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AT&T hits MCI with racketeering charges

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AT&T has upped its attack against MCI/WorldCom, filing suit against the company for an alleged long distance call rerouting scheme.

AT&T has spiced up the charges against MCI with a bit of mob lingo. Its lawsuit claims MCI violated provisions of the federal Racketeering Influenced and Corrupt Organization (RICO) Act. Both MCI and ONVOY rerouted domestic phone calls through Canada, hoping to avoid high connection fees and looking to put the calls on AT&T's network, according to an AT&T statement.

AT&T already made similar allegations in filings with a U.S. Bankruptcy court. MCI/WorldCom is trying to emerge from bankruptcy after admitting to the largest accounting scandal in history.

The U.S. Attorney's Office for the Southern District of New York and communications regulators have been investigating the rerouting claims. AT&T insists that MCI and ENVOY are both still engaged in the illegal acts at this time.

The racketeering charge is a nice touch for those who have followed MCI CEO Michael Capellas' career. It was Don Capellas who sent the Alpha processor to its grave while at Compaq. The same Don Capellas left tens of thousands of workers in the hands of Carly "The Outsourcer" Fiorina, when he quickly departed HP.

Now Capellas finds himself at the helm of MCI, fighting off fraud, civil conspiracy and racketeering charges from AT&T.

To right past wrongs, MCI has named five new board members that will help clean house when MCI emerges from Chapter 11. The new board members are David Matlin, chief executive of MatlinPatterson Global Advisers LLC, a large investor in MCI; W. Grant Gregory, former chairman of Touche Ross; former Bell Atlantic Corp. executive Judith Haberkorn; Patton Boggs LLP partner Laurence Harris, and former U.S. Deputy Attorney General Eric Holder, MCI said last week. ®

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