Scott Sullivan, the former chief financial officer of WorldCom, has been indicted in connection with the $7bn accounting fraud at the disgraced US telecoms giant.
Meanwhile, the company’s former controller David Myers is believed to be helping prosecutors with their ongoing investigation into the company.
The grand jury’s indictment against Mr Sullivan – the document which it must complete for someone to be taken to court for a serious crime – included charges of conspiracy to commit securities fraud and making false statements to the US financial regulator, the Securities and Exchange Commission.
It follows a criminal complaint filed against Mr Sullivan and Mr Myers by federal prosecutors earlier this month and could lead to a trial in a Manhattan federal court.
WorldCom, based in Clinton, Mississippi n July became the largest bankruptcy in US corporate history.
Mr Sullivan is accused of trying to hide WorldCom’s growing debt
The company’s collapse followed exposure of an accounting fraud, now put at $7.68bn (Â£5bn), which made the company look profitable when it was not.
Mr Sullivan is accused of overseeing the hiding of billions of dollars of company expenses.
He allegedly told key staff to mark operating costs as long-term investments, which made earnings look much stronger than they were.
Myers negotiating a deal?
WorldCom’s former director of general accounting, Buford Yates, was also indicted on Wednesday.
However, prosecutors did not file indictments against Mr Myers.
Instead they said they planned to file criminal information against him along with other directors Betty Vinson and Troy Norman.
Former government prosecutors have said this often indicates that the defendant is planning to plead guilty to the charges and co-operate with the government.
In the WorldCom case, it is thought that prosecutors want to build a case against the company’s former chief executive Bernie Ebbers.
Mr Ebbers resigned from the company in April, but has so far not been charged with any crime.
Under the so-called Chapter 11 bankruptcy procedure, the company is able to continue operating while attempting to restructure its business and remaining protected from creditors.
Mr Sullivan, who was sacked from WorldCom in July, could face up to 65 years in jail if he is found guilty of all charges and fines of up to $2.5m.
Professor Gerald Treece from the South Texas College of Law in Houston told the BBC’s World Business Report a guilty plea could lead to further bad news for Mr Sullivan.
“There is a law in the US that if a person is involved in illegal activity and then the illegal activity leads to illegal gains, the government can bring an… action against boats, houses, cars, property which are the fruits of that illegal activity,” he said.