Two former WorldCom executives indicted on securities fraud, other charges
Wednesday, August 28th 2002, 12:00 am
By: News On 6
NEW YORK (AP) _ The former chief financial officer for WorldCom Inc. was indicted Wednesday on securities fraud and other charges after an apparent breakdown in plea negotiations.
The defendant, Scott Sullivan, 40, is accused of overseeing a scheme to conceal $3.8 billion in company expenses. The indictment also names a new defendant, Buford Yates Jr., the telecommunication giant's former director of general accounting.
WorldCom, which owns MCI, the nation's second-largest long-distance company, filed for Chapter 11 bankruptcy protection on July 21 after disclosing the accounting abuses.
It was the biggest such filing in U.S. history. Since then, the company has disclosed an additional $3.3 billion in inflated profits.
The indictment, unsealed Wednesday in federal court in Manhattan, also names two other accounting executives, Betty Vinson and Troy Normand, as unindicted co-conspirators.
Sullivan allegedly instructed the executives to hide WorldCom's increasing expenses by improperly shifting costs from operating to capital accounts.
A call to Sullivan's attorney, Irv Nathan, was not immediately returned. Nathan has said his client was a victim of ``a rush to judgment.''
Prosecutors filed documents indicating Vinson, Normand and former controller David Myers are cooperating with the investigators.
Myers, 44, was not indicted Wednesday. He was charged along with Sullivan in the earlier criminal complaint, but has been negotiating with prosecutors.
The indictment came amid reports that prosecutors were seeking plea deals with Sullivan and others in hopes of building a case against former chief executive Bernard Ebbers. Ebbers' lawyers have said he had no knowledge of the accounting decisions in question.
Sullivan, who is free on $10 million bail, could get up to 65 years in prison if convicted on charges of securities fraud, conspiracy and filing false statements with the SEC. But federal guidelines call for a sentence of 10 years or less.