Former WorldCom Chief Executive Bernard Ebbers masterminded a $5 billion scheme to falsify the company's bottom line because he cared more...
NEW YORK — Former WorldCom Chief Executive Bernard Ebbers masterminded a $5 billion scheme to falsify the company’s bottom line because he cared more about protecting his personal fortune than being honest with shareholders, Assistant U.S. Attorney William Johnson told the jury yesterday at Ebbers’ fraud trial.
“Money, power and pressure corrupted Bernard Ebbers to commit fraud on a billion-dollar scale,” Johnson said in closing arguments. “WorldCom had truly become WorldCon.”
Prosecutors have charged Ebbers with securities fraud, making false filings to the Securities and Exchange Commission and conspiring with former finance chief Scott Sullivan to boost the Mississippi-based telecommunication giant’s earnings by hiding operating expenses and making unannounced changes to the way it recorded revenue.
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Investors lost billions when WorldCom filed for bankruptcy in July 2002. The company now does business as MCI.
Ebbers said on the stand he knew nothing of the fraud. His attorney Reid Weingarten contends that Sullivan concocted the scheme with his underlings and is now falsely accusing Ebbers to reduce his own prison time. Weingarten will address his closing arguments to the 12 jurors and two alternates today.
In his three-and-a-half-hour summation, Johnson focused heavily on Ebbers’ financial motive to falsify WorldCom’s results and on his reputation as a demanding boss who kept an eagle eye on the company’s expenses.
Falling stock prices
It was no coincidence, Johnson said, that the conspiracy began in October 2000, shortly after Ebbers’ bank started calling in his personal loans because of the company’s falling stock price.
“Ebbers faced a choice of admitting WorldCom’s financial position or lying to cover it up, but the truth would have wiped him out,” Johnson said. “He chose to commit a crime.”
Johnson ridiculed Ebbers’ testimony that he did not notice entries in monthly budget reports that showed key operating expenses — called line costs — fluctuating by $600 million in a single month, calling it the “aw shucks, I’m just not that sophisticated defense.”
“He treated you no better than he treated the ordinary investors and shareholders in WorldCom,” Johnson told the jury. “He lied right to your face. It insults your intelligence that Ebbers could have built this company up from nothing in 10 years and still be clueless about its financial performance.”
Johnson declared, “There is a paper trail in this case that stretches nearly all the way back to Mississippi,” but the government did not introduce a single document that clearly linked Ebbers to the line-cost fraud at the heart of the case.
Johnson gave jurors a “top 10 list” of reasons why Ebbers is guilty. Number one on the list was Sullivan, who testified that there were no witnesses to the conversations in which he told Ebbers he was committing fraud.
Four other events Johnson cited incriminated Ebbers primarily based on Sullivan’s testimony. Among those items: Sullivan’s assertions that Ebbers called off merger talks with Verizon because he feared Verizon officials would uncover the fraud and that Ebbers wanted the company’s main monthly budget report altered to omit line costs.
Other witnesses testified that the merger talks stalled and the reports were changed but did not link the developments to Ebbers’ knowledge of fraud.
The defense had hammered away at Sullivan during the trial, highlighting his previous use of cocaine and marijuana and his admitted past lies about the fraud. Johnson reminded jurors they are not required to like him.
“You may frankly be appalled at what Scott Sullivan did,” he said. “All you’re being asked to do is believe him.”
The defense rested its case earlier yesterday after calling four witnesses over five days of testimony, none more important than Ebbers, who testified he learned about the massive fraud only after he resigned from WorldCom in 2002.
Johnson’s comments on Sullivan and information on the defense resting its case provided by The Associated Press.