NEW YORK (CNN) -
Federal prosecutors are planning to seek indictments against three former top executives of WorldCom Inc., including former CEO Bernard Ebbers, as early as next week, sources familiar with the probe have told CNN.
In addition to Ebbers, WorldCom's ex-chief financial officer Scott Sullivan, and David Myers, the company's former controller, are said by multiple sources to be targets of the investigation.
WorldCom filed for bankruptcy protection on Sunday a month after announcing it had improperly accounted for $3.8 billion.
The sources said the U.S. Attorney for the Southern District of New York is considering charges against Ebbers, Sullivan, who was fired as chief financial officer when financial reporting problems were revealed, and David Myers, the company's former controller. While prosecutors may turn to a grand jury for an indictment against the former executives, they may also hand down charges in a criminal complaint.
CNNfn's sources say it is still an open question whether criminal charges will be brought against the company itself, given the level of cooperation by company officials with investigators. A criminal conviction could threaten the survival of the nation's No. 2 long-distance provider, as any fines could end up coming at the expense of other creditors.
Ebbers' attorney, Reid Weingarten, said, "We are confident that the prosecutors will ignore the howling mob and concentrate on the evidence. And if they do so, Mr. Ebbers will not be prosecuted."
Attorneys for Sullivan and Myers have not responded to phone calls seeking comment.
A WorldCom spokeswoman, when asked about the possible indictments of Ebbers, Sullivan and Myers, declined to comment to CNNfn. With regard to the company being indicted, she told CNNfn, "That's flatly inconsistent with what federal prosecutors have communicated to the company."
The sources who spoke with CNNfn refused to outline what allegations will be made except to say they would involve securities fraud. It was also unclear how the indictments would be sought.
The company already faces civil fraud charges from the Securities and Exchange Commission.
The exact timing of any charges is being weighed at the highest levels of the Justice Department, according to CNNfn's sources.
The Wall Street Journal also reported Thursday that prosecutors were weighing the charges. The paper quotes WorldCom spokesman Brad Burns as saying that an indictment of the company "is flatly inconsistent with what federal prosecutors have communicated directly to us."
"We have not been informed by any law enforcement authority that it presently intends to seek an indictment against the company" a press release from the company later stated.
Criminal indictments of companies are relatively rare because prosecutors are concerned with hurting employees and creditors of a company who are innocent of charges, especially when the managers who committed the alleged crimes are no longer with the company.
But the Justice Department recently won an obstruction of justice conviction against Arthur Andersen for its role in the destruction of documents at bankrupt energy trader Enron Corp. Andersen also was WorldCom's auditor at the time the accounting problems occurred there.
The company announced in June that $3.8 billion in expenses were improperly reported, inflating a key measure of earnings. The paper, quoting unidentified people with knowledge of the matter, said that prosecutors believe Sullivan to be the architect of the alleged fraud, while it said Myers has admitted to WorldCom audit staffers that he knew about the questionable accounting treatment.
It also said it is seeking to persuade former and current executives to testify against Ebbers, the founder of the company who was forced to resign due to financial problems before the accounting scandal broke. Ebbers has denied knowledge of any improper actions during his tenure, but he also refused to testify at a congressional hearing into the company's problems.
The report comes the day after five former top executives of Adelphia Communications, including former CEO John Rigas, were arrested on similar charges arising from the bankruptcy of that company, the nation's No. 6 cable company.