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Non-Tech : The Enron Scandal - Unmoderated -- Ignore unavailable to you. Want to Upgrade?

To: Glenn Petersen who wrote (2667)	8/27/2003 3:58:23 PM
From: Glenn Petersen	Read Replies (2) \| Respond to of 3602

Oklahoma Charges MCI, Ex-CEO with Fraud story.news.yahoo.com By Ben Fenwick, OKLAHOMA CITY (Reuters) - The Oklahoma attorney general on Wednesday charged MCI and its former chief executive with violating state securities laws by knowingly giving false information to investors. These are the first criminal charges filed against former CEO Bernard Ebbers. Other former executives, including its one time Chief Financial Officer Scott Sullivan, were previously charged. Sullivan also was named in the Oklahoma complaint. Bankrupt telephone company MCI, the legal name of which is WorldCom Inc., filed the largest bankruptcy in history last year amid an accounting scandal that has ballooned to $11 billion. The company said it does not believe the Oklahoma charges will affect its planned emergence from bankruptcy later this year. Attorney General W.A. Drew Edmondson said Oklahoma state pension funds lost $64 million in MCI's implosion, and he speculated that residents lost even more in their individual investments. MCI, based in Ashburn, Virginia, said it would cooperate fully with the Oklahoma attorney general. Lawyers for Ebbers and Sullivan were unavailable for comment, but Ebbers has previously said he had no knowledge of any misconduct. Sullivan has pleaded not guilty to federal criminal charges including securities fraud and conspiracy. The 15-count complaint in Oklahoma contends that the company and former executives used deceptive measures to defraud investors, lied about the company's financial health, and ran a business that operated as a fraud. "We allege the company and these six employees executed a scheme to artificially inflate bond and stock prices by intentionally filing false information with the Securities and Exchange Commission (news - web sites)," Edmondson said. "Securities analysts and the investing public, including the state of Oklahoma, used this information when making investment decisions," he said. WorldCom has already settled federal civil securities fraud charges by agreeing to pay $750 million in cash and stock to shareholders and bondholders who lost some $200 billion. SIMILAR LAWSUITS SEEN The attorney general also said other states may end up filing similar lawsuits down the road. "I would be very surprised if Oklahoma remained the only state to file either criminal or civil actions against WorldCom and its officers. We just happen to be the first," he said. Others named in the complaint, which was filed in the Oklahoma County District Court, included former Controller David Myers, former Director of General Accounting Buford Yates, former Director of Management Reporting Betty Vinson, and former Director of Legal-Entity Accounting Troy Normand. Those four executives pleaded guilty to previous fraud charges. Edmondson said if the six former MCI executives fail to appear in Oklahoma in 10 days, he would start extradition proceedings. "REWARDED FOR BAD ACTS" He was also critical of the company's $750 million settlement with the SEC, saying that would be partially offset by a $300 million tax refund. "I don't think this company has been punished, I think it's been rewarded for its bad acts and I intend to prosecute it criminally," Edmondson told a news conference. MCI has made several moves to strengthen its corporate governance, such as overhauling its management team and board of directors, and firing employees involved in the accounting fraud or who failed to report abuses. (Additional reporting by Paul Thomasch and Gail Appleson in New York, Jeremy Pelofsky in Washington)