Feeds

Worldcom finance duo charged with fraud

Humiliation complete

  • alert
  • submit to reddit

Build a business case: developing custom apps

ComputerWire: IT Industry Intelligence

Two former top financial executives at WorldCom Inc were taken to court by the FBI yesterday, handcuffed and in full view of the massed ranks of the media, in a major public demonstration of the authorities' anxiety to crack down on corporate fraud.

Former CFO Scott Sullivan and David Myers, former financial controller, were arrested and charged with conspiracy to commit security fraud and five counts of making false filings to the Securities and Exchange Commission. If convicted, the two men could face five years in prison and a $250,000 fine on the conspiracy count, and 10 years and a $1m fine on each of the fraud and false filings counts.

The authorities have moved with extraordinary speed on the case; it is less than six weeks since WorldCom admitted financial misstatements to the tune of $3.8bn over the last five quarters. But their concern stems from the way that events at WorldCom, coming so soon after the Enron scandal, have undermined confidence in the whole system and helped to drag down a troubled stock market.

As US president George Bush has pledged to "fully investigate and hold people accountable for misleading not only shareholders but employees as well", the FBI was hardly likely to treat Sullivan and Myers with kid gloves when they surrendered themselves, by appointment, at the FBI's New York headquarters at 7am yesterday.

Instead of the gentle treatment often afforded white-collar defendants, the two men were handled like any other high-profile criminal defendants as they were taken to court. While they are accused of booking company expenses as capital spending to artificially inflate income, WorldCom's former CEO Bernie Ebbers has yet to be charged, though he and Sullivan were such a double act they were referred to as "The Scott and Bernie Show".

This could suggest that the authorities are leaving the way open for a plea bargain with Sullivan and Myers to offer them lower sentences in return for evidence against Ebbers.

On Tuesday President Bush promised: "No more easy money for corporate criminals. Just hard time," when he signed a bill that a law that quadruples penalties for accounting fraud. The Sullivan and Myers trial will be the first test of this new approach.

© ComputerWire

Related stories

Feds gunning for WorldCom honchos
EDS rejects Worldcom accounting allegations
Worldcom dives for Chapter 11 cover
Worldcom whistleblowers play in tune
Help us make it through the night - Worldcom CEO

Worldcom engulfed in $3.8bn accounting scandal

Boost IT visibility and business value

More from The Register

next story
Microsoft exits climate denier lobby group
ALEC will have to do without Redmond, it seems
Caught red-handed: UK cops, PCSOs, specials behaving badly… on social media
No Mr Fuzz, don't ask a crime victim to be your pal on Facebook
Barnes & Noble: Swallow a Samsung Nook tablet, please ... pretty please
Novelslab finally on sale with ($199 - $20) price tag
Ballmer leaves Microsoft board to spend more time with his b-balls
From Clippy to Clippers: Hi, I see you're running an NBA team now ...
Kate Bush: Don't make me HAVE CONTACT with your iPHONE
Can't face sea of wobbling fondle implements. What happened to lighters, eh?
Video of US journalist 'beheading' pulled from social media
Yanked footage featured British-accented attacker and US journo James Foley
Amazon takes swipe at PayPal, Square with card reader for mobes
Etailer plans to undercut rivals with low transaction fee offer
Assange™: Hey world, I'M STILL HERE, ignore that Snowden guy
Press conference: ME ME ME ME ME ME ME (cont'd pg 94)
Call of Duty daddy considers launching own movie studio
Activision Blizzard might like quality control of a CoD film
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Top 10 endpoint backup mistakes
Avoid the ten endpoint backup mistakes to ensure that your critical corporate data is protected and end user productivity is improved.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Rethinking backup and recovery in the modern data center
Combining intelligence, operational analytics, and automation to enable efficient, data-driven IT organizations using the HP ABR approach.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.