Bernard J. Ebbers, who spent 12 years in prison after presiding over a notorious $11 billion accounting fraud as chief executive of telephone company WorldCom, died Sunday. He was 78.
His death was announced by his lawyer, Graham P. Carner, in a statement that said his health had sharply deteriorated in recent months.
Ebbers, who was sentenced to 25 years in 2005, was released from a federal prison in Texas in December, having been granted compassionate release by a federal judge to spend his final months at home in Mississippi. His family said in the statement that he died “surrounded by his loving family and not chained to a hospital bed without anyone he knew in the room.”
In what was once considered a great entrepreneurial success story, the former executive from a modest upbringing turned a small phone company in Mississippi into a telecommunications juggernaut. At its peak, the company employed 80,000 people.
But the apparent growth, fueled by a series of acquisitions, turned out to be an illusion enabled by accounting trickery. A jury convicted Ebbers of securities fraud, conspiracy and filing false reports in 2005, despite his arguments that he had been misled by subordinates and was in the dark about the wrongdoing. The 25-year sentence was among the strongest penalties ever handed to a corporate executive.
“The problem is that Bernard Ebbers was transformed into a symbol of corporate corruption,” another lawyer, Reid Weingarten, said after he was sentenced in 2005.
WorldCom had $107 billion in assets when it applied for bankruptcy protection in July 2002, and its rapid fall reverberated throughout the industry. Thousands of WorldCom employees lost their jobs, insurance and pensions, with their savings wiped out by the plummeting price of the company’s stock. AT&T laid off tens of thousands of people in the late 1990s as it tried to chase WorldCom’s phantom profits.
In 2005, Ebbers, who was once worth $1 billion on paper, surrendered nearly all of his remaining $40 million fortune to investors who lost billions in the bankruptcy.
Before the fall, he was widely hailed as a visionary, a rags-to-riches corporate outsider who stitched together a world-class company. Originally from Edmonton, Alberta, Ebbers, who was 6 feet 4 inches tall, moved to Clinton, Mississippi, in the 1960s to play basketball at Mississippi College, a Baptist university. He worked as a high school basketball coach and operated motels before, in 1983, founding the company that would become WorldCom.
“The only experience Bernie had before operating a long-distance company was he used the phone,” Carl J. Aycock, an early investor and WorldCom board member, said in 1997.
Ebbers experienced “a rapid decline” in October and was hospitalized several times in November and December, his family said. His daughter, Joy Ebbers Bourne, said in a court filing in October that he was “now experiencing full-blown dementia” and was “unable to carry on a conversation.”