Former WorldCom chief executive Bernard Ebbers, the biggest fish in the biggest corporate collapse in US history, was convicted on Tuesday on fraud charges, capping off a three-year criminal probe.
Ebbers, 63, accused of being the mastermind of the US$11 billion fraud that forced the telecom giant into bankruptcy in 2002, was found guilty on all charges by a federal court jury after a six-week trial.
Ebbers faced charges of securities fraud, conspiracy and filing false reports with regulators, each of which carries a lengthy prison sentence.
PHOTO: AP
A distraught-looking Ebbers made no comment as he left the courthouse, surrounded by cameramen and reporters. He entered a car with his wife and stepdaughter.
Ebbers will be sentenced on June 13 by US District Judge Barbara Jones, but the conviction -- which could lead to a sentence of as much as 85 years in prison -- means a virtual life sentence for Ebbers unless it is overturned on appeal.
"Today's verdict is a triumph of our legal system and the application of our nation's laws against those who breach them," US Attorney General Alberto Gonzales said. "We are satisfied the jury saw what we did in this case: that fraud at WorldCom extended from the middle-management levels of this company, all the way to its top executive."
Reid Weingarten, Ebbers' lead defense attorney, said he was confident his client would be vindicated on appeal.
"CEOs have a responsibility but it doesn't mean they've committed crimes when misdeeds were committed in their organizations that they didn't know about," he said. "The captain of the ship is responsible for the ship, but is not criminally responsible unless he acted with criminal intent. And I don't think Mr. Ebbers ever acted with criminal intent, and still don't today, despite the verdict."
WorldCom, along with Enron, became a symbol of corporate misconduct, inspiring Congress to pass tough legislation holding corporate leaders accountable for financial misconduct at their companies.
Ebbers, who built one of the biggest telecom empires at the height of the tech bubble, is the most prominent executive to face prison time. Top executives at Enron are due to go on trial next year in Texas.
Shareholders lost about US$180 billion in WorldCom's collapse, 20,000 workers lost their jobs and the company went bankrupt. The company came out of bankruptcy last year, renamed as MCI Inc.
The Ebbers trial is the latest in a series of attempts by prosecutors to nail senior executives for charges of cooking company books, hampering federal investigations and using companies as their own personal piggy banks.
Ken Boehm, chairman of the National Legal and Policy Center's Corporate Integrity Project, said the decision was "the right verdict."
"It was the world's largest accounting fraud, it was far from a victimless fraud," Boehm said. "People's pensions were wiped out, many people lost their jobs and livelihood. I think it sends a message to corporate executives that, unlike in the past, they will be held accountable for their actions."
The star prosecution witness in the case was former chief financial officer Scott Sullivan, who portrayed Ebbers as a hands-on CEO who encouraged the accounting scheme to help meet Wall Street financial targets.
Ebbers' lawyers, meanwhile, contend that the CEO delegated most authority and that the fraud was orchestrated by Sullivan, who cut a deal with prosecutors for leniency in exchange for his testimony.
Sullivan, who has pleaded guilty to accounting fraud charges as part of an agreement with prosecutors, acknowledged that he directed the manipulation of the books from 2000 to 2002 but that Ebbers was well aware of the situation.
Appearing in his defense after weeks of testimony from Sullivan for the prosecution, Ebbers sought to play up his humble roots and almost accidental rise as a major corporate leader.
"I was a very demanding boss," he said, but he added: "I know what I don't know."
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