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Former WorldCom executives can expect charges

Friday, July 26, 2002

NEW YORK -- Federal prosecutors plan to charge former officers of WorldCom Inc. sometime next week for their suspected roles in the massive financial wrongdoing at the bankrupt telecommunications giant, a law enforcement official said Thursday.

"Indications are that charges will be filed sometime next week," a source close to the investigation, speaking on condition of anonymity, told The Associated Press.

The official would not identify which individuals, or how many, were likely to be charged. But the Wall Street Journal reported Thursday that former chief financial officer Scott Sullivan and former controller David Myers are expected to be indicted on a variety of charges related to billions of dollars in accounting frauds at the company.

The government also is likely to seek the indictment of former chief executive Bernard Ebbers, the Journal reported, citing unidentified sources familiar with the matter.

Federal prosecutors set a deadline of next Wednesday to file indictments against Sullivan and Myers, who were dismissed from the company last month, the sources told the newspaper. They said prosecutors are seeking the former WorldCom officials' cooperation to produce evidence against Ebbers, who resigned two months before the company admitted it inflated earnings by nearly $4 billion.

"We are confident that the prosecutors will ignore the howling mob and concentrate on the evidence," Ebbers' attorney Reid Weingarten said in a statement. "And if they do so, Mr. Ebbers will not be prosecuted."

Corporation in doubt

WorldCom also could be indicted as a corporation under a plan being considered by the Justice Department, the newspaper reported. A conviction of the long-distance phone company could drive it out of business and hurt consumers and creditors.

WorldCom spokeswoman Julie Moore said Thursday the company had no indication that indictments were forthcoming.

"That is flatly inconsistent with what federal prosecutors have communicated to the company," Moore said.

The Justice Department and the FBI declined to comment. Sullivan's attorney, Andrew J. Graham, did not immediately return requests for comment. Myers' attorney could not immediately be located by the AP.

The Securities and Exchange Commission, citing "accounting improprieties of unprecedented magnitude," filed civil fraud charges last month against WorldCom.

The Clinton, Miss.-based company admitted June 25 it falsely accounted for $3.8 billion in expenses. The inflated revenue allowed the company to report profits when it otherwise would have losses. That day, it fired Sullivan, who was subsequently accused by the company's auditor, Arthur Andersen, of withholding crucial information about WorldCom's bookkeeping.

WorldCom on Sunday filed for bankruptcy under Chapter 11, the largest such filing in U.S. history. The judge overseeing the case approved the appointment Monday of an independent examiner to ensure an honest accounting of the company's value and investigate for mismanagement, irregularities and fraud.

U.S. Bankruptcy Judge Arthur Gonzalez approved $2 billion in financing to keep WorldCom operating as it reorganizes its finances.

He also granted the Justice Department's request for an independent examiner to ensure an honest accounting of the company's value and investigate for mismanagement, irregularities and fraud.


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