About two years ago it began and now the names Enron, WorldCom, Tyco, HealthSouth and Adelphia Communications are among those associated with scandal. Charges and trials involving wide-scale fraud in all of these companies are in various stages, with WorldCom's Bernard Ebbers and Enron's Jeffrey Skilling becoming the latest high-profile defendants.
"No matter how high executives climb on the corporate ladder, they will never be above the law," said Stephen M. Cutler, director of the SEC's Division of Enforcement, as he announced that former WorldCom Chief Financial Officer Scott Sullivan had settled civil charges in the case. He has also settled criminal charges and is cooperating with prosecutors building a case against Ebbers.
Skilling, former Enron CEO, was indicted Feb. 19 on charges he misled investors. The energy-trading giant, once the seventh largest company in the nation, collapsed in 2001.
Former Tyco Inc. CEO L. Dennis Kozlowski is on trial on massive theft charges, as is Adelphia Communications Corp.'s former chief, John Rigas, accused of fraud and conspiracy. The fraud trial of Richard Scrushy, ex-CEO of HealthSouth Corp., is scheduled to begin this summer, the Associated Press reported.
In a glimpse of what's to come in the Ebbers case, Sullivan testified to prosecutors he told Ebbers in September 2000 that the company needed to tell investors that earnings would be less than analysts had predicted, according to the indictment.
"Ebbers nevertheless insisted that WorldCom publicly report financial results that met analysts' expectation," the court papers said. "Rather than disclosing WorldCom's true condition and suffer the ensuing decline in the price of WorldCom's stock, Sullivan, with Ebbers' knowledge and approval, directed co-conspirators to make false and fraudulent adjustments to WorldCom's books."
Ebbers pleaded innocent yesterday in Manhattan federal court and was released on his own recognizance. He has two weeks to come up with $10 million in bail and his trial is set for trial for Nov. 9.
"We're looking forward to our day in court," his lawyer told reporters on the courthouse steps in lower Manhattan's Foley Square. "A fair jury will never conclude that Bernie did anything wrong."