Ebbers Sentencing

Once one of the shining stars of the technology boom, Bernard J. Ebbers will now spend what could be the rest of his life in prison for leading the largest accounting fraud in U.S. history. U.S. District Judge Barbara Jones, despite pleas for leniency, sentenced the 63-year-old Ebbers to 25 years in prison.

Washington Post staff writer Carrie Johnson was online Thursday, July 14, to discuss the case. Read her coverage of the sentencing here .

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Carrie Johnson: Thanks for logging on today and for all the good questions. I'm eager to hear your thoughts on yesterday's whopping 25-year sentence for Bernie Ebbers: fair or foul? It would be great to hear in particular from current and former MCI/WorldCom employees and investors.

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Washington, D.C.: What's the minimum amount of time Ebbers will serve?

Carrie Johnson: Judge Barbara Jones gave Ebbers a 25-year sentence. Because parole has been abolished in the federal system, he must serve at least 85 percent of that term--or about 21 years. He is eligible for a reduction of up to 15 percent for good behavior behind bars.

Ebbers asked the judge to send him to a low security prison in Yazoo, Miss., close to his family in the Clinton/Brookhaven area.

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Fort Lauderdale, Florida: Surprise, surprise, surprise: Did the Ebbers camp really think he'd get a lighter sentence because of a few letters from pals and records that show he threw crumbs to charity from among the billions of dollars he bilked from shareholders, employees, and others?

Carrie Johnson: Defense lawyers for Ebbers sought a reduction in his prison sentence on several grounds--including his heart trouble, his $100 million in charitable gifts, and the fact that he held onto WorldCom stock while the share price fell precipitously.

But the judge was mostly unmoved. Under her calculations, he could have served between 30 years and life. She said she cut him a 5-year break based on good works he performed, such as donations to orphan homes and scholarships for poor kids.

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Hollywood, FL: We've read Mrs. Ebbers is being allowed to keep a modest house in Alabama and about $50,000 in Ebbers' assets. Just how modest is this house, and how much of his graft was funneled into her own personal accounts before the ax fell? How extensive are her personal assets? Is she still going to be living quite comfortably while making those jailhouse visits? Or will she have to struggle to make ends meet like so many folks her greedy husband helped ruin?

Carrie Johnson: Good question. The full extent of the assets Kristie Ebbers has been allowed to keep is somewhat unclear, for privacy reasons. But federal prosecutors in NY and plaintiff lawyers say she will get to keep an IRA account, $50,000 in cash, a small stake in an oil/gas business and the smaller house in Mississippi. It is safe to say that prosecutors would not have signed off on the deal if they thought Mrs. Ebbers was getting the better of them. Tellingly, a federal judge gave preliminary approval to the settlement earlier this week or last week and said it passed muster with her.

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Fairfax, VA: I lost $297K and my job. I filed with others in a class-action suit. Is it true that guys like me, may, if lucky, may see only $1,000 at the most?

Carrie Johnson: The lawyers in the shareholder case have recovered about $6.1 billion from investment banks, accounting firms, and Ebbers. Lawyers will take about 5-6 percent of that sum in fees and the rest, less administrative costs, will go back to investors and bondholders. They will never be made whole for their $2.2 billion in losses, but the WorldCom recovery is the biggest ever for investors. That may be little solace to you, as it was to employees who spoke to reporters at the courthouse in New York yesterday.

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Olney, MD: I don't understand how people can possibly think his sentence was too harsh. "He didn't kill anyone"? No, but he ruined thousands of lives, and even if he spends the rest of his life in prison, he may be better off than many of those people during that time. How is that even close to being too harsh? Should it be one day for every life ruined, no more?

Carrie Johnson: Fair point. There is an intense debate raging about the sentences that business fraudsters should face. Congress stepped up the penalties after the Enron and WorldCom debacles. But some defense lawyers point out that Ebbers and others will serve more time behind bars than convicted drug dealers, murders, and rapists. It's tough stuff.

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Anonymous: Alabama sure does seem to be the place to go for a white collar trial!

Carrie Johnson: Yeah -- really. Defense lawyers for Ebbers had tried to get the case moved to Mississippi, where he might have benefitted from all the charity he doled out over the years. That is one of the grounds for their pending appeal.

Hard not to notice the 25-year sentence for Ebbers came down the same day the government announced it would drop its appeal of a judge's dismissal of perjury charges for HealthSouth Corp. founder Richard M. Scrushy--who was resoundingly acquitted by a hometown jury earlier this month.

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Ashburn Campus, MCI: I laughed out loud when I saw Ebbers's lawyer claim than an "innocent man" was sentenced to jail. He knows and Bernie knows he's finally getting what was coming to him. I just can't understand why he gets to wait until October to start his sentence. His mark on this company still exists, as we move towards the eventual merger with Verizon. And I hope once that occurs, the last imprints of his tenure will finally be washed away.

Carrie Johnson: I'm sure you speak for many employees who continue to feel the effects of the fraud and its disclosure. One of the employees at the courthouse yesterday expressed concern that workers at MCI may not be fully out of the woods yet--that more layoffs could come after the merger takes effect.

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San Francisco, Ca: Ebbers deserves the sentence. What about the board of directors? Has any of them been held criminally responsible for being involved with the fraud?

Carrie Johnson: Board members in place at the time of the fraud are all gone now. They have not faced criminal charges. Prosecutors point out that it is very difficult to bring a criminal case against corporate directors absent some evidence of personal impropriety, as happened with one Tyco International Ltd. board member who pocketed $20 million as a deal success fee. Board members generally can defend themselves by showing they relied on accountants, business people, and others. But WorldCom's board members, in a virtually unprecedented move, were forced to shell out money from their own pockets to settle the big class action claim. Plaintiff lawyers say that could set a standard for better governance among corporate boards in the future.

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Dallas, TX: I would think the most appropriate penalty for these people (including Ebbers) would be for them to enter the poor house. It seems like, at least in Fastow's case, they still left him a millionare, and with Ebbers's lost loans, is there any way to make sure they don't have access to the money they stole?

Carrie Johnson: Ebbers is giving up about 95 percent of his assets--leaving what plaintiffs describe as a "modest" living allowance for his wife. Earlier this year, the Rigas family of Adelphia Communications Corp. gave up more than a billion dollars in assets after two family members were convicted of taking part in an accounting fraud. Some analysts believe this is the strongest way to deter business wrongdoing.

As for Enron's Andy Fastow, he is to turn over more than $20 million to the government as part of his plea deal.

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Duluth, GA: The culture of lies, fraud, and greed were filtered throughout MCI's different divisions. Ebbers and other MCI leadership should be taken to task for their greed and the pain and suffering that they have caused innocents. Ebbers sentence is appropriate and I do not feel badly for him.

I worked for MCI in the late 1990s in Elkridge, MD in the marketing and sales division of long distance and other additional telephone services. It was an "anything goes environment" when it came to selling their services.

In fact, those who were deceitful seemed to be preferred and rewarded in that maligned culture. We were taught to divide people that we were targeting into green apples and red apples.

Green apples were more sophisticated and stronger willed people, who asked more questions and were not easily fooled. Red apples were the elderly, poor and less educated and assertive people, and foreign people, who may not quite understand what was being discussed. We were trained and expected to aggressively sell to the red apples and to load them up with lots of extras that may or may not be of value to them.

On behalf of all the MCI sales people who were penalized for being scrupulous and on behalf of all those red apples that helped make MCI richer: We are glad that Ebbers' has twenty-five years in jail to think about the greedy and malignant culture that he created.

Carrie Johnson: Another very strong voice from a former employee of WorldCom about the corporate culture and how it festered.

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Bashaw, Alberta, Canada: The 25-year sentence meted out to Ebbers is unprecedented. Executives, guilty of much the same crimes, have gotten much more lenient sentences. Does the fact that Ebbers is something of an outsider -- he was born and raised in Canada, I believe and may not be an American citizen -- have anything to do with the harshness of the sentence? Is he, in other words, without the kind of political and social connections that would otherwise have saved him from such a devastating sentence? Or, to put it another way, has his foreign background made him vulnerable to this kind of judicial reprisal?

Carrie Johnson: I don't think Ebbers's birthplace played a role in his criminal sentence.

The single biggest factor under federal guidelines is the amount of the loss to investors/shareholders/victims. In the WorldCom case, officials pegged that loss at over $2 billion. Under sentencing guidelines, a loss of more than $100 million virtually ensures a defendant will spend decades behind bars. Defense lawyer Reid Weingarten urged the judge to show leniency and depart from the guidelines, but she rejected his entreaty yesterday.

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Washington, D.C.: Is Ebbers the only person from WorldCom who could receive that much prison time? When counting up the costs of the fraud, I think it's also important to look at the WorldCom competitors who were sunk by the appearance of such a strong company in the market when everyone was actually going under. Even part of MCI's strategy today is to use more of its own capacity, which means that the excess supply problem will be shifted from MCI, which is in bankruptcy and can break contracts, to other firms, who are not in bankruptcy (yet) and cannot break contracts.

Carrie Johnson: Great point. So many companies struggled and made business decisions based on the fraudulent numbers WorldCom reported.

Former CFO Scott Sullivan and four other former WorldCom officials are going to be sentenced later this summer. Each of those folks pleaded guilty, cooperated with prosecutors, and will likely receive a big reduction in their prison sentence as a result. The system is set up so that people who go to trial--and lose--pay the biggest price.

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Washington DC: What other corporate 'leaders' are coming up for trial soon? I know Ken Lay is one.

As for Bernie Ebbers - he's LUCKY to have gotten only 25 years, and not a trip to a guillotine given the number of people's lives he's screwed up.

Carrie Johnson: Former Enron leaders Ken Lay and Jeff Skilling are scheduled to go to trial in January in Houston. That will likely be the final chapter of this era of business scandal.

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Vienna, VA: Why such a lenient sentence for Ebbers? For $11 billion lost, 25 years of jail time. That's about 1 year jail time for each $440 million. I'd think a robber stealing $1 million from a bank would get more than one year of jail. White-collar criminals like Ebbers seem to get off too easy.

Carrie Johnson: Here's a voice from the tough love camp

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Annandale, Virginia: As long as a weapon, or physical harm to the victims is not involved in the crime, I have always felt that a just sentence would be: One day in jail for each dollar stolen. Jean Valjean lives!

Carrie Johnson: Wow--never thought I'd see a Les Miserables reference in an online chat about Bernie Ebbers. Thanks Annandale.

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Fairfax, VA: I don't celebrate anyone having to spend what could be the rest of his or her life in prison but as a former WorldCom employee, I feel that some jail time was appropriate. My qiestion is, does this mean that Scott Sullivan (the person I believe was most guilty) will get less time for having coorporated with the authorities? The I think would be an injustice!

Carrie Johnson: Defense lawyers for Ebbers made exactly this point yesterday. They argued that Ebbers never would have been able to pull off the fraud without Scott Sullivan's acquiescence and accounting skills.

But the judge clearly ruled that Ebbers was the "instigator." I believe Scott Sullivan faces a statutory maximum of 25 years in prison but I would be really surprised if he gets that kind of sentence. Prosecutors are likely to file a motion with the judge describing his cooperation, and many analysts believe the government never would have made a case against Ebbers without Sullivan's testimony and his help sifting through documents.

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Olney, MD: Carrie, thanks for letting me vent earlier. As for the "...defense lawyers -who] point out that Ebbers and others will serve more time behind bars than convicted drug dealers, murders, and rapists", I'd like to point out that killers and rapists usually only ruin one life or one family, or maybe a handful. While I can understand the argument that there is less direct harm, it is definitely much, much wider. I suppose it would be clearer if he was sentenced for, say, 10,000 counts of fraud, or one for every shareholder or customer he helped defraud, however many that was.

Carrie Johnson: Maybe so--you are of course right to note that there are thousands and thousands of former employees and investors hurt by WorldCom's downfall.

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Alexandria, VA (former WCOM employee): Any word on charges being filed against additional executives such as the former COO, R. Beaumont, along with the executives who received special cash bonuses in finance, marketing and engineering?

Carrie Johnson: No word on former chief operating officer Ron Beaumont's status. Defense lawyers for Ebbers wanted the government to give Beaumont and a few other former WorldCom executives immunity from prosecution so that he could testify in Ebbers's defense. But prosecutors rejected that idea. This is another one of the grounds for the upcoming Ebbers appeal.

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Peoria: Because all of these high profile corporate executives contributed heavily to the Bush Presidency, and in more ways than one are responsible for Bush to be appointed president, don't you think that Bush is indebted to these corporations and he will pardon the whole bunch before leaving office? Our present administration seems to be above the law and everyone is afraid to question anything they do, good or bad, fearing their wrath.

Carrie Johnson: It would astonish me if any of these white collar defendants were pardoned by President Bush. The public outcry would be enormous. Average investors still haven't forgotten the hit to their retirement savings three years ago--as many of the comments in this chat underscore.

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Arlington, VA: Initially the judge seemed to set 30 years as the lower boundary of her sentencing range, then I think called for 30 years, reduced to 25. Why talk about a life sentence as a possibility first, then go for the minimum? Was she trying to scare him (I ask that in all seriousness)?

Carrie Johnson: I believe the judge was basing her sentence calculations on the guidelines--a complex series of factors that call on jurists to add or reduce prison time based on things such as the number of victims and the loss they suffered.

She said the guideline range for Ebbers was 30 years to life, then reasoned that 30 years was "excessive" and knocked off five years to come up with a 25-year term.

Finally, defense lawyer Brian Heberlig asked the judge to treat Ebbers as if he were eligible for a low-security prison (which is available to defendants with a maximum sentence of 23 years 6 months) and the judge agreed.

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Mt. Lebanon PA: So how much time off of his sentence did the judge cut because Ebbers was a "good" and "model" and "charitable" "public citizen"? And does one get "time off" in a Federal penitentiary? Or is 25 years a quarter of a century, time-wise? Frankly, I'd a hung him.

Thanks much. Vietnam Era Draftee/Veteran

Carrie Johnson: Ebbers must serve about 21 years.

When 80-year-old Adelphia founder John Rigas was sentenced to 15 years earlier this summer, the judge said he might be able to reduce his sentence further in the event that he was near death. It's pretty bleak out there.

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Reston, VA: Regarding Scott Sullivan -- since his major asset is him multimillion dollar house in Florida, does he get to keep it? And, can he then refinance it to draw off cash to fund a nice lifestyle?

Carrie Johnson: Plaintiff lawyers are in negotiations now with Sullivan and other former WorldCom officials who admitted to taking part in the fraud. We should know soon what kind of cash/property settlement Sullivan will cough up. Typically defendants make those kinds of deals before they are criminally sentenced. Sullivan is to be sentenced August 4 in New York.

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Alexandria, VA: Any evidence that the though leaders in the business community are discussing or evaluating why corporations tolerate the leadership styles of Ebbers and Lay? There seems to be a pattern where the hands-off, all-show CEO is the preferred front-person versus an involved type.

Carrie Johnson: You've hit on something very interesting. It is so curious to me that many of the CEOs on trial recently raised an "I'm not an accountant" defense. In fact, many of them never even used e-mail messages. That may be a generational thing, or it may be an acknowledgment that e-mail is an invaluable tool for prosecutors.

Congress passed the Sarbanes-Oxley Act in 2002, after WorldCom's fraud disclosure. The law requires CEOs to personally vouch for the accuracy of their financial statements, an effort to cut back executives' use of the know-nothing defense.

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College Park, MD: Olney's post is probably the most disgusting thing I've ever read. A murder kills a person, worth much more than a few billion, even trillion dollars. You can get your money back, a life never comes back.

Ebbers should be in jail, but not 25 years. I say, give him a pick. 25 in low security. 15 in medium security. 5 in high security.

Carrie Johnson: Interesting push back--thanks for sharing your thoughts.

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Wilmington, NC: Do you think average joe bank robber would have received a similar low-security exception? I think not.

Carrie Johnson: You're most likely right.

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Reston, Va: What is to prevent Ebbers from leaving the country before he is to report to prison?

Carrie Johnson: Prosecutors, defense lawyers and the judge all agreed Ebbers is not much of a flight risk. His lawyer said he is going back home to Mississippi and he must report to probation officials within 72 hours to handle paperwork and other issues.

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San Francisco, Ca: I started working for MCI in 1980 and was laid off in 2003. When Ebbers and company bought MCI, all accountability went to the wayside, except for Travel and Business expenses and office supplies costs which were monitored very closely. Bernie's authoritarian style kept obedience and loyalty as the only management skill required to succeed internally. For several years during the uncovering of the fraud, employees were subjected to numerous video and conference calls where any one doubting the ethics of current business practices was put down and eventually laid off. This continued after the scandal was uncovered and from what I hear from former peers continues today. This management style will always fail in long term.

Carrie Johnson: More interesting comments from the inside of WorldCom/MCI.

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Washington : Don't Ebber's sentence and similar ones lose sight of principles of diminishing returns to scale? In other words, wouldn't a 10-year sentence be almost as effective as a deterent to others? For blue-collar crimes, we need to worry about incapacitation. For someone like Ebbers, we know he will not be in a position to commit similar crimes again. This sentence seems a bit irrational and pointless.

Carrie Johnson: Maybe so--the government set the bar pretty high when it reached plea deals with Rite Aid and Enron executives that called for them to serve 8 or 10 years behind bars.

The Justice Department position is that people who plead guilty generally should receive less prison time than those who roll the dice at trial--so if Sullivan gets 8 or 10 years, Ebbers should get far more. It's the same with Enron's Andy Fastow and Jeff Skilling/Ken Lay.

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Tucson, AZ: Your response to an earlier participant:

"But some defense lawyers point out that Ebbers and others will serve more time behind bars than convicted drug dealers, murders, and rapists. It's tough stuff." We need to impose stiffer sentences on the aforementioned drug dealers, murders, and rapists as well as pedophiles. The defense lawyers were comparing apples and oranges.

Carrie Johnson: Thanks.

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Washington, D.C.: Do you believe that the general public comprehends that $11 billion is equal to $11,000 million? I think if you polled them, most people would say 25 years is fair for defrauding $11 million too.

Carrie Johnson: Fair point--these sums are absolutely astronomical. It's only in the telling of individual stories (a salesman losing his job and his house, another employee losing his retirement funds) that they really come to life.

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Northern Va.: If 30 years is excessive, what would someone have to do to merit the upper limit of the guidelines -- cause a depression?

Carrie Johnson: More from the strong medicine camp...

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DC: Was that a typo you made earlier when you said $6.1 billion? If they are recovering 6.1 billion why won't the whole $2.2 billion be reimbursed?

Carrie Johnson: Now *I'm* erroneously comparing apples and oranges.

WorldCom's market capitalization plunged disastrously....I believe the $2.2 billion figure takes some of that, but by no means all of it, into account.

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Murder vs. Ebbers: I find it interesting that some folks are comparing murdering a person and what Ebbers did. Obviously, apples and oranges. You can always argue about a life being lost and not being able to get it back. And you can always say that people will be able to earn their money back. So they are not good comparisons. I think 25 years is what he deserved. I worked for MCI (pre Worldcom) for 6 years. I managed to sell a lot of my stock and 401(k) stock at the right time, but I did lose about $40K in my 401(k). I know many, many others who lost a lot more - people who worked years and years to save it and don't have the time anymore for retirement. 50,000-plus employees have been affected -- their lives shattered. How's this -- we'll feel as much remorse for Ebbers as he felt for all of us.

Carrie Johnson: Thank you for writing--very interesting point.

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Los Angeles: General question: When the Feds, or a state, collect a huge fine for corporate fraud as the result of a criminal trial, where does that money go??

Carrie Johnson: In the WorldCom case, federal prosecutors agreed to allow plaintiff lawyers in the class action case shuttle money back to investors, with a judge's approval. That process will not begin in earnest until 2006. There is an August 2005 deadline for WorldCom investors to file claims to receive some of those funds.

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Carrie Johnson: Thanks very much for all those responses. Sorry I couldn't get to every one of the questions today.

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