MCI , formerly known as WorldCom Inc., is expected to reveal that its total accounting fraud reached about $11 billion and that its final financial restatement will affect billions more because the company has reversed many of its past accounting practices, people familiar with the situation told The Wall Street Journal.
MCI is expected to make the disclosure as early as today in a filing with the Securities and Exchange Commission. In the filing, the telecommunications titan is expected to provide audited financial results for 2000, 2001 and 2002 that will reveal the full extent of the largest accounting fraud in U.S. history, according to these people.
The filing represents the unraveling of the massive fraud and paves the way for the company to emerge from Chapter 11 U.S. Bankruptcy Code protection by the end of April.
MCI, the nation’s second-largest long-distance company, after AT&T Corp. was driven into bankruptcy protection in 2002 by the scandal, which wiped out a stock that had been worth about $185 billion at its peak in 1999.
The fraud allowed WorldCom to maintain the illusion of profits and extend its run as one of the stock market stars of the 1990s. Now, the final restatement is expected to turn years of profits into losses as WorldCom’s business faltered amid a severe downturn in telecommunications.