WorldCom's Former CFO Scott Sullivan Indicted on Fraud Charges
By Christopher Mumma
New York, Aug. 28 (Bloomberg) -- Former WorldCom Inc. Chief Financial Officer Scott D. Sullivan was indicted on securities fraud charges.
Sullivan was also accused of making false filings to the U.S. Securities and Exchange Commission.
Sullivan, 40, was arrested Aug. 1 along with WorldCom's former controller David Myers, 44. They were charged with plotting to conceal mounting expenses at WorldCom from investors, to prop up earnings. The pair was accused of misrepresenting billions in company expenses, in a fraud that led to the largest bankruptcy in U.S. history.
Myers was not indicted today. Former Chief Executive Officer Bernard Ebbers, who resigned in April while owing the company $408 million in loans, is also under investigation.
The arrests of Sullivan and Myers came five weeks after WorldCom disclosed it had misreported $3.9 billion in expenses. Attorney General John Ashcroft said the scheme was meant to hide five straight quarterly net losses and create the illusion the company was profitable. On Aug. 8, WorldCom said it found $3.3 billion more in misstated expenses, bringing the total to $7.2 billion.
WorldCom, parent of the MCI long-distance phone service and carrier of about half all Internet traffic, filed for bankruptcy protection on July 21, listing $107 billion in assets and $41 billion in debts. The Clinton, Mississippi-based company had missed a $79 million payment to bondholders who are owed $30 billion.
WorldCom fired Sullivan in June, and Myers was forced to resign. Following their arrest earlier this month, the two men were paraded in handcuffs past television cameras and photographers, on their way from the FBI building in Manhattan to a court appearance a block away. Sullivan was freed on a $10 million bond. Myers posted a $2 million bond. |
