Lawyers for former WorldCom Inc. chief executive Bernard J. Ebbers have asked a judge to force the government to grant two witnesses immunity from prosecution so they will testify on his behalf at an upcoming securities fraud trial.
Defense lawyers claim that Ronald R. Beaumont, the telecommunications company's former chief operating officer, and Ronald Lomenzo, a former in-house accountant, possess information that could help clear Ebbers of fraud and conspiracy charges. But the men will not take the stand voluntarily unless they receive assurances from the government that it will spare them from prosecution, the lawyers said.
"There is simply no other reason (other than tactical manipulation) why the government cannot decide at this point in the investigation of WorldCom whether it intends to prosecute Messrs. Beaumont and Lomenzo," wrote Ebbers's defense lawyers, Reid H. Weingarten, Erik L. Kitchen and Brian M. Heberlig.
Ebbers is accused of leading a conspiracy to mislead investors and analysts about WorldCom's financial health from 2000 to 2002 by mischaracterizing expenses the company paid to use rivals' telephone lines and inflating revenue. WorldCom filed the nation's largest bankruptcy in 2002, and investors lost billions of dollars. The company has since emerged from bankruptcy and operates under the name MCI Inc.
WorldCom's former chief financial officer, Scott D. Sullivan, pleaded guilty to related charges in March and agreed to cooperate with the government. He is likely to be the star witness for the prosecution.
The defense team for Ebbers signaled in a series of motions filed late Tuesday that it is seeking to draw out inconsistencies in Sullivan's story and to contrast his account about what Ebbers may have known about the accounting tricks with those of other WorldCom officials.
For instance, the defense team said in court papers that Beaumont never talked with Ebbers about how the company accounted for certain costs and personally did not question the way WorldCom booked the expenses until independent auditors raised the issue in a June 2002 board meeting.
Separately, Lomenzo met regularly with Sullivan to discuss the company's finances, but he did not learn about the expense issue until a day before Sullivan was fired in June 2002, Ebbers's lawyers said. Lomenzo said discrepancies in weekly and monthly financial reports "never caught [his] eye," according to court papers.
Ebbers's request to force the government to grant key witnesses immunity is unusual but not unprecedented, according to former prosecutors familiar with the tactic. Defense lawyers often are stymied by the refusal of important players to testify. But these motions rarely succeed because the government is traditionally granted substantial discretion over such issues, legal experts said.
"Here you have a situation where you're talking about intent crimes," said E. Lawrence Barcella Jr., a former prosecutor who now represents executives. "How do you prove in a corporate setting that you didn't have intent? It may be only through the testimony of people you dealt with."
Separately, the Ebbers defense team sought access to a series of still-secret court filings that Sullivan made before he pleaded guilty. The documents contain information supporting Sullivan's position at the time that WorldCom had properly accounted for certain expenses. At the least, Ebbers's legal team said, the papers provide a basis to strenuously cross examine Sullivan about changes in his story.
Defense lawyers also asked U.S. District Judge Barbara S. Jones to postpone the November trial by three months to give the defense more time to pore over documents and other materials. The judge has declined previous requests to change the trial date.
A spokeswoman for U.S. Attorney David N. Kelley of Manhattan declined comment yesterday. She said prosecutors would file a formal response to Ebbers's requests later this month, before the judge rules.