Prosecutors say David Myers, 44, and Scott Sullivan, former chief financial officer at WorldCom, instructed employees to hide more than $3.8 billion in expenses on balance sheets, allowing the telecommunications company to increase its reported profits when in actuality, it was losing money.
WorldCom, which owns telephone long distance giant MCI, registered the largest corporate bankruptcy in U.S. history in July and has since updated its accounting records to include $7.1 billion in improprieties.
The first to plead guilty in the WorldCom scandal, Myers entered his plea in a Manhattan U.S. District Court after telling Judge Richard Casey he wanted to waive his right to be indicted on the charges. Myers is charged with false filing of documents with the Securities and Exchange Commission, conspiracy to commit fraud and securities fraud.
“I was instructed on a quarterly basis by senior management to ensure that entries were made to falsify WorldCom’s books to reduce WorldCom’s reported actual costs therefore increasing reported earnings, ” Myers told the court.
According to media reports, Myers’ lawyer Richard Janis said outside the court that his client was a “reluctant participant” in the accounting fraud.
“Although he acted at the direction of others and although he expressed his discomfort and displeasure with the actions being undertaken by WorldCom, he recognizes that as a corporate officer those facts do not relieve him of his own responsibility,” Janis told reporters.
Myers’ cooperation with authorities may increase the pressure on Sullivan to strike a similar deal and tell prosecutors if former WorldCom CEO Bernie Ebbers was aware of the falsified accounting. Ebbers’ lawyer has said that his client knew nothing of the accounting missteps.
Sentencing was tentatively set for Dec. 26 and Myers could face up to 10 years in prison on the most serious charge.