Investigators attempting to build a case against former WorldCom boss Bernie Ebbers are considering serving subpoenas to some of the ex-chief executive’s private business associates.
Dick Thornburgh, the bankruptcy court examiner who has been given the task of investigating the fraud at the long-distance telecommunications group, is also in the process of issuing subpoenas for documents from Salomon Smith Barney, the investment bank, according to a person involved in the investigation.
The new information is expected to contribute to the third report into the company by Mr Thornburgh, due out in late September, which will examine the role investment bankers played in the company’s collapse and the creation of the MCI tracking stock.
The rampant fraud committed at WorldCom under the leadership of Mr Ebbers, its founder, and chief financial officer Scott Sullivan, who has been charged with engineering the fraud, is expected to top $10bn once a full review of the accounts has been completed.
Mr Ebbers has, so far, however, appeared to elude various investigative agencies who are attempting to pin some of the blame for the scandal on the once high-flying Mississippi dealmaker.
Mr Thornburgh’s first report into WorldCom’s collapse focused almost exclusively on the more than $400m in personal loans that were granted to Mr Ebbers in the last few years of his tenure.
The loans were issued by key members of WorldCom’s board after margin calls threatened to force the ex-CEO to sell his shares in order to pay for millions of dollars in personal investments, including thousands of acres of property, timber holdings and a yacht building business.
Mr Thornburgh is not expected to serve a subpoena against Mr Ebbers because the former WorldCom boss already refused to answer questions when faced with a congressional hearing, citing his Fifth Amendment right.
But the move, still under consideration, to subpoena people who were involved in the management of Mr Ebbers’ personal businesses such as his investment company, Joshua Management signals that investigators are widening their net, looking for any information that could link the ex-chief’s finances to the collapse of WorldCom.