WorldCom’s Ebbers Indicted

Former WorldCom Inc. CEO Bernard Ebbers has been indicted in New York on federal charges of conspiracy to commit securities fraud, securities fraud and falsely filing with the Securities and Exchange Commission.

According to the Associated Press, ex-CFO Scott D. Sullivan, indicted last week, has agreed to testify against Ebbers to trim his own possible 25-year jail stint. Sullivan pleaded guilty to the same charges leveled at Ebbers this morning.

The grand jury accuses Ebbers as the ringleader of the largest U.S. accounting scandal in history, and accuses him of misstating financials from September 2000 to June 2002, a month before the company filed the nation’s largest-ever bankruptcy.

“Ebbers, Sullivan and their co-conspirators knew the scheme to defraud would paint a material false picture of WorldCom,'' U.S. Attorney General John Ashcroft said at a press conference, according to a Bloomberg report. “Ebbers directed co-conspirators to make false and fraudulent adjustments to WorldCom's books and records and disguised true operating performance and financial results.''

Ebbers is expected to turn himself in and be formally charged in New York federal court tomorrow.

WorldCom, now MCI Inc., is scheduled to exit bankruptcy this year. The SEC and the company itself, the nation’s No. 2 long-distance provider, have pegged the accounting discrepancy at $11 billion, including overstated profits.

This is the latest in a line of high-profile indictments stemming from a two-year Department of Justice investigation into corporate misconduct. Besides other WorldCom execs, the DoJ has in its sights Jeffrey Skilling, former CEO of Enron Corp. who was indicted Feb. 19 for swindling shareholders. Also, former Tyco Inc. CEO L. Dennis Kozlowski and Adelphia Communications Corp. ex-CEO John Rigas are on trial now for fraud charges.

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