Scott Sullivan, the former chief financial officer of WorldCom Inc., was indicted with securities fraud on Wednesday after plea-bargain negotiations apparently broke down.
WorldCom collapsed in the biggest bankruptcy in U.S. corporate history
The charges against Sullivan, 40, were unsealed in a federal courtroom in Manhattan.
WorldCom revealed on June 25 that $3.9 billion US in expenses had been improperly accounted for – a move that resulted in falsely inflated profits. Sullivan is said to have run the scheme to conceal those expenses.
On July 21, WorldCom filed for court protection from its creditors so that it could restructure. With a reported $107 billion US in assets, WorldCom’s filing is the largest bankruptcy in U.S. corporate history.
David Myers, 44, WorldCom’s former controller, was not indicted Wednesday.
On August 1, Myers was charged along with Sullivan in an earlier criminal complaint, but Myers been negotiating with U.S. authorities, who are said to be targetting WorldCom founder Bernie Ebbers.
Earlier this week, the U.S. House of Representatives Financial Services Committee released letters obtained under subpoena from Citigroup that showed Ebbers, Sullivan, Sullivan’s wife and other WorldCom executives got IPO shares.
The documents revealed that Ebbers got over 800,000 shares in over a dozen IPOs, including Qwest Communications and Juniper Networks, from Citigroup-owned Salomon Smith Barney.
Sullivan and his wife are said to have received over 30,000 shares.