By Brooke A. Masters
Washington Post Staff Writer
Tuesday, March 15, 2005; 2:37 PM
NEW YORK, March 15 -- Former WorldCom Inc. chief executive Bernard J. Ebbers was found guilty on all counts against him -- conspiracy, securities fraud and making false filings with regulators -- for his role in a massive accounting fraud that led to the downfall of the nation's second largest telecommunications firm, costing millions of investors billions of dollars. Ebbers sat impassively with his fingers laced as the jury forewoman delivered the verdict and stared intently at each juror in turn as the judge polled them individually. The jury of seven women and five men held Ebbers, 63, responsible for filings that boosted WorldCom's reported earnings and hid the fact that its business was deteriorating for nearly two years. WorldCom filed for bankruptcy protection in July 2002, later announcing it had uncovered $11 billion in fraudulent accounting entries. The firm's collapse -- combined with the implosion of Enron Corp. -- signaled the death knell for the 1990s stock market boom and prompted Congress to enact strict new laws holding corporate chieftains more accountable for their companies' financial reporting. Ebbers, a former milkman and high school coach who built WorldCom from a tiny Mississippi long-distance reseller into a national powerhouse, was convicted on all of the nine charges. He is the fifth and highest ranking WorldCom executive to be convicted in the fraud. Ebbers faces a maximum of 85 years in prison and could spend much of the rest of his life behind bars. It was a remarkable comedown for a former billionaire once hailed as the "telecom cowboy" for helping lead the telecommunications revolution. His wife cried silently throughout the reading of the verdict, and after it was over Ebbers walked over and put his arms around her and their daughter. Then he and his family left the courtroom together, pushing through a scrum of reporters to get into a taxi. The conviction came after five weeks of testimony and more than 40 hours of deliberation over eight days. During that time the jurors sent out more than two dozen notes and requested testimony of virtually every witness. "We are all devastated. We profoundly believe in our client, believe this case is riddled with reasonable doubt," said Reid H. Weingarten, Ebbers's lead attorney. Weingarten promised to appeal. Prosecutors left the courtroom without commenting. They had contended that Ebbers orchestrated a scheme to boost WorldCom's share price because he was trying to protect his personal fortune -- once valued at $1 billion -- from banks that were calling in his loans as the company's stock fell. Ebbers's former lieutenant Scott D. Sullivan, WorldCom's ousted finance chief, testified that he personally informed Ebbers that he was taking improper "shortcuts to earnings" and making "adjustments that weren't right" to the way the company booked revenue and operating expenses known as line costs. In these private conversations, Sullivan said, Ebbers ordered him to commit the fraud by insisting that the company had to "hit the numbers" for revenue and earnings that Wall Street was expecting. Three lower-level WorldCom executives, who like Sullivan have pleaded guilty to fraud, explained how they had secretly reclassified more than $2 billion in line costs -- the fees paid to other carriers for use of their networks -- as capital expenditures. A voicemail from Sullivan to Ebbers and a memo written by Ebbers strongly suggested that he was aware the company was including "accounting fluff" and "one time events" in its revenue numbers. Other employees of WorldCom and its successor, MCI Inc., of Ashburn, testified that Ebbers had an eagle eye for cutting costs -- down to small items like bottled water and the company's coffee service and closely studied WorldCom budget documents. But Ebbers took the stand and denied that Sullivan had ever told him that anything illegal was going on. His attorney Weingarten contended that Sullivan had masterminded the line-cost scheme and was falsely accusing Ebbers to cut his prison time. Prosecutors introduced no documents that directly linked Ebbers to the line-cost fraud and only one conversation with anyone other than Sullivan. Ebbers also contended that he trusted Sullivan to make sure that the company reported its revenue and expense accounting properly. "This man has committed no crimes," Weingarten said. Jurors sent word through U.S. District Judge Barbara S. Jones that they did not want to comment. Jones thanked the jurors and set sentencing for June 13. Ebbers's likely prison time is somewhat unclear because the U.S. Supreme Court recently declared the federal sentencing guidelines unconstitutional but said judges could use them as a guide. If the guidelines were in force, Ebbers would likely receive at least 25 years, with a possible increase if Jones decides he lied on the stand. But she could also give him reductions for his personal situation -- he has a heart condition and has made more than $100 million in charitable gifts -- or she could opt not to use the guidelines at all.
Bernard Ebbers, 63, and his wife, Kristie, exit a federal courthouse in New York after a jury returned guilty verdicts on all counts against the former WorldCom chief executive.
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