The Securities and Exchange Commission on Thursday filed a civil suit against David Myers, alleging that WorldCom’s former financial controller broke several securities laws as he participated in the bankrupt telecom group’s $7bn accounting fraud.
The suit came on the same day as Mr Myers pleaded guilty to three fraud charges following a three-month investigation by the US Department of Justice into his role in the WorldCom fraud.
“I was instructed by senior management to make entries in WorldCom’s books to increase WorldCom’s reported earnings for which I knew there was no justification,” Mr Myers told a New York courtroom. The judge set a sentencing date of December 26th for the charges, which carry a maximum sentence of 15 years.
Mr Myers’ plea, which had been widely expected, is the first guilty plea since WorldCom unveiled the fraud in June. He is expected to become a key government witness against his former boss, WorldCom chief financial officer Scott Sullivan, who has claimed he is not guilty of the fraud. Mr Myers’ co-operation may also help investigators built a case against Bernie Ebbers, WorldCom’s founder and former chief executive.
The SEC charged Mr Myers with violating numerous provisions of federal securities laws, and with aiding and abetting WorldCom’s violations of reporting and bookkeeping rules. A lawyer for Mr Myers said on Thursday he expected the SEC case, which requests the former executive repay any ill-gotten gains and be barred from serving as an officer or director of a public company, to be settled shortly.
According to charges brought by officials of the US Attorney’s office in Manhattan, Mr Sullivan was largely responsible for orchestrating the fraud while Mr Myers was his somewhat unwilling accomplice.
“Although he acted at the direction of others, and although he expressed his discomfort and displeasure at the actions being undertaken at WorldCom, he recognises that as a corporate officer those facts do not relieve him of his own responsibility in this matter,” Mr Myers’ lawyer said.
Mr Sullivan and another former WorldCom official, Buford Yates, have both decided to plead not guilty.