Bernard Ebbers, former CEO of WorldCom, was convicted Tuesday for his role in orchestrating the massive fraud that led to collapse of the telecom giant. A federal jury in New York deliberated for eight days before finding Ebbers guilty on all counts - conspiracy, securities fraud and making false regulatory filings. Ebbers, who is scheduled to be sentenced on June 13, faces a lengthy prison term.
Problems at WorldCom first surfaced after the company disclosed accounting irregularities in June 2001. Those early revelations were just the start of an $11 billion corporate scandal that led to WorldCom’s bankruptcy in July 2002. Prosecutors charged that Ebbers, who resigned from WorldCom shortly before the scandal surfaced, masterminded the accounting fraud in order to protect his vast wealth, which was tied to the value of WorldCom shares. They alleged that Ebbers was concerned about $400 million in personal loans that were backed by his WorldCom holdings.
The principal witness against Ebbers was Scott Sullivan, WorldCom’s former chief financial officer, who said that Ebbers pressured him to “hit our numbers” - according to Sullivan, a command to cook the books and satisfy Wall Street’s expectations. Sullivan, who has pleaded guilty to his role in the fraud, maintained that he was only following Ebbers’ instructions and warned the CEO of possible accounting improprieties.
Ebbers, who testified at the trial, denied Sullivan’s allegations, claiming that he did not pay attention to accounting details and insisting that Sullivan never had advised him of any concerns. Evidently the jury was not persuaded of his innocence.
Ebbers is still facing civil litigation, including claims by WorldCom.
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