Ex-WorldCom CEO Ebbers indicted
By Devlin Barrett
WASHINGTON -- Former WorldCom CEO Bernard Ebbers has been indicted on federal charges stemming from the multibillion dollar accounting fraud at the telecommunications giant, a government official said today.
The official, who spoke to the Associated Press on condition of anonymity, said the charges include securities fraud.
Attorney General John Ashcroft planned a 1 p.m. news conference in New York to announce the charges, which first were reported late Monday by WNBC-TV.
Ebbers' attorney, Reid Weingarten, could not immediately be reached for comment.
Ebbers resigned from WorldCom in April 2002, well after its stock price had begun a steady decline and soon after questions began to swirl about the company's finances. Two months later, WorldCom announced it had uncovered nearly $4 billion in hidden expenses -- the beginning of a spiral that would become the largest corporate fraud in U.S. history. The fraud is now estimated at $11 billion.
WorldCom, parent of the nation's second biggest long-distance telephone company, filed for bankruptcy July 21, 2002. In a bid to heal its reputation, WorldCom changed its name to MCI last April and moved its headquarters from Jackson, Miss., to Ashburn, Va.
The charges against Ebbers come as authorities scheduled a morning court appearance by former WorldCom chief financial officer Scott Sullivan.
Another source familiar with the case, who also spoke on condition of anonymity, said Sullivan has been involved in plea negotiations with federal prosecutors ahead of his April 7 trial date and a deal could be announced as soon as today. Sullivan was to appear at the federal courthouse in New York at 11:30 a.m., U.S. Attorney David N. Kelley said.
Sullivan and former WorldCom controller David Myers were arrested in August 2002 on charges of securities fraud, conspiracy and filing false statements with the SEC.
Authorities allege Sullivan oversaw a long-running conspiracy to hide operating expenses in order to boost reported profits at WorldCom.
Ebbers and Sullivan were also charged with 15 violations of state securities laws in Oklahoma. They are among six ex-WorldCom employees charged there in an accounting fraud prosecutors say cost state pension funds $64 million.
Oklahoma's attorney general dropped criminal charges against Ebbers in November but has said he plans to refile them this year.
A WorldCom report released in June said Ebbers fostered a poisonous corporate culture and said he was "aware, at a minimum, that WorldCom was meeting revenue expectations through financial gimmickry."
The report, produced by lawyer William McLucas at the request of the company's new board, said Ebbers had been in meetings in which company officials discussed ways to artificially inflate revenue.
A second report, by former Attorney General Richard Thornburgh for a bankruptcy judge in New York, described a corporate culture dominated by Ebbers and Sullivan "with virtually no checks or restraints placed on their actions by the board of directors or other management."