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Opening statements in Bernard Ebbers’ trial Tuesday painted starklycontrasting pictures of his role in the $11 billion scandal that rockedthe onetime telecommunications giant WorldCom. Prosecutors blamed Ebbers, the former chief executive of WorldCom,of orchestrating a massive accounting fraud that inflated revenues andmischaracterized expenses in an attempt to prop up the company’s saggingstock during the 2000-2001 economic slump. The motive, said leadprosecutor, Assistant U.S. Attorney David Anders, was Ebbers’desperation to avoid financial ruin. Defense lawyer Reid Weingarten of Washington, D.C.’s Steptoe & Johnsonplaced the blame on Scott Sullivan, the company’s former chief financialofficer. According to the defense, it was Sullivan, not Ebbers,who masterminded the accounting fraud and has now turned on Ebbersto save his own neck. Ebbers, 63, is accused of nine counts of securities fraud,conspiracy and filing false public reports. If convicted in the jurytrial before Southern District Judge Barbara Jones, he will face up to85 years in jail. WorldCom was a flagship among the booming telecommunications market inthe late 1990s. With Ebbers at the helm, the company mushroomedthrough a spree of acquisitions and mergers, even swallowinglong-distance giant MCI. By 2000, though, the telecom market began to sag and WorldCom with it.Eventually, WorldCom fell into bankruptcy in 2002 when revelations aboutits accounting practices came to light. It emerged last April under thename MCI. “On Oct. 26, 2000, Bernard Ebbers was at a crossroads,” said Andersin his opening. Anders successfully prosecuted former Credit SuisseFirst Boston banker Frank Quattrone last year. The executive could have told the truth to the investing public aboutWorldCom’s falling profits, continued Anders. But, he saidemphatically, “Bernard Ebbers chose to lie.” For 90 minutes, Anders meticulously and matter-of-factly describedthe government’s case to the jurors. At its heart are a handful of questionable accounting moves that,according to the government, deceived investors about WorldCom’sfinancial situation. These machinations, according to Anders, were executed by Ebbers’ right-hand man, former CFO Sullivan. When the two top executives of the company realized WorldCom’s earningswould fall short of projections, Sullivan told Ebbers that onlyan illegal accounting adjustment would make up the shortfall, said Anders. Ebbers’ response, according to prosecutors, was, “We have to hit thenumbers.” Anders repeated this statement several times in trying to convincejurors that these were orders to cook the books from the company’s chiefto his primary lieutenant. When Sullivan and others resisted, Ebbers persisted: “We have tomake the numbers.” “Why was Bernard Ebbers obsessed with hitting the numbers?” asked Anders. “It was money.” While Ebbers commanded Sullivan and WorldCom’s accountingdepartment to commit fraud, he was telling the world the company’sfinancial future was bright to keep WorldCom’s stock from fallingdramatically, the prosecutor said. Ebbers had borrowed about $400 million from outside banks for a hostof investments and used his WorldCom stock as collateral. If the stockcollapsed, then the banks would call in their loans, explained Anders, pushing him to lie and cheat to protect his own interests. “There will be a very different ending to this story,” countered Weingarten early in his opening statement. Weingarten described Ebbers as a charismatic coach, a “Telecomcowboy” with a gambler’s penchant for risk-taking. His client’sstrengths, said Weingarten, speaking rapidly but slowing to focus oncertain points, were not on accounting methods. Those responsibilities at WorldCom fell on Sullivan, the “brilliantsuperstar” who ran the company’s accounting department, Weingartensaid. Sullivan, along with Ronald Beaumont, the former chief operatingofficer of the company, ran its day-to-day operations as Ebbersprepared to retire, said Weingarten. The attorney’s focus remained on Sullivan, the chief witness for theprosecutors, who are relying on him to incriminate Ebbers throughpersonal conversations in a case without smoking-gun documents. “All of the accounting decisions were made by Scott Sullivan,” said Weingarten. “In fact, it was Scott Sullivan’s decision to capitalize the linecosts,” he continued, referring to one accounting gimmick used to reduceoperating expenses. While the defendant acted as a “cheerleader” not at the center of thefinancial workings of the company, Weingarten said, Sullivan”became addicted” to accounting machinations to ensure WorldCom wouldmeet its rosy projections. “[Mr. Ebbers] never told Scott Sullivan to make an accounting decision,”Weingarten said, explaining that Ebbers’ emphasis on “making thenumbers” was an innocuous statement used to motivate those working underhim, not an order to cook the books. “Scott Sullivan is a liar” for blaming Ebbers for the fraud Sullivan masterminded to avoid a lifetime in jail, Weingarten said.

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