Ex-WorldCom director admits guilt
By Andrew Backover
A second former WorldCom executive pleaded guilty yesterday to fraud charges, giving prosecutors more ammunition to link top executives to one of the biggest corporate fraud cases ever.
Former accounting director Buford Yates, 46, pleaded guilty to conspiracy and fraud charges, reversing an earlier innocent plea. He joins former WorldCom controller David Myers, who also pleaded guilty to fraud.
Both are cooperating with investigators and could help prosecutors work up the chain of command, possibly to former CEO Bernie Ebbers. Ebbers has denied wrongdoing but is one of many CEOs in the spotlight as regulators try to rebuild investor confidence shattered by corporate scandals.
Yates is a minor player in a scheme that prosecutors say helped WorldCom hide more than $5 billion in expenses from late 2000 into 2002. The goal: meet Wall Street earnings expectations when its growth stalled.
The USA's No. 2 long-distance phone company has revealed $7.2 billion in improper accounting. In July, it filed for the largest bankruptcy reorganization ever.
Former CFO Scott Sullivan, who prosecutors say masterminded the scheme, has said he's innocent. Yates reported to Myers, and Myers is key to the case against Sullivan. Sullivan, then, could implicate other executives, legal experts say. Yates also helps "present an airtight prosecution" of Sullivan, says Robert Mintz, a former prosecutor now with McCarter & English.
Yates, like Myers, had no direct contact with Ebbers. But both have said in documents released by investigators that they questioned the accounting used.
Meanwhile, WorldCom directors today could further consider whether to rescind $408 million in loans and $1.5 million in severance to Ebbers. Also, director Stiles Kellett plans to defend his lease of a company jet for $1 a month plus expenses. A court monitor has said Kellett should resign, but he is not expected to. The monitor questioned whether Ebbers' loans and the plane lease to Kellett were linked. Kellett's attorney has said that the lease was proper and that WorldCom's outside directors approved Ebbers' perks.