The federal jury in Manhattan yesterday found Ebbers guilty on all charges of fraud, conspiracy and filing false documents with securities regulators.
Ebbers, expected to launch an appeal, had pleaded innocence saying former CFO Scott Sullivan perpetrated the fraud and kept him in the dark.
Sullivan is one of six WorldCom executives indicted when investigators uncovered the company’s $11bn fraud in 2002. The former CFO and the six agreed to co-operate with investigators and to plead guilty to fraud.
According to Ebbers, Sullivan never told me an entry that wasn’t right.
Sullivan, though, became a key witness in the government’s case, saying he’d warned Ebbers that the only way WorldCom could meet earnings projections against the dot-com bubble burst was by making adjustments. According to Sullivan, Ebbers told him: We have to hit our numbers.
Ebbers was an early investor WorldCom investor, who took a stake in 1985 – just two years after the company’s creation as Long Distance Discount Service (LDDS).
He subsequently cemented his grip on power by closing the $40bn acquisition of MCI Communications in 1998 the largest purchase in corporate history at that time while the company’s stock hit a high a year later at $64 per share.
By 2000, though, both MCI’s and Ebbers’ fortunes were changing. US and European regulators blocked aproposed merger with Sprint and, with the dot-com bubble bursting, the Securities and Exchange Commission began examining WorldCom’s accounts and a $400m loan to Ebbers.
The chief executive resigned in April 2002 and the company filed Chapter 11 bankruptcy protection three months later, becoming the largest bankruptcy in corporate history.
