Former WorldCom Controller Instructed to Falsify Records

Share this content

The former controller of WorldCom Inc., David F. Myers, pleaded guilty to charges of securities fraud, saying he was instructed by senior management to falsify records.

"I was instructed on a quarterly basis by senior management," he told the judge, "to ensure that entries were made to falsify WorldCom's books to reduce WorldCom's actual reported costs and therefore to increase WorldCom's reported earnings."

His attorney said the former controller was a "reluctant participant" in the fraud who acted at the direction of others and expressed his discomfort. But he recognizes that as a corporate officer, those facts do not relieve him of his own responsibility.

As part of the plea agreement, the Mr. Myers agreed to cooperate with prosecutors in the government's case against WorldCom's former chief financial officer and other executives who may have played a role in the accounting fraud.

The judge accepted the former controller's plea, which waived his rights to be indicted and tried on the charges. Mr. Myers is expected to face "significant" prison time for his role in the securities fraud. Memos and internal e-mail have shown him admitting the company was using improper accounting techniques and trying to prevent a subordinate from consulting with the company's former auditor, Arthur Andersen.

Simultaneously with Mr. Myers' guilty plea, the U.S. Securities and Exchange Commission filed a civil fraud suit against him. His attorney said he has actively been discussing this matter with the SEC and expects to have it resolved in the near future.

So far, WorldCom has admitted to overstating its income by $7 billion since 1999. Recent reports have indicated the final total may reach $9 billion. It is believed to be the largest corporate accounting scandal in U.S. history.

-Rosemary Schlank

About admin


Please login or register to join the discussion.

There are currently no replies, be the first to post a reply.