NEW YORK - Former WorldCom Inc. Chairman Bernard Ebbers "told lie after lie after lie" about how his company was performing, a federal prosecutor told jurors in Manhattan federal court yesterday.
"Bernard Ebbers knew that WorldCom's books had been cooked. He knew, because he told people beneath him to do it," Assistant U.S. Attorney David Anders said in his opening statement at the start of Ebbers' trial on charges of masterminding an $11 billion fraud at the company he founded.
Ebbers, 63, is accused of directing his subordinates at WorldCom to artificially boost revenue and hide expenses to prop up the company's share price.
Prosecutors will rely on testimony from WorldCom's former finance chief, Scott Sullivan, who is expected to be the main witness against Ebbers. Sullivan has pleaded guilty to fraud charges and is cooperating with the government.
Defense lawyers contend that Ebbers was kept in the dark about accounting matters and that Sullivan is lying to win a more lenient sentence.
Former WorldCom Controller David Myers, who also pleaded guilty to fraud charges and agreed to cooperate with prosecutors, is expected to be among the first government witnesses.
At his plea hearing Sept. 26, 2002, Myers told U.S. District Judge Richard Casey that he was instructed "on a quarterly basis by senior management" to falsify entries in WorldCom's books to reduce actual reported costs and increase reported earnings.
Also expected to testify for the government is Adam Quinton, a telecommunications research specialist at Merrill Lynch & Co. Inc. who covered WorldCom. Quinton is expected to say that he might have lowered his rating of the long-distance company in 2002 if he had known about its accounting methods.
Ebbers is charged with one count each of securities fraud and conspiracy and seven counts of making false filings to the Securities and Exchange Commission. If convicted, he faces up to 25 years in prison.
The prosecution of Ebbers is the result of a three-year investigation into the largest securities fraud in U.S. history, one that led to the biggest bankruptcy ever when the company sought court protection in 2002. The company emerged from bankruptcy as MCI Inc. in April.