NEW YORK, Feb. 2 -- Two former WorldCom Inc. accounting managers who made billions of dollars in false accounting entries testified Wednesday that they each drafted letters of resignation the first time they were asked to falsify the telecommunication company's books, in October 2000.
But Betty L. Vinson and Troy M. Normand told the Manhattan jury considering criminal charges against WorldCom's former chief executive Bernard J. Ebbers that they decided to stay because of personal financial pressures.
The two said they typed their letters right after a meeting with WorldCom's then-finance chief, Scott D. Sullivan, in which Sullivan said the entries were necessary because Ebbers was refusing to warn investors that WorldCom's results would not meet expectations. Sullivan then said he had a plan to fix the company's sagging finances.
Sullivan, who has pleaded guilty to fraud, "told us not to jump out of the plane . . . [to] hang in there and help him get through the situation for the third quarter," Vinson said. She added that she ultimately decided to make the entries and not to quit because she "believed what Scott said, that this was a one-time thing."
Prosecutors contend that Ebbers conspired with Sullivan for nearly two more years to commit securities fraud and make false filings to the Securities and Exchange Commission by hiding WorldCom's rising operating expenses from investors. But Ebbers's defense team, led by Reid H. Weingarten, counters that Ebbers did not understand accounting and was misled by Sullivan and others.
Normand and Vinson gave conflicting testimony on the key question of what Sullivan said about Ebbers's knowledge of the accounting situation. Vinson said the finance chief said, "Bernie was aware there was a problem with accountants not wanting to make the entries," but Normand's description of the meeting did not include Sullivan's assertion about Ebbers's knowledge. Vinson said she never spoke to Ebbers about the situation. Normand, who will face cross-examination Thursday, was not asked if he had. Vinson has finished testifying.
The company's former controller, David F. Myers, who also attended the meeting, testified earlier in the trial that Sullivan said Ebbers knew about the situation, but he differed from Vinson and Normand on other key details, including the timing of the meeting. He said the fraudulent accounting entries had already been made, while the other two said they were refusing to make them.
The confusion puts additional pressure on Sullivan, who is expected to be the prosecution's star witness, because he appears to be the only WorldCom executive who claims to have told Ebbers about the $11 billion in accounting fraud.
Normand and Vinson were fired after WorldCom discovered the accounting fraud and then declared bankruptcy in July 2002. The company now does business as MCI Inc. of Ashburn. Vinson works as the comptroller of a KFC restaurant franchise, and Normand holds a similar position at an industrial equipment distributor. Both have pleaded guilty to conspiracy and securities fraud. They said they hope to avoid prison through their cooperation with prosecutors.
