home

WorldCom Trial : Sullivan Fingers Ebbers in Fraud

Things are heating up at the WorldCom trial of Bernard Ebbers. Former CFO and co-defendant Scott Sullivan, now cooperating with the Government in exchange for a lesser sentence, testified against Ebbers today and in no uncertain terms linked Ebbers to the accounting fraud Sullivan put into motion.

Sullivan has some baggage, though:

He also confessed to a drunk driving conviction and using marijuana and cocaine, as federal prosecutors sought to head off damaging evidence that defense lawyers might bring out. In what seemed to be preemptive strikes, Sullivan was asked about his $10 million retention bonus, his $15 million Florida home, and his ambivalent feelings about his former boss.

Sullivan is considered "the linch pin" in the trial against Ebbers:

Sullivan, who pleaded guilty to fraud last year, is the linchpin of the government's case against Ebbers, who is accused of orchestrating the $11 billion fraud that drove WorldCom into bankruptcy in 2002. The company emerged from bankruptcy last spring and is known as MCI Inc.

The government contends Sullivan was acting on orders from Ebbers when he directed WorldCom accountants to hide out-of-control expenses, and that the CEO was driven by keeping WorldCom in the good graces of Wall Street analysts. Defense lawyers for Ebbers have said he was uneducated on accounting matters, preferring to be more of a visionary and cheerleader for the company and leaving the numbers to Sullivan.

Former Attorney General John Ashcroft released this statement in July when the federal indictment was unsealed.

Today, in federal court here in Manhattan, Scott Sullivan pleaded guilty to participating from September 2000 through June 2002 in the illegal scheme with other former WorldCom, Incorporated officers and employees. Mr. Sullivan pleaded guilty to Conspiracy to commit securities fraud; Guilty to securities fraud; and guilty to false filing with the Securities & Exchange Commission.

Scott Sullivan faces a maximum sentence of 25 years in prison. Scott Sullivan has agreed to cooperate.

Of course, due to his cooperation, Sullivan will get nowhere near that amount of time. He was also hit with an SEC enforcement action, which he conceded, meaning he will never be allowed to serve as an Officer and Director of a public company, or practice as an accountant before the SEC.

Here's a list of Congressman and Senators who accepted money from Sullivan, as late as 2002. Worldcom was under investigation in 2002, and the illegal activity by Worldcom and Sullivan occurred between 2000 and 2002. One of those to whom Sullivan contributed on several occasions, including in 2002, was Mississippi Congressman Charles Pickering (whom Bush later snuck on the 5th Circuit as a recess appointment after the Senate Judiciary Committee refused to confirm him. Pickering has since resigned .) Worldcom began in Mississippi as a long distance company and that's where Ebbers kept the company's headquarters. I wonder what Pickering knew about Worldcom's troubles and when he knew it.

Sullivan was represented by Miami superlawyer Roy Black. For now, it looks like Sullivan is being represented by the Justice Department, although his lawyers likley will step back in when it's time for the Government to decide how much in years off Sullivan's prison sentence it's willing to pay for his testimony against Ebbers.

< Yahoo Enters ShowBiz | Is Canada the Answer? >
  • The Online Magazine with Liberal coverage of crime-related political and injustice news

  • Contribute To TalkLeft


  • You do know bush knows both guys right?

    Re: WorldCom Trial : Sullivan Fingers Ebbers in Fr (none / 0) (#2)
    by Andreas on Tue Feb 08, 2005 at 12:41:56 AM EST
    What is the maximum sentence for Bernard Ebbers?

    Re: WorldCom Trial : Sullivan Fingers Ebbers in Fr (none / 0) (#3)
    by Andreas on Tue Feb 08, 2005 at 12:47:10 AM EST
    I found an answer to my question: 85 years. Just follow the last link ("began in Mississippi").

    Fred - Please quit it. I read your comment just as I was taking a drink of coffee and almost choked while laughing.

    Re: WorldCom Trial : Sullivan Fingers Ebbers in Fr (none / 0) (#5)
    by kdog on Tue Feb 08, 2005 at 06:01:08 AM EST
    How long has it been since the thievery took place, over two years? If he had robbed a bank he'd be in prison by now. Stolen funds buy a great defense I guess.

    Complex business crimes have created a significant problem for law enforcement. The factual situations are hard for a lay jury to understand. I have been involved in prosecuting and defending government contract fraud, antitrust and other complex business crime cases. The amount of documentation is stupefying. The resources of the company are significant and the willingness of employees to talk is low. (Cooperation is the equivalent to committing caree suicide. You will be branded as a "disgruntled" employee. Other employers will hesitate to hire you.) Convictions come only after lower level employees can be turned. The top officials rarely receive what they deserve.

    Re: WorldCom Trial : Sullivan Fingers Ebbers in Fr (none / 0) (#7)
    by Sailor on Tue Feb 08, 2005 at 09:01:31 AM EST
    They seemed to get Martha as fast as they wanted. PPJ - I choked on Fred's comment too, but I misread it. I thought he said bush blows both guys;-)

    Re: WorldCom Trial : Sullivan Fingers Ebbers in Fr (none / 0) (#8)
    by john horse on Tue Feb 08, 2005 at 03:58:09 PM EST
    Does anyone else see any similarity with the scam that WorldCom ran and the scam that Bush is running? According to findlaw "The government contends Sullivan was acting on orders from Ebbers when he directed WorldCom accountants to hide out-of-control expenses, and that the CEO was driven by keeping WorldCom in the good graces of Wall Street analysts." Similarly, Bush is keeping the war in Iraq and his social security privatization scheme out of his budeget to keep in the good graces of the American public.

    Re: WorldCom Trial : Sullivan Fingers Ebbers in Fr (none / 0) (#9)
    by cp on Tue Feb 08, 2005 at 04:10:45 PM EST
    just goes to prove that the old adage about there being "no honor among thieves" applies even at the highest levels of theft. one of the big problems in prosecuting people like ebbers is that they look so good. they are well educated, well dressed, well spoken, nice families, etc. not only does a lay jury have trouble with the basic facts of white-collar crime, they have a hard time associating people like that with criminal activity. perhaps if they were required to appear in court in prison denims, unshaved and unkempt, like your average poor street thug, juries wouldn't be swayed solely by their appearance. of course, that wouldn't be fair to the defendent. hint, hint.

    Sailor - The butt you save may be your own. ;-) John Horse - You gotta be kidding me. et al - I spent over 30 years in telcom, the BS that some of these crooks passed out is outrageous. And WS was the big enabler.

    Re: WorldCom Trial : Sullivan Fingers Ebbers in Fr (none / 0) (#11)
    by Kitt on Tue Feb 08, 2005 at 07:35:17 PM EST
    All of you stop it. It's hard to read while choking, sputtering and laughing at the same time. One of the things I always found interesting about Ebbers was the manner in which he came across, unsuspecting, unassuming - a dolt. The Forbes web site adds a bit more detail than the BBC

    Re: WorldCom Trial : Sullivan Fingers Ebbers in Fr (none / 0) (#12)
    by john horse on Tue Feb 08, 2005 at 08:27:26 PM EST
    Jim, How far fetched is it to compare WorldCom with Bush (WorldCon??). WorldCom was engaged in some very questionable accounting activities. Are the accounting practices used by Bush that much different? According to the Center on Budget and Policy Priorities: "For the first time since 1989, the budget fails to provide information about the funding of specific discretionary programs beyond the upcoming budget year, thereby hiding the impact of the large discretionary cuts it is proposing." "The Administration also proposes a new budget rule that would require that legislation to make the tax cuts permanent be treated as if such legislation had already been enacted." "The Administration insists on its practice of budgeting for only five years, masking the full cost of its tax cuts, while it simultaneously insists on using “infinite” or 75-year time horizons in other contexts." I don't know about you, but it doesn't sound like GAAP to me.