Former WorldCom Inc. Chief Financial Officer Scott Sullivan was indicted Wednesday on charges he orchestrated a multibillion-dollar accounting fraud, and the government signaled three other officials were close to pleading guilty.
Sullivan, 40, was also accused of making false filings to the U.S. Securities and Exchange Commission in a plot to deceive investors and inflate earnings that led to the largest U.S. bankruptcy in history. The company has admitted hiding $7.2 billion since 1999.
Also named in the indictment was Buford Yates Jr., WorldCom’s former director of general accounting.
“Sullivan is looking at decades behind bars if he’s prosecuted to the full extent,” said Anthony Sabino, a St. John’s University law professor.
A U.S. grand jury in Manhattan accused Sullivan, Yates and three unindicted co-conspirators of engaging in “an illegal scheme to inflate artificially WorldCom’s publicly reported earnings by falsely and fraudulently reducing reported line cost expenses.”
WorldCom’s former controller, David Myers, was named an unindicted co-conspirator long with two other WorldCom officials, Betty Vinson and Troy Normand. The government said Myers, Vinson and Normand have waived their right to be indicted and will respond to what is known as a criminal information, an alternative to an indictment that indicates the three are close to reaching plea bargains with prosecutors.
Former WorldCom CEO Bernard Ebbers, who resigned in April while owing the company $408 million in loans, is also under investigation.
Ebbers declined to comment on whether he expected to be indicted.