A Manhattan federal judge yesterday denied a bid by lawyers for former WorldCom chief financial officer Scott Sullivan to move his accounting fraud trial out of New York after they argued a Big Apple trial would pose a financial “hardship” for the millionaire executive.
Ruling from the bench, U.S. District Court Judge Barbara Jones also rejected a defense motion to dismiss conspiracy charges against Sullivan, 40, whose lawyer had argued that no crimes occurred in Manhattan. Instead Jones found New York was the proper venue for the case and scheduled Sullivan’s trial for Sept. 8.
Sullivan, of Boca Raton, Fla., was CFO of the telecommunications giant during its staggering $9 billion accounting scandal.
His lawyer, Irv Nathan, argued that Sullivan’s wife, Carla Sullivan, is suffering from a severe form of diabetes, which causes convulsions brought on by stress. He argued that being far from home would make caring for the couple’s 1-year-old daughter, Christina, a hardship, and suggested the trial be moved to Washington, D.C., or Mississippi.
Nathan said that the couple has family in Washington who has offered a residence for the Sullivans during a trial and could care for both Carla Sullivan and the child if she becomes ill.
Assistant U.S. Attorney David Anders argued that Sullivan has “vast resources” and that short of moving the trial to Florida, the couple will have to live away from home if the case is brought in New York, Washington or Mississippi where WorldCom was headquartered, in Clinton, at the time the crimes allegedly occurred.
“It cannot be disputed that Mr. Sullivan has vast resources,” Anders said. “He certainly has the ability for his wife to be here and pay for it if necessary.”
In court papers filed yesterday, Anders noted that Sullivan was once described in news accounts as the highest paid CFO in the United States and that he received $19 million in salary, bonuses and compensation in 1997.
He said that from 1995 to 2000, Sullivan sold WorldCom stock worth $45.3 million and that he is building a $15 million mansion that includes a movie theater, boathouse and pool in Boca’s exclusive “Le Lac” community.
Sullivan was indicted on charges of conspiracy and securities fraud for allegedly directing WorldCom employees to transfer expenses on the firm’s ledger, which over-inflated the firm’s worth by more than $3.8 billion.
Sullivan is also charged with making false filings to the Securities and Exchange Commission and to auditors.
In her decision, Jones said Carla Sullivan’s medical condition was the one factor that “gave her pause” in granting the request to move the trial. However, she said she believed Carla Sullivan could get proper medical care in New York and said Sullivan has the resources to pay for adequate housing and child care here.
Sullivan remains free on $10 million bond secured by his Florida mansion. He declined to comment after the ruling.
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