NEW YORK, March 4 -- A federal jury began debating the fate of former WorldCom Inc. chief executive Bernard J. Ebbers on Friday.
Ebbers, 63, is charged with securities fraud, seven counts of filing false documents with the Securities and Exchange Commission and conspiring with underlings to boost the telecommunication giant's reported earnings by billions of dollars in 2000 through 2002. Prosecutors contend Ebbers was seeking to protect his personal fortune in WorldCom stock and ordered former finance chief Scott D. Sullivan to hide operating expenses and make undisclosed changes to revenue accounting.
Former WorldCom chief executive Bernard J. Ebbers is charged with fraud related to the firm's collapse.
(Peter Morgan -- Reuters)
Ebbers, a former high school coach who built WorldCom from an obscure Mississippi long-distance reseller to the nation's second-largest long-distance firm, contends Sullivan masterminded the fraud without his knowledge or consent.
On Friday, U.S. District Judge Barbara S. Jones turned the case over to the jurors to decide, telling them: "You are not partisans. You are judges. . . . Your sole interest is to seek the truth."
Sullivan, who pleaded guilty to fraud and faces up to 25 years in prison, was the government's star witness. He told the jury that he personally informed Ebbers in private face-to-face meetings for seven straight financial quarters that he was making a total of more than $5 billion in "adjustments that weren't right," including falsely reclassifying line costs -- fees paid to other carriers as capital expenditures.
Prosecutors introduced no documents that directly linked Ebbers to the line cost fraud, but the jury saw a memo from him and heard a voice mail from Sullivan to Ebbers that both talked explicitly about "accounting fluff" and "one-time events" in the company's revenue totals.
Ebbers took the stand in his own defense and testified that Sullivan had told him nothing of the line-cost fraud. "If he had, we wouldn't be here today," he said. Ebbers also told the jury that he believed the search for new sources of revenue was a legitimate process and that he left decisions on what to include in the company's financial statements to Sullivan and the company's finance department.
"I know what I don't know. To this day I don't know technology, and I don't know finance and accounting," Ebbers said.
Prosecutors argue that Ebbers conspired to boost WorldCom's earnings because banks that had lent him more than $400 million based on his stock were asking to be repaid as the company's stock price fell in 2000 and 2001. The defense countered that, with the exception of a September 2000 sale forced on him by the bank, Ebbers hung onto millions of shares of WorldCom and even bought additional shares worth $5.3 million after he was forced out of the company in April 2002 but before the fraud was uncovered in June of that year.
All of those shares became worthless when WorldCom filed for bankruptcy protection in July 2002. The company now does business as MCI Inc. of Ashburn.
The jurors, seven women and five men, deliberated just over four hours and sent out four notes. They requested about three dozen exhibits and excerpts from testimony by Sullivan and three other former WorldCom officials who have pleaded guilty.
The jury includes teachers, transit workers and bank employees from Manhattan, the Bronx and the northern suburbs of New York City. Deliberations are to resume Monday.