Former WorldCom CEO Bernard Ebbers has been found guilty on all charges of conspiracy and fraud arising from WorldCom's US$11 billion of accounting misstatements.
He had been accused of inflating revenue to boost the price of WorldCom's stock. Ebbers could now receive 85 years in jail. The sentencing date is set for 13 June and until then Ebbers remains free.
Ebbers faced, and was found guilty of, one count of conspiracy to commit securities fraud, one count of securities fraud and seven counts of false filing with the SEC. The conspiracy charge carries a maximum prison sentence of five years and a fine of either $250,000 or twice the gross gain or loss resulting from the offence, whichever amount is larger. The fraud count carries a maximum of 10 years in prison and a fine of $1 million or twice the gross gain or loss, whichever is bigger. The other counts have a maximum prison sentence of 10 years.
In his defence, Ebbers said he left accounting to subordinates and had no knowledge of financial irregularities while he was CEO. However, this was disputed by former WorldCom chief financial officer, Scott Sullivan, who pleaded guilty in the case and was the key witness against Ebbers.
Sullivan stands to receive a more lenient sentence for aiding federal authorities in the case. He was the only witness in the six-week trial who said he had spoken to Ebbers directly about the fraud.
Ebbers said that after he resigned as CEO in 2002, he was "shocked" to have learned that Sullivan was involved in financial irregularities.
The prosecution, however, produced e-mail that showed Ebbers grilled his subordinates about financial presentations, and questioned him about WorldCom decision-making to show that he was a hands-on manager who would have know about accounting issues.
"I'm not surprised, I would have been surprised if it had gone the other way," said Ernest Buehler, a former accountant for the City of New York, who attended part of the trial. "The idea that he didn't know anything about the financial shenanigans that were going on just doesn't go over. Surely he had to investigate the profit and loss figures of the companies that WorldCom acquired. WorldCom grew by acquiring dozens of companies. It doesn't make sense that when it came to running his own house, he wouldn't have known what was going on."
In comments to media and broadcast by CBS Radio after the verdict, Weingarten indicated that he would file an appeal. "I don't think Mr. Ebbers ever acted with criminal intent ... the fight will continue."
The US Department of Justice was triumphant. "We are satisfied the jury saw what we did in this case: that fraud at WorldCom extended from the middle-management levels of this company, all the way to its top executive," said US Attorney General Alberto Gonzales.
WorldCom now operates under the name MCI. It filed for bankruptcy in July 2002 and agreed to a $750 million settlement for accounting irregularities with the US Securities and Exchange Commission (SEC). It came out of bankruptcy last April.