Bernard Ebbers, former CEO of WorldCom (now doing business as MCI), was indicted last week for conspiracy and securities fraud for his alleged role in inflating the value of the companys stock in light of its weakening financial condition. The charges came shortly after the companys former chief financial officer, Scott Sullivan, pleaded guilty to related criminal charges.
In a filing with the U.S. Attorneys Office for the Southern District of New York, the U.S. government charged that Ebbers, Sullivan and other WorldCom officials knew about the companys poor finances but that Ebbers insisted false results be reported publicly. Ebbers and Sullivan agreed that fraudulent entries would be made in the companys books, including revenue, income, line-cost expenses, earnings per share and EBITDA, the government charged.
The former WorldCom executives could face a maximum sentence of five years in prison for the conspiracy charge. Each securities fraud count carries a maximum sentence of 10 years in prison.