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Report: WorldCom Scam Could Total $2B

Sep 19, 2002 | AP

The WorldCom Inc. accounting scandal could soon reach $9 billion. The bankrupt telecommunications company is preparing to revise its past financial results yet again, this time by $2 billion, The Wall Street Journal reported Thursday, quoting unidentified sources.

officials were expected to disclose the new findings in a filing with the Securities and Exchange Commission on Friday, the Journal said.

WorldCom spokeswoman Julie Moore would not comment.

The company indicated earlier this summer it planned a restatement.

WorldCom, which owns the nation's No. 2 long distance carrier MCI, filed for Chapter 11 bankruptcy protection July 21 after the company reported $3.8 billion in bogus accounting. That figure was later revised to $7.1 billion.

The Journal said that while the exact breakdown of the potential $2 billion addition isn't yet known, some of the revision may involve write-downs of assets. An unspecified amount also could stem from improper accounting for a partial stake WorldCom held in a foreign company, the Journal said.

WorldCom announced earlier that it may write off $50.6 billion in goodwill and other intangible assets when it does restate its finances to adjust for the accounting problems.

Five WorldCom executives are accused of being co-conspirators in the accounting scandal, the biggest in U.S. history. Federal prosecutors recently said they may level new charges and indict new defendants in the case. The company faces civil fraud charges by the SEC.

"One can't help but be blown away by the magnitude of this malfeasance," said Patrick Comack, an analyst with Guzman and Co. in Miami. "I'm not surprised they are finding more fraudulent activity but I'm certainly surprised by the size of it."

Worldcom's standing "continues to get crushed by these ongoing revelations," Comack said. "It's going to be tough for them to come back."

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