Two ex-WorldCom bosses arrested on federal charges

NEW YORK -- Two former WorldCom executives were arrested Thursday on charges of falsifying the books by $3.8 billion at the now-bankrupt long-distance company -- the second time in a week that American business leaders were led away in handcuffs.

Former chief financial officer Scott Sullivan, 40, and former controller David Myers, 44, surrendered to the FBI in the latest blow to the company and corporate America, which has seen investors bail out of the stock market because of one accounting scandal after another.

"With each arrest, indictment and prosecution, we send this clear, unmistakable message: Corrupt corporate executives are no better than common thieves," Attorney General John Ashcroft said.

Sullivan and Myers could get up to 65 years in prison if convicted on charges of securities fraud, conspiracy and filing false statements with the Securities and Exchange Commission, Ashcroft said. But federal guidelines call for a sentence of 10 years or less.

Sullivan was released on $10 million bail, Myers on $2 million. Sullivan's bond was secured by a multimillion-dollar mansion under construction in Boca Raton, Fla.

'Honest man'

Outside court, Sullivan's attorney, Irv Nathan, called him "an honest and honorable man" and accused the Justice Department of making him a scapegoat. "We deeply regret the rush to judgment and the political overtones involved," Nathan said.

Myers' lawyers said he would plead innocent if indicted.

WorldCom, which owns MCI, the nation's second-largest long-distance company, filed for Chapter 11 bankruptcy July 21 after disclosing the accounting abuses. It was the biggest such filing in U.S. history.

Sullivan is accused of directing Myers to conceal about $3.8 billion in expenses on the company's balance sheet. That enabled WorldCom to continue reporting profits when it was actually losing money.

As the scheme was unraveling in June, Myers told WorldCom accountants that the company "could not continue with the cost structure at the current levels and that if the cost structure did not change, the company 'might as well shut the doors,"' prosecutors said in court papers.

The charges against Sullivan and Myers could pressure them to tell investigators what they know about their one-time boss, former chief executive Bernard Ebbers, who is also under investigation.

Ebbers' lawyers said in a statement that he had no knowledge of the accounting decisions in question, and believed Sullivan and Myers to be "competent, ethical and loyal employees, devoted to the welfare of WorldCom."

Federal agents led the two businessmen out of New York's FBI headquarters in handcuffs en route to the courthouse. The men, both wearing dark suits, did not speak to reporters. Two passers-by clapped.

Prosecutors said the defendants never disclosed the questionable accounting practices to WorldCom's outside auditors, including Arthur Andersen.