Miss. A.G. Working On WorldCom ProbeAug 7, 2002 | AP
Mississippi Attorney General Mike Moore says his office's cooperation with federal authorities investigating WorldCom Inc. will be similar to the ongoing case against fugitive financier Martin Frankel.
Moore said he met late last week with U.S. Attorney James B. Comey in New York to discuss strategy in the WorldCom probe.
Last Thursday, two former WorldCom executives were arrested in New York and charged with hiding billions in expenses and lying to investors and regulators in a desperate bid to keep the Clinton-based company afloat.
Former chief financial officer Scott Sullivan, 40, and former controller David Myers, 44, surrendered to the FBI in the latest blow to the bankrupt telecommunications giant.
Moore said he and Comey discussed coordinating their investigations so they didn't duplicate efforts. Part of that will include interviewing witnesses and sharing information, he said.
"We talked strategy — whether to go forward with federal charges first, or state charges, or both," Moore said. "We developed a plan of action. It was very helpful. They're going to cooperate with us 100 percent, and us with them."
In the Frankel case, Moore's office worked closely with the U.S. attorney in Connecticut, where Frankel owned a mansion.
Frankel, accused of swindling more than $200 million from insurance companies while living in luxury, pleaded guilty in May to corruption charges in Mississippi.
A little more than a week earlier, he entered guilty pleas in Connecticut to federal charges for the same scam.
In Mississippi, the 47-year-old former fugitive pleaded guilty to nine counts of mail fraud, one count of conspiracy and one count of making false statements and representations. He faces up to five years in prison on each count.
Circuit Judge L. Breland Hilburn deferred sentencing for a year as part of a deal with state and federal prosecutors. Frankel has agreed to cooperate in the investigation and possible recovery of assets.
Moore wouldn't talk specifically about the WorldCom case, but he said a goal of a joint investigation is to "try to encourage cooperation."
Elsewhere, USA Today reported that renewed calls for the removal of chief executive John Sidgmore were expected Wednesday as the company's creditors met with top executives.
"Our new management team is focused on restructuring the company, not on unfounded speculation," a WorldCom spokesman said about the article.
WorldCom's creditors holding a $2.7 billion unsecured loan have been pushing for Sidgmore's removal, arguing for new leadership not tainted by the company's accounting scandal.
Sullivan and Myers could get up to 65 years in prison if convicted on federal charges of securities fraud, conspiracy and filing false statements with the Securities and Exchange Commission, according to U.S. Attorney General John AshcrofT. But federal guidelines call for a sentence of 10 years or less.
WorldCom filed for Chapter 11 bankruptcy July 21 after disclosing the accounting abuses. It was the biggest such filing in U.S. history.
Sullivan is accused of directing Myers to falsify the company's balance sheet by about $3.8 billion. That enabled WorldCom to continue reporting profits when it was actually losing money.