cooperate with the government in its prosecution of Ebbers. As he pleaded guilty before Southern District Judge Barbara S. Jones, Sullivan said he knew what he was doing was wrong and apologized for his actions. “I do want to say that I did not take any of these actions for personal financial gain,” Sullivan said. He said he helped mask WorldCom’s financial woes in a misguided effort to lift the company out of what he believed were “temporary financial difficulties.” Sullivan is being represented by Irvin B. Nathan of Arnold & Porter in Washington, D.C. Ashcroft, joined by Southern District U.S. Attorney David N. Kelley and Stephen M. Cutler, director of the Securities and Exchange Commission’s Division of Enforcement, revealed a three-count indictment charging Ebbers, 62, with conspiracy to commit securities fraud, securities fraud and false filings. The superseding indictment also named Sullivan and added charges to a previous indictment against him. Ebbers’ attorney, Reid H. Weingarten of Steptoe & Johnson in Washington, D.C., denied the allegations in a statement. Ebbers is scheduled to be arraigned today. According to the indictment, Ebbers and Sullivan directed members of WorldCom’s accounting department to book entries in the company’s accounting ledger that increased revenue in an attempt to satisfy the expectations of Wall Street analysts. They also caused the company to file false statements with the SEC, the indictment said. When the extent of WorldCom’s inflated revenue was revealed, the company’s stock plummeted. WorldCom filed for bankruptcy in the summer of 2002. Ashcroft described Sullivan’s plea as a “step forward,” but would not comment on the importance of the former CFO’s testimony in a prosecution against Ebbers. As far as Ebbers, the attorney general said, “The message to CEOs is that integrity is very important.” Cutler, speaking at the press conference, said the indictment of Ebbers showed that “no matter how high executives climb on the corporate ladder, they will never be above the law.” He would not say whether the SEC would file individual charges against Ebbers, adding that the agency sometimes chooses not to take such actions for tactical reasons. The SEC settled a civil action against WorldCom last summer for $750 million. Cutler said any future disgorgements from the company’s executives will be added to that fund to benefit investors. Weingarten said in a statement, “Bernie Ebbers never sought to mislead investors, never sought to improperly manipulate WorldCom’s numbers, never improperly took any money and never sought to hurt the company he built.” He added: “We do not believe that a fair-minded jury will conclude that Bernie Ebbers ever acted with criminal intent.” The Southern District prosecution team is being led by Assistant U.S. Attorney David B. Anders.

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.