Former WorldCom CEO Bernard Ebbers was sentenced Wednesday to 25 years in prison for his part in the nation’s largest accounting fraud. U.S. District Judge Barbara Jones gave 63-year-old Ebbers the stiffest sentence handed down to a CEO since the collapse of Enron, despite being five years less than the maximum possible sentence.
“I find that a sentence of anything less would not reflect the seriousness of this crime,” the Associated Press reports Judge Jones as saying.
Ebbers was convicted of seven counts of making false filings to the Securities and Exchange Commission (SEC), conspiracy and securities fraud. Bloomberg reports that Ebbers was responsible for at least $2.22 billion in shareholder loses, testified falsely during his trial and obtained hundreds of millions of dollars in loans secured by WorldCom that was artificially inflated according to prosecutors.
“This was not a minor fraud,” Judge Jones is quoted by the Associated Press as saying. “Mr. Ebbers committed a fraud that caused numbers of investors to suffer losses. His statements deprived investors of the truth about WorldCom’s financial condition.”
New York State Comptroller Alan Hevesi, whom Bloomberg identifies as the lead plaintiff in a civil suit against WorldCom, is satisfied with the sentence. The Associated
Press reports that Hevesi’s office is collecting funds and managing some of the WorldCom-related settlements and Ebbers himself. According to the Associated Press, the funds collected will be deposited in a trust for investors who lost money on WorldCom stock, however, Hesesi’s office would not speculate on when investors could see restitution.
Reuters reports that the SEC also announced on Wednesday that Ebbers had agreed to settle civil charges related to WorldCom’s fraudulent accounting activities. These funds will be added to the “fair fund” created by the SEC for WorldCom investors as part of the company’s settlement. The Associated Press reports that the fund holds $750 million waiting to be distributed to WorldCom shareholders.
“This immense fraud was the turning point that caused millions of people to stop investing and cost the U.S. economy tens of billions in lost economic activity,” Hevesi told Bloomberg.
Ebbers has been ordered to surrender on October 12, 2005 to federal prison, Bloomberg reports. His defense lawyers have asked Jones to recommend Ebbers serve his time, which may well be the rest of his life, at the federal facility in Yazoo City, Mississippi. The length of his sentence, however, may make him ineligible for the low- and medium-security facility. Ebbers’ defense attorneys are also planning an appeal.