Phantom Growth: Worldcom Chief Hammered by Jury
The American dream - come from sparse roots in canada, build a company from the ground up, take it public, pump up your net worth to 1 billion, loot your creation for
11 billion, and then top it all off with a life sentence. I'm talking of course about the worldcom / Ebbers trial -- former worldcom ceo and badboy bernie ebbers was convicted of nine counts of securities fraud and false filings today. 85 years they're saying he'll land. He's free on bail now -until June. poor guy--they say hell is worse once you've already had a taste of heaven...
Ebbers, 63, insisted throughout a two-month-long trial that he wasn't aware of the $11 billion accounting fraud that pushed WorldCom into bankruptcy three years ago. Prosecutors mocked his "aw shucks" defense, calling Ebbers a micromanager who counted coffee filters and cut off free phone privileges for WorldCom employees.
Ebbers was charged on seven counts of making false filings with the SEC. Prosecutors persuaded the jury that Ebbers led a book-cooking scheme aimed at concealing the company's weakening performance and propping up WorldCom's stock price..."Money can corrupt, power can corrupt, and pressure can corrupt," U.S. attorney William Johnson told jurors...
The smoking gun for the prosecution seemed to be the massive round-number adjustments made to line costs, the fees paid to other telcos that carried WorldCom calling traffic. By shifting the line costs to capital expenditures, Ebbers and his minions were able to keep a total of $3.8 billion in expenses from punishing profits. Conversely, ebber's lawyer had portrayed his client as an unsophisticated college dropout who excelled at accumulating motels and later phone companies -- but didn't know a lick about accounting. The linchpin of the government's case was the testimony of Ebbers' former right-hand man, ex-financial chief Scott Sullivan.
I smell a rat! By 2002, despite Ebbers' assurances that WorldCom was in shipshape, the stock kept plunging. In June WorldCom filed for Chapter 11 protection. But it was too late--hundreds of employees losts hundred of thousands in 401K and pension account holdings.
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