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Face Charges, WorldCom Former Executives People Say

Jul 25, 2002 | Bloomberg

Prosecutors are preparing to seek indictments against former WorldCom Inc. chief executive Bernard Ebbers and two other former company officials, people familiar with the investigation said.

Former finance chief Scott Sullivan and former controller David Myers also face charges, the people said. Sullivan was fired after it was revealed that the company hid more than $3.85 billion in costs. Ebbers resigned in April, owing WorldCom more than $408 million in loans he said he would repay.

Prosecutors in New York are considering charges that include securities, mail and wire fraud, one person said. They plan to ask a grand jury to return indictments as early as next week, the person said. The company has been accused of civil fraud by the Securities and Exchange Commission.

``The swifter the justice, the better,'' said Carl Lawrence, managing director at Warwick Capital, which owns 20,000 WorldCom shares. ``I want to see this get done as quickly as possible so we can put it behind us.''

WorldCom, the second largest long-distance telephone company, filed the biggest bankruptcy in U.S. history on Sunday. The indictments would follow yesterday's criminal charges against John Rigas, founder of Adelphia Communications Corp., two of his sons and two other former company executives accused of looting the cable television operator of more than $1 billion.

Justice Department spokesman Bryan Sierra and WorldCom spokesman Brad Burns declined to comment on possible indictments.

Declining Fortunes

Reid Weingarten, Ebbers's lawyer, and E. Lawrence Barcella, Myers's lawyer, didn't return voicemail messages left for them. A receptionist at the office of Andrew Graham, Sullivan's lawyer, said he wasn't immediately available.

The Wall Street Journal reported earlier today that the indictments may be imminent. The government also is considering indicting WorldCom, a move that may threaten the company's survival, the newspaper said.

Company documents released by the House Energy and Commerce Committee show that Sullivan and Myers were told as early as 2000 that the accounting treatment they were using was questionable.

WorldCom's fortunes have plummeted since 1999, when it was acquiring rivals to challenge the long-distance dominance of AT&T Corp. Declining sales and growing debt squeezed the telecommunications industry and wiped out more than $100 billion in the company's market value.

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