WorldCom Convictions Handed Down
Bernard Ebbers received 25 years for his part in the largest bankruptcy in U.S. history. He was sentenced in July after a jury of his peers ruled in April that he had engaged in fraud and conspiracy in connection with WorldCom’s $11 billion accounting scandal. It was the largest in U.S. history. WorldCom has since come out of bankruptcy as MCI. Verizon is expected to acquire the company later this year.
Other men who helped convict Ebbers have had their sentences passed down recently. Scott Sullivan was WorldCom’s chief financial officer and the big fish after Ebbers. He received a five-year sentence with three-years probation. Back in March 2004, he plead guilty to fraud and other charges but testifying against Ebbers allowed him an opportunity to exit prison before age 50.
At his sentencing, he appealed to U.S. District Court Judge Barbara Jones to acknowledge his substantial cooperation in convicting Ebbers and the physical condition of his wife who suffers from diabetes as well as the care and wellbeing of their four-year-old daughter. Mrs. Sullivan has been hospitalized nine times in 2005.
“I am sorry for the hurt that has been caused by my cowardly actions. I truly am,” Sullivan said in court, sounding distressed. “I ask the court for leniency so I can get back to my family as soon as possible.”
In his hearing, the judge told Sullivan, “It was extremely fortunate there was an opportunity for you to cooperate, Mr. Sullivan, you would have faced a substantial sentence had you not cooperated with the government.”
While Judge Jones called Sullivan a “model of cooperation” in court, the judge also told Sullivan his “offenses were of the highest magnitude.” He initially denied any involvement in the $11 billion fraud perpetrated by WorldCom. “I believe Mr. Sullivan was the architect of the fraud at WorldCom,” the judge said adding that, “Mr. Sullivan was the day-to-day manager, if you will, of the scheme.” Judge Jones also understood that Sullivan was under substantial pressure from Mr. Ebbers.
In pleading guilty to these charges, Sullivan also agreed to sell his $15 million beachside Boca Raton, Florida. He will also forfeit his WorldCom retirement account. The proceeds from the home sale as well as the contents of the retirement account will go to a fund for WorldCom shareholders.
Sullivan must surrender to federal officials on November 11. His attorney has requested the Bureau of Prisons to place him in a minimum-security prison facility near his Pensacola, Florida home.
Also appearing before Judge Jones, the former controller David Myers received a sentence of a year and a day allowing Myers to have his time reduced for good behaviour. Myers must serve at least 85 percent of his sentence.
Judge Jones could have given a stricter sentence but she noted his extensive government cooperation and his early admission of guilt. He directed WorldCom’s accounting department to adjust their financial statements to comply with market expectations. Scott Sullivan was his direct boss.
Myers must surrender to federal authorities on October 10. His attorney requested that Myers serve his sentence in a federal prison in Yazoo City, Mississippi, near his home.
Buford “Buddy” Yates Jr also appeared before Judge Jones and received a sentence of one year and a day with three years’ probation. He must serve 85% of his sentence and was also fined $5,000. For the two counts of his indictment, his maximum sentence would have been 15 years and a fine in the millions.
Yates did not testify in the Ebbers trial but his sentence was reduced on the fact that Yates did not receive the salary or stock options of other WorldCom executive. He was also forced to falsify WorldCom’s financial statements to meet Wall Street expectations.
In court, Yates said, “When faced with a decision that required strong moral courage, I took the easy way out.” He told the judge, “there are no words to describe my shame and humiliation.” Yates must surrender to an undetermined federal correctional facility on October 10.
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