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WorldCom: 2 More Plead Guilty

Oct 11, 2002 | The Clarion-Ledger

Two former WorldCom executives pleaded guilty on Thursday to their parts in the Clinton-based firm's $7.2 billion accounting scandal, bringing the number of admittedly guilty employees to four.

Betty Vinson, 47, WorldCom's former director of management reporting, pleaded guilty in New York early Thursday to conspiracy and securities fraud charges. Troy Normand, 35, director of legal entity accounting, pleaded guilty to the same charges in New York on Thursday afternoon.

Each of the Madison residents face up to 15 years in prison on the charges that at least one legal expert called an attempt by prosecutors to rack up high conviction numbers at the expense of seeking justice in the case.

Both Vinson and Normand said they altered WorldCom's books at the direction of fired Chief Financial Officer Scott Sullivan and former controller David Myers. Myers pleaded guilty last month, making him the first WorldCom executive to admit wrongdoing.

Sullivan has maintained his innocence, saying the accounting methods used to hide billions of dollars in expenses were legal even if they did make WorldCom look profitable while it was actually losing money.

Another former WorldCom executive, accounting director Buford "Buddy" Yates, pleaded guilty in New York on Monday.

As it did following Myers' and Yates' guilty pleas, the Securities and Exchange Commission filed civil charges against Normand nad Vinson. The SEC asked the court to fine the former executives and bar them from ever serving as officers of a publicly traded company.

Vinson and Normand have been cooperating with prosecutors since June when the accounting scandal erupted. Given their cooperation and their relatively junior positions at the company, a former prosecutor questioned the criminal prosecutions.

Jacob Frenkel, a former senior counsel with the SEC's enforcement division and former federal prosecutor now with the Atlanta law firm of Smith, Gambrell & Russell, said prosecutors need to show judgement in deciding whether or not to prosecute low-level executives.

"Traditionally, people at this level are only prosecuted when they are the instigators," Frenkel said, referring to the fact that Vinson and Normand did not have decision-making power at WorldCom.

In fact, congressional and court documents showed that both Normand and Vinson objected to the accounting moves. Normand went as far as asking to be layed off from the company.

If prosecutors needed Normand and Vinson to press their case against Sullivan or even former Chief Executive Officer Bernie Ebbers, the government could achieve that goal by allowing the former executives to testify in exchange for immunity, Frenkel said.

He questioned whether or not prosecutors pursued charges against the executives to give themselves bragging rights over Enron's prosecutors who have fewer guilt admissions.

"If Enron catches up, are the WorldCom prosecutors going to go after the person who changed the toner on a printer under some convoluted conspiracy theory that he knew the printer would be used for fraudulent financial reports?" Frenkel said.

Officials with the U.S. Department of Justice declined to comment on why they pressed charges against Vinson and Normand, two people who have been cooperating with investigators since the WorldCom scandal broke in June.

"We're just claiming that these people violated the law. I can't go into why we prosecute or don't prosecute anyone," said Marvin Smilon, a spokesman for the Justice Department's office in New York.

Legal experts have said testimony from Yates, Vinson, Normand and Myers will give prosecutors a strong case against Sullivan, but it does not bring the government any closer to Ebbers.

A clear target of federal, state and civil probes, Ebbers has not been charged with any crimes and has maintained his innocence in the ongoing scandal.

Joe Hollomon, a Jackson attorney representing both Vinson and Hollomon, told reporters in New York that his clients had only occasional contact with Ebbers.

According to court and congressional documents, all of the orders to alter financial statements at WorldCom came from Sullivan and Myers, not Ebbers.

While having four executives lined up to testify against him may encourage Sullivan to plead guilty and testify against Ebbers, Frenkel and other legal experts have said the former financial chief will need to provide prosecutors with more than just his testimony.

If Sullivan chose to testify against Ebbers, it could look like the desperate act of a man facing serious prison time. Prosecutors would likely want something more such as a corroborating witness or documents that showed Ebbers was aware of the accounting shell game and that he knew it was illegal.

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