Former WorldCom CEO Bernard Ebbers pleaded innocent today to federal charges that he directed an $11 billion accounting fraud, the biggest in U.S. corporate history.
The 62-year-old Ebbers was led to court in handcuffs after surrendering to the FBI early today, a day after former WorldCom finance chief Scott Sullivan pleaded guilty to an $11 billion fraud and agreed to testify against his former boss at the nation's No. 2 long-distance company.
Ebbers did not speak in court. His lawyer, Reid Weingarten, entered the innocent plea on his behalf to conspiracy, securities fraud and other charges that carry up to 25 years in prison. Ebbers was released on $10 million bond that was partly secured by his Mississippi home.
"Bernie Ebbers never sought to mislead investors, never sought to improperly manipulate WorldCom's numbers, never improperly took any money and never sought to hurt the company he built," Weingarten told reporters.
Trial was set for Nov. 9, but Assistant U.S. Attorney William Johnson said it could be delayed because additional charges were likely against Ebbers for the conspiracy and for "other conduct." Johnson said other people may be charged.
As Ebbers walked past camera crews to a waiting car, he turned to his lawyer Reid Weingarten and pleaded, "Can I say something?" Weingarten shook his head, and Ebbers remained silent. Weingarten said Ebbers wants to tell his side, but "we have to keep him on a tight chain."
Prosecutors say Ebbers and Sullivan teamed up to deceive investors, the SEC, analysts and others when it became apparent in September 2000 that the company was no longer able to meet growth projections. The $11 billion fraud to pump up profits and hide expenses at WorldCom came amid a series of corporate scandals that raised questions about the honesty of accounting at U.S. companies.
The indictment filed Tuesday portrayed Ebbers as the leader of the conspiracy, resisting Sullivan's suggestion to issue an earnings warning to alert the public to the company's deteriorating prospects.
Ebbers and Sullivan then enlisted subordinates to help hide the company's true financial picture and appear to meet Wall Street's expectations for quarterly earnings and revenue, the indictment said.
Sullivan, 42, of Boca Raton, Fla., agreed to testify to trim a potential 25-year prison sentence on charges that mirror those against Ebbers.
Asked outside court about Sullivan's statements, Weingarten suggested Sullivan's testimony would be unreliable, in part because he wanted to avoid a long prison term.
"People will do a lot of things to protect their families," he said.
WorldCom filed for bankruptcy protection in July 2002, about three months after Ebbers resigned amid questions about the company's finances. WorldCom changed its name to MCI last April.
Four former company executives, including controller David Myers, have pleaded guilty in the federal fraud investigation.