WorldCom indictments called likely next week
Former CEO Ebbers, two top financial men could face charges
"Indications are that charges will be filed sometime next week," said a source close to the investigation, speaking on condition of anonymity.
The Wall Street Journal reported yesterday that former Chief Financial Officer Scott D. Sullivan and former Controller David Myers are expected to be indicted on charges related to billions of dollars in accounting frauds at the company.
The government also is likely to seek the indictment of former Chief Executive Officer Bernard J. Ebbers, the Journal reported, attributing that to unidentified sources familiar with the matter.
"We are confident that the prosecutors will ignore the howling mob and concentrate on the evidence," Ebbers' attorney Reid Weingarten said in a statement. "And if they do so, Mr. Ebbers will not be prosecuted."
Federal prosecutors set a deadline of Wednesday to file indictments against Sullivan and Myers, who were dismissed from the company last month, the sources told the newspaper.
They said prosecutors are seeking the cooperation of Myers and Sullivan to produce evidence against Ebbers, who resigned two months before the company admitted inflating earnings by nearly $4 billion.
WorldCom also could be indicted as a corporation under a plan being considered by the Justice Department, the Journal reported. A conviction of the long-distance phone company could drive it out of business and hurt consumers and creditors.
WorldCom spokeswoman Julie Moore said the company had no indication that indictments were forthcoming.
"That is flatly inconsistent with what federal prosecutors have communicated to the company," Moore said.
The Justice Department and the FBI declined to comment yesterday. Calls to Myers' home were answered by a recording, and his attorney could not immediately be found for comment.
Sullivan's attorney, Andrew J. Graham, did not immediately return a request for comment.
The Securities and Exchange Commission, noting "accounting improprieties of unprecedented magnitude," filed civil fraud charges last month against WorldCom.
The Clinton, Miss.-based company admitted June 25 that it had falsely accounted for $3.8 billion in expenses. The inflated revenue allowed the company to report a profit when it otherwise would have had a loss.
Sullivan, who was fired the same day, subsequently was accused by the company's auditor, Arthur Andersen, of withholding crucial information about WorldCom's bookkeeping.
WorldCom filed for bankruptcy protection Sunday under Chapter 11, the largest such filing in U.S. history.
U.S. Bankruptcy Judge Arthur J. Gonzalez approved $2 billion in financing Monday to keep WorldCom operating as it reorganizes its finances.
He also granted the Justice Department's request for an independent examiner to ensure an honest accounting of the company's value and to investigate possible mismanagement, irregularities and fraud.