NEW YORK - Jury selection begins today in the trial of Bernard J. Ebbers, WorldCom's former chief executive officer, who is accused of orchestrating a Wall Street shell game that led to the largest bankruptcy in history.
Federal prosecutors have accused Ebbers of conspiracy, securities fraud and filing false statements to regulators in the $11 billion accounting fraud that helped caused WorldCom's collapse in 2002. He could be sentenced to up to 85 years in prison if convicted on all counts.
The company's lead investment banker, Citigroup, paid $2.65 billion to settle claims by investors who were hurt by the collapse, and 10 former WorldCom directors agreed to pay $18 million of their own money to settle the same lawsuit.
The superlatives attached to the WorldCom case and the continuing fights over it are a big reason that the Ebbers trial is being called the biggest of all fraud cases. It is also being billed as a coda to the excesses of the stock market bubble that catapulted and then consumed the telecommunications industry in the past half-decade.
In digging through WorldCom's wreckage, the government has methodically built its case against Ebbers, a former high school basketball coach who turned a cut-rate long-distance telephone company into a behemoth worthy of the name he gave it.
Prosecutors have secured guilty pleas from five of his underlings, including his former chief financial officer, Scott D. Sullivan.
Judge Barbara S. Jones of U.S. District Court in Manhattan denied requests that Ebbers' trial be moved to his home state, Mississippi, and rejected motions to grant immunity to witnesses for the defense.
Those victories would seem to presage an easy case for the government, but legal analysts say the trial will be anything but clear-cut because Ebbers is so contradictory.
Many trials involving former corporate highfliers come down to whether the executive planned or knew about the fraud, or whether the dirty work was done by subordinates without his or her direct knowledge.
Proving Ebbers knew about the fraud will not be easy. According to managers who worked with him, Ebbers was a detail-oriented and hands-on executive who was concerned, even obsessed, with sales growth figures and efforts to cut costs.
But the managers said he did not appear to be a financial whiz capable of devising Enron-like accounting schemes and instead was more focused on buying companies to merge into WorldCom and on increasing revenue.
Prosecutors say they have damning voice mail messages and memos, but Ebbers rarely sent e-mail messages, making it harder to compile a paper trail of instructions to subordinates.
Prosecutors are likely to call former co-workers, including the five financial officers who have pleaded guilty, to the stand. Sullivan, Ebbers' right-hand man, will be a particularly important witness.
The defense is likely to counter by saying those witnesses are motivated to cooperate with the government because they are eager to reduce their maximum sentences, which range from 15 to 25 years. Former directors and financial industry analysts might also be called, but Ebbers reportedly kept his own counsel, so witnesses with direct knowledge of his plans could be hard to find.
In lieu of a specific memo showing that Ebbers instructed Sullivan or someone else to cook WorldCom's books, the government will have to build a case around Ebbers' motivation, legal specialists said. Here again, contradictions abound.
Ebbers was a persuasive salesman and an aggressive businessman, having bought dozens of companies over two decades. Seeing opportunity in the breakup of AT&T;, he was among the earliest entrepreneurs to help usher in cheap long-distance service.
But as WorldCom grew, Ebbers became a slave to Wall Street. Under pressure to meet analysts' expectations, he had to continue buying companies. When a downturn in the broader market hurt WorldCom's stock, the company used accounting gimmicks to paper over losses and buoy its shares, prosecutors say.
Whether Ebbers ordered those manipulations or was privy to them is the question. Prosecutors are likely to try to show that there was no way an executive so involved in the company's climb could not have been involved in its demise.
The company was not the only thing at stake. WorldCom made Ebbers fabulously wealthy. He borrowed millions of dollars against his stock to buy a 500,000-acre ranch in Canada, where he was born, and acquired timberland, boats, homes and businesses.
Yet Ebbers kept his WorldCom shares as they fell. And he has humble roots, which his lawyers are sure to emphasize. After moving to Mississippi, he operated motels before entering the telephone business in the 1980s. Without formal training in engineering or finance, he relied on grit and instinct.
Ebbers' lawyers are likely to portray him as someone who focused on the big picture and let others handle the books.