Ebbers Convicted on All Charges in Worldcom Case
A federal jury in Manhattan took eight days to reach guilty verdicts on all charges, including one count of conspiracy, one count of securities fraud and seven counts of false regulatory filings — crimes carrying up to 85 years in prison, reported the Associated Press.
Sentencing is scheduled for June 13.
The conviction came two years after an internal auditor began asking questions about curious accounting at WorldCom, touching off a scandal that eventually unearthed $11 billion in cooked books, according to the AP.
The star witness in the case was Scott Sullivan, chief financial officer at WorldCom, who testified that Ebbers directed him to hide expenses and overstate revenue to meet Wall Street expectations, reported Bloomberg News.
Sullivan pleaded guilty in exchange for leniency at sentencing.
Ebbers himself took the stand for three days late in the trial, directly disputing Sullivan’s testimony, saying he was unfamiliar with the details of accounting and knew nothing about the fraud taking place.
Prosecutors said the fraud stretched from late 2000 to early 2002, sometimes amounting to $1 billion per quarter in hidden expenses and improperly recognized revenue, the AP reported.
Ebbers had built up WorldCom from a little-known discount long distance company that he started in Mississippi in 1983. Capitalizing on the breakup of telephone giant AT&T, the company bought more than 40 companies in five years.
Ebbers resigned from WorldCom in April 2002, well after its stock price had begun a steady decline and soon after questions about the company’s finances surfaced.
WorldCom lost more than $180 billion in market value before its bankruptcy filing in July 2002.
In an attempt to heal its reputation, WorldCom changed its name to MCI in April 2003 and moved its headquarters to Ashburn, Va.
The company has struck a $750 million settlement with federal regulators to repay aggrieved investors.
Twelve former directors of the company, some investment banks that underwrote WorldCom securities and auditing firm Arthur Andersen also face a civil trial brought by investors. That trial is set to start in late March.