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Former WorldCom CEO indicted on new charges

By Erin McClam
The Associated Press

Bernard Ebbers

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NEW YORK — The government brought new charges yesterday against former WorldCom Chief Executive Bernard Ebbers, accusing him of falsifying six regulatory filings just before the company's spectacular collapse.

Ebbers already faces fraud and conspiracy charges filed in March by federal prosecutors who say he presided over WorldCom's $11 billion accounting fraud, leading to the nation's largest bankruptcy.

The new indictment, from a Manhattan grand jury, claims Ebbers submitted six false 10-Q and 10-K forms to the Securities and Exchange Commission (SEC) in 2001 and 2002. Public companies must submit these forms to report on their financial condition.

Prosecutors already had accused Ebbers of filing a false SEC form in November 2000. The new charges take the alleged falsification up to May 2002, two months before WorldCom's bankruptcy.

Ebbers has pleaded not guilty to the original three charges: securities fraud, conspiracy and the first false-document charge. He is free on $10 million bail.

His lawyer, Reid Weingarten, did not immediately return a call about the new charges.

In March, Weingarten said Ebbers "never sought to mislead investors, never sought to improperly manipulate WorldCom's numbers, never improperly took any money and never sought to hurt the company he built."

Former WorldCom Chief Financial Officer Scott Sullivan agreed to plead guilty to fraud charges and testify against Ebbers.

Ebbers' trial was scheduled for Nov. 9, but prosecutors hinted in March it might be delayed because of additional charges.
 
Weingarten has suggested Sullivan's testimony will be unreliable because the former finance chief pleaded guilty to avoid a longer prison sentence and protect his family.

The three original charges carried up to 30 years in prison. The additional six add 60 years to the potential sentence, although any sentence would be drastically reduced under congressional sentencing guidelines.

A hearing in the case — already scheduled before prosecutors announced the new charges — was set for today.

Ebbers and other founders built the telecommunications giant after working out details for a new long-distance service at a Mississippi coffee shop in 1983. The company grew over two decades under Ebbers' hand, merging with MCI in 1997.

He resigned from WorldCom in April 2002, well after the company's stock price had begun to drop but just after questions began to swirl about finances.

A WorldCom report released in June 2003 said Ebbers fostered a poisonous corporate culture and said he was "aware, at a minimum, that WorldCom was meeting revenue expectations through financial gimmickry."