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Former WorldCom Finance Chief May Strike Deal On Accounting-Fraud Charges

Nov 12, 2002 | Wall Street Journal

WorldCom Inc.'s former finance chief, Scott D. Sullivan, has resumed talks with federal prosecutors that could lead to a possible guilty plea to charges that he engaged in accounting fraud at the telecommunications concern, people familiar with the matter told The Wall Street Journal.

Mr. Sullivan, who was indicted in August in connection with WorldCom's escalating accounting scandal, is considering striking a deal and cooperating with the government's investigation in the hopes of getting a more-lenient sentence, these people said.

The ex-WorldCom official was charged with seven felony counts, including securities fraud, and faces a maximum of 65 years in prison. Mr. Sullivan has pleaded not guilty to the charges. WorldCom, which is operating under bankruptcy-court protection, has said it inflated profit by at least $9 billion over the past three years.

Mr. Sullivan and prosecutors were in talks about a possible plea deal before his indictment in August. But, those discussions broke down over the amount of prison time the government wanted to include in an agreement, according to people close to the matter.

But pressure has been building on Mr. Sullivan in recent weeks to strike a deal as several of his subordinates have pleaded guilty and agreed to cooperate with the government's investigation.

Four former WorldCom executives, including David F. Myers the controller who reported directly to Mr. Sullivan have pleaded guilty to charges in connection with their roles in the accounting improprieties. They are expected to be key witnesses in the government's case against Mr. Sullivan if it goes to trial.

Mr. Sullivan, who is free on $10 million bail, has told WorldCom executives and others that the accounting treatment he used was proper and that he doesn't believe he did anything wrong.

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