WorldCom, Ebbers Face Criminal Charges For First TimeAug 27, 2003 | www.Bizjournals.com
For all the courtroom attention WorldCom's collapse has received, company founder Bernie Ebbers has never criminal charges. Nor has the company itself until Wednesday. The state of Oklahoma becomes the first to file felony charges against the company and against its former CEO.
The Oklahoma Attorney General's office Wednesday filed 15 felony charges against Ebbers and five other former WorldCom executives accusing them of violating state securities laws. Former chief financial officer Scott Sullivan was also among those charged.
The Oklahoma charges accuse the former executives of overstating financial results which were used by investors in Oklahoma to invest in the company's stock.
"We allege the company and these six employees executed a scheme to artificially inflate the value of WorldCom stock and bonds by intentionally falsifying information filed with the Securities and Exchange Commission," says Oklahoma Attorney General Drew Edmondson. "Securities analysts and the investing public, including the state of Oklahoma, rely on this information when making investment decisions."
In addition to Ebbers and Sullivan, the state names WorldCom itself, along with former senior executives David Myers, Buford Yates Jr., Betty Vinson and Troy Normand.
WorldCom, as a company, has not faced federal criminal charges. It settled a Securities and Exchange Commission civil suit by agreeing to pay $750 million in fines.
Edmondson said it was rare for the state to name a company in a criminal complaint, but called this action justified. "The decision to commit this fraud was a company decision," he said in a statement.
Ashburn-based WorldCom's $11 billion accounting scandal eventually led to the largest bankruptcy filing in history last year.
WorldCom has a confirmation hearing for its reorganization plan scheduled for Sept. 8. The company still plans to emerge from bankruptcy protection by October.