honoluluadvertiser.com

Sponsored by:

Comment, blog & share photos

Log in | Become a member
The Honolulu Advertiser
Posted on: Friday, September 8, 2006

Prison date set for fallen WorldCom CEO

By Larry Neumeister
Associated Press

NEW YORK — Former WorldCom Corp. chief Bernard Ebbers was ordered to report to prison Sept. 26 to begin serving a 25-year sentence for an $11 billion accounting fraud.

U.S. District Judge Barbara Jones, in a ruling made public yesterday, ordered Ebbers to surrender to an institution designated by the U.S. Bureau of Prisons to begin serving a sentence that was delayed for the past year while an appeals court considered it.

Ebbers, 65, was sentenced in July last year after he was convicted of fraud and conspiracy in the massive fraud that drove WorldCom into bankruptcy in 2002.

The 2nd U.S. Circuit Court of Appeals last month upheld his conviction and sentence, finding he was motivated primarily by personal financial circumstances.

Ebbers once was known as one of the nation's most successful chief executive officers as his telecommunications company and its stock soared during the technology driven excesses of the late 1990s.

At trial, prosecutors successfully argued that Ebbers helped lead a plan to prop up the company's stock price by hiding its failing finances. The scheme was described as one of the largest accounting frauds in history.

WorldCom collapsed into bankruptcy in 2002, and investigators eventually uncovered $11 billion in fraud, much of it because accountants were classifying regular expenses as long-term capital expenditures. The company re-emerged under the name MCI. Verizon later bought MCI.

A lawyer for Ebbers, Reid Weingarten, did not immediately return a telephone call for comment yesterday.

Ebbers at sentencing could have faced as much as 85 years in prison on nine criminal counts including securities fraud, conspiracy and making false filings to the Securities and Exchange Commission.

He was convicted more than 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.

The company struck a $750 million settlement with federal regulators to repay aggrieved investors, a small sum compared to the tens of billions of dollars of market capitalization that evaporated in the scandal.