Law enforcer: Federal prosecutors to seek charges against former WorldCom executives
Thursday, July 25th 2002, 12:00 am
By: News On 6
NEW YORK (AP) _ Federal prosecutors plan to charge former officers of WorldCom Inc. sometime next week for their suspected roles in the massive financial wrongdoing at the bankrupt telecommunications giant, a law enforcement official said Thursday.
The official, speaking on condition of anonymity, would not identify which individuals, or how many, were likely to be charged. But The Wall Street Journal reported Thursday that Scott Sullivan and David Myers are expected to be indicted on a variety of charges related to billions of dollars in accounting frauds at the company.
The government also is likely to seek the indictment of former chief executive Bernard Ebbers, the Journal reported, citing unidentified sources familiar with the matter.
Federal prosecutors set a deadline of next Wednesday to file indictments against dismissed chief financial officer Scott Sullivan and former controller David Myers, the sources told the newspaper. They said prosecutors are seeking Myers' and Sullivan's cooperation to produce evidence against Ebbers, who resigned two months before the company admitted it inflated earnings by nearly $4 billion.
WorldCom also could be indicted as a corporation under a plan being considered by the Justice Department, the newspaper reported. A conviction of the long-distance phone company could drive it out of business and hurt consumers and creditors.
WorldCom spokeswoman Julie Moore told The Associated Press on Thursday the company had no indication that indictments were forthcoming.
``That is flatly inconsistent with what federal prosecutors have communicated to the company,'' Moore said.
The Justice Department and the FBI declined comment. Ebbers's attorney, Reid Weingarten, did not immediately return a message left Thursday by the AP. Calls to Myers' home were answered by a recording. His attorney could not immediately be located by the AP for comment. Sullivan's attorney declined to comment, the newspaper said.
The Securities and Exchange Commission, citing ``accounting improprieties of unprecedented magnitude,'' filed civil fraud charges last month against WorldCom.
The Clinton, Miss.-based company admitted June 25 it falsely accounted for $3.8 billion in expenses. The inflated revenues allowed the company to report profits when it otherwise would have losses. That day, it fired Sullivan, who was subsequently accused by the company's auditor, Arthur Andersen, of withholding crucial information about WorldCom's bookkeeping.
WorldCom on Sunday filed for bankruptcy under Chapter 11, the largest such filing in U.S. history. The judge overseeing the case approved the appointment Monday of an independent examiner to ensure an honest accounting of the company's value and investigate for mismanagement, irregularities and fraud.
U.S. Bankruptcy Judge Arthur Gonzalez approved $2 billion in financing to keep WorldCom operating as it reorganizes its finances. He also granted the Justice Department's request for an independent examiner to ensure an honest accounting of the company's value and investigate for mismanagement, irregularities and fraud.