Sullivan's behavior, as reported by the WSJ yesterday, does not seem to support a criminal fraud charge, but I'm not an attorney, so I invite any attorney's hanging here to comment. Here's an excerpt from the WSJ:
A person familiar with the matter says Mr. Sullivan didn't appear to have realized any personal financial gain from his strategy. At Worldcom's peak in 1999, his shares were worth more than $150 million, and he currently owns about 3.2 million shares. But he hasn't sold any Worldcom stock in nearly two years, [since before his decision to shift the expenses] according to ...
And this:
In May, according to people familiar with his thinking, Mr. Sullivan was contemplating taking a charge. On May 23, the board was notified that a charge would include the line costs, but didn't signal how much it would be...
Then there's the matter of whether Sullivan ever tried to hide his action or cover it up. The fact is that journal entries, especially ones this large, can't be hidden and the news that the entries were not well documented (supporting paperwork, not the entries themselves) only implies bad accounting, not criminal intent.
From what I'm hearing so far, a criminal case against Sullivan seems iffy at best. One against the company itself appears very far fetched. Civil liability, of course, is another matter altogether.
Again, I'm not an attorney, so WDIK?
Bob |
