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Ebbers indicted, ex-CFO pleads guilty
Sullivan is expected to cooperate with authorities as they prosecute ex-WorldCom CEO.
March 2, 2004: 4:07 PM EST

NEW YORK (CNN/Money) - Ex-WorldCom CEO Bernard Ebbers was indicted Tuesday on charges of orchestrating the biggest of the recent cases of corporate fraud, while his former chief financial officer pleaded guilty and agreed to cooperate with prosecutors.

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Attorney General John Ashcroft announced charges against former WorldCom CEO Bernard Ebbers. CNNfn's Chris Huntington reports.

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The indictment charges Ebbers and ex-WorldCom CFO Scott Sullivan with "knowingly and consistently" manipulating financial results at WorldCom to present the company in a better light to Wall Street analysts, investors and regulators during the stock market boom of the 1990s.

Ebbers became the second former chief executive of a major company to be charged in as many months as federal prosecutors step up efforts to crack down on corporate fraud. The government charged former Enron CEO Jeff Skilling with fraud and insider trading last month for his role in that company's accounting scandal.

According to the indictment filed Tuesday, Ebbers and Sullivan made false statements to investors and a false filing with the Securities and Exchange Commission for the third quarter of 2000.

Sullivan pleaded guilty to fraud charges related to the $11 billion accounting scandal that led the telecommunications company into the largest bankruptcy in U.S. history.

Read the charges
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U.S. v. Ebbers and Sullivan (PDF)
Litigation documents

"As CFO at WorldCom I participated with other members of WorldCom to conspire to paint a false and misleading picture of WorldCom's financial results," Sullivan, 42, said in federal court in Manhattan, according to Reuters.

His lawyer said Sullivan has agreed to put up the proceeds from the sale of his Florida home, now on the market for $13 million, as restitution for investor losses.

U.S. Attorney General John Ashcroft said at a news conference in Manhattan that Sullivan faces up to 25 years in prison.

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Ex-WorldCom CFO Scott Sullivan pleads guilty to three charges and is expected to cooperate with investigators. CNNfn's Chris Huntington reports.

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Sullivan, fired by WorldCom in June 2002, is expected to cooperate in the government's case against Ebbers, who was charged with conspiracy, fraud and making false statements. Ebbers is due to be arraigned Wednesday.

His lawyer said that Ebbers would be vindicated at trial.

"We know the evidence in this case, we know our client and we know that Bernie 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," said the statement from Reid Weingarten.

"We believe when we get to court and competent evidence -- not one-sided reports, sound-bites, political speeches and angry headlines -- is the currency of the day, we will be fine. We do not believe that a fair-minded jury will conclude that Bernie Ebbers ever acted with criminal intent."

WorldCom, which operates as MCI, agreed last May to pay a record $750 million to settle fraud charges related to its accounting scandal.

Ebbers, who often began corporate meetings with a prayer, built WorldCom into the nation's No. 2 long-distance carrier through a string of 60 acquisitions before he left the company in April 2002 -- two months before the accounting scandal broke.

Ebbers was charged last year with violating state securities law in Oklahoma, but those charges were dropped in November as prosecutors went after Sullivan. The Oklahoma Attorney General has said he plans to refile charges against Ebbers later this year.

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WorldCom filed for bankruptcy-law protection from creditors in July 2002, hoping to shed nearly all its $41 billion in debt and emerge as a reorganized company.

But it faced setbacks last year as rivals charged that WorldCom had tried to reduce its telephone network costs by defrauding Verizon, AT&T and SBC.

WorldCom, which merged with MCI in 1998, operates under the MCI name.  Top of page


-- from CNN's Terry Frieden and staff and wire reports




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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.