"He was WorldCom, and WorldCom was Ebbers," prosecutor William Johnson
told jurors. "He built the company. He ran it. Of course he directed
this fraud."
The defense claimed all along that the fraud was masterminded by
Sullivan, who testified as the star government witness that Ebbers
instructed him quarter after quarter to "hit our numbers"; meet
Wall Street expectations.
Ebbers himself took the witness stand at trial's end and flatly denied
any role in the fraud. He said he viewed his role at the company as a
visionary and cheerleader, was uncomfortable with accounting and left
it to Sullivan.
"He's never told me he made an (accounting) entry that wasn't right,"
Ebbers said of Sullivan. "If he had, we wouldn't be here today."
The largely blue-collar jury of seven women and five men considered
the case for eight days, an uncommonly long deliberation for
white-collar cases, but never showed signs of discord.
The jurors were ushered away from the courthouse without speaking to
the media, and Judge Barbara Jones instructed reporters not to badger
them.
Outside court, top defense lawyer Reid Weingarten said he was
"devastated" but predicted Ebbers "will ultimately be vindicated" on
appeal. He said he had no regrets about calling Ebbers to testify.
"I did not think Mr. Ebbers ever acted with criminal intent," he
said. "Obviously we're disappointed by the result, but the fight will
continue."
Legal experts said the appeal would be difficult. Weingarten said part
of the case would center on prosecutors' refusal to grant immunity to
three former WorldCom executives the defense wanted to call as
witnesses.
The nine criminal counts against Ebbers, securities fraud, conspiracy
and seven counts of making false filings to the Securities and
Exchange Commission carry up to 85 years in prison. He will be free on
bail until sentencing.
The conviction comes more than two years after an internal auditor
began asking questions about curious accounting at WorldCom, touching
off a scandal that eventually unearthed $11 billion in cooked
books.
With the entire telecom industry suffering a dot-com hangover,
the fraud was driven by soaring "line costs"; the fees WorldCom
paid to smaller local telephone carriers to use their networks.
Besides Sullivan, three former WorldCom accounting officials who have
pleaded guilty in the case testified they were pressured to cover up
the expenses. Only Sullivan directly implicated Ebbers.
Ebbers still faces civil litigation, including from the company, which
backed up his $400 million in personal loans when Bank of America
demanded more and more collateral as the stock price fell.
The company struck a $750 million settlement with federal regulators
to repay aggrieved investors, a small sum compared to the tens of
billions of dollars of market capitalization that evaporated in the
scandal.
WorldCom, which was based in Clinton, Miss., since re-emerged as MCI
Inc., based in Ashburn, Va.
Twelve former directors of the company, plus some investment banks
that underwrote WorldCom securities and auditing firm Arthur Andersen,
also face a civil trial brought by angry investors. That trial is
scheduled to get under way later this month.
In winning a conviction against Ebbers, federal prosecutors in
Manhattan rang up another victory in a remarkable string of
white-collar prosecutions that began in the summer of 2002.
Martha Stewart, Adelphia Communications founder John Rigas and former
dot-com banking star Frank Quattrone were all found guilty during that
stretch, with the same prosecutor, David Anders, handling both
Quattrone and Ebbers.
The prosecutors have also wrung guilty pleas from countless other
executives, including ImClone Systems Inc. founder Sam Waksal and five
other former WorldCom officials who agreed to cooperate against
Ebbers.
Sullivan and the three former WorldCom executives who have pleaded
guilty in the case still face sentencing. They hope to win lighter
prison terms or none at all by cooperating with the government against
Ebbers.
Copyright 2005 The Associated Press.
NOTE: For more telecom/internet/networking/computer news from the daily
media, check out our feature 'Telecom Digest Extra' each day at
http://telecom-digest.org/td-extra . Hundreds of new articles daily.
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