Wednesday, May 25, 2022

Ex WorldCom CFO Sullivan gets 5 years in jail

Former WorldCom Inc. Chief Financial Officer Scott Sullivan was sentenced to five years in prison Thursday for his role in engineering the US$11 billion accounting fraud that led to the bankruptcy of the telecommunications powerhouse.

Sullivan last year agreed to plead guilty to fraud, conspiracy and filing false financial documents and cooperated with prosecutors, who then wrote a letter to Judge Barbara Jones recommending a reduced sentence, according to a spokeswoman at the United States Attorney’s Office for the Southern District of New York.

Sullivan’s cooperation took the form of turning against his former boss, former WorldCom Chief Executive Officer Bernard Ebbers, who in July was sentenced to 25 years in jail for fraud. Ebbers’ jail time could amount to life sentence, since he is 63 and in poor health. Sullivan, 43, was the prosecution’s main witness against Ebbers, and the only person who testified that he discussed the WorldCom fraud directly with Ebbers.

The sentencing of Sullivan closes a chapter in the history of WorldCom, which grew into an international communication giant in the 1990s through acquisitions, accomplished by leveraging the company’s skyrocketing market capitalization. The WorldCom case revolved around accounting misstatements that were engineered to, among other things, bolster the company’s share price.

WorldCom, now operating under the name MCI Inc., filed for bankruptcy in July 2002 after disclosing that employees had falsified records to conceal losses and inflate earnings. MCI emerged from bankruptcy in April 2004 after agreeing to a $750 million settlement for accounting irregularities with the U.S. Securities and Exchange Commission (SEC).

The company is now merging with Verizon Communications Inc., which this year won a takeover battle with Qwest Communications International Inc. for MCI.

During the past week, four other former WorldCom executives also were sentenced in the case. The executives had also cooperated with prosecutors, and received sentences ranging from probation to one year and one day.

Meanwhile, Ebbers is working on an appeal in his case.

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Jim Love, Chief Content Officer, IT World Canada

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