A federal judge Thursday sentenced former WorldCom Inc. finance chief Scott D. Sullivan to five years in prison for helping to direct an $11 billion accounting fraud that drove the telecommunications giant into the nation's largest bankruptcy.
U.S. District Judge Barbara S. Jones could have sent Sullivan away for as many as 25 years on conspiracy and fraud charges. Instead, she credited him with "extraordinary" cooperation, including seven days he spent on the witness stand earlier this year testifying against his former boss and mentor, Bernard J. Ebbers.
The sentence, two decades shorter than Ebbers's prison term, underscored the importance of Sullivan's assistance to prosecutors -- and his strained family situation.
"He was detailed, he was candid, he was an excellent witness," Jones said. "I believe his value to the prosecution is enormous."
The judge said she would recommend that Sullivan, 43, serve his time at a federal prison in Pensacola, Fla., the closest facility to his chronically ill wife and their 4-year-old daughter. The Bureau of Prisons will make the ultimate decision about where Sullivan is sent. He must report to federal authorities by Nov. 11.
In a brief statement before the judge delivered the sentence, Sullivan implored her to take into account his wife's severe diabetic condition, which he said had prompted nine emergency admissions to the hospital this year.
"I am sorry for the hurt that has been caused by my cowardly decisions," Sullivan told the judge in a firm, clear voice. He said he had slept only three hours in the past two days as the proceeding weighed on his mind.
Sullivan continued: "I stand before you today ashamed and embarrassed. I deeply regret my actions and apologize for the pain I have caused."
Caring for the couple's daughter probably will fall on Sullivan's parents, who sat in the front row of the crowded Manhattan courtroom. His mother gripped him tightly after the hour-long proceeding ended. His father, who has Parkinson's disease, hugged Sullivan.
Under federal prison rules, Sullivan could receive a 15 percent reduction in his sentence for good behavior. He also could shave several more months off the five-year prison term if he successfully completes an alcohol rehabilitation program.
Defense lawyer Irvin B. Nathan said he was "disappointed" with the sentence, but he thanked the judge for considering the 400 hours Sullivan spent helping prosecutors build a fraud case against Ebbers. Nathan, of Arnold & Porter LLP in the District, said he would not appeal.
"Without Mr. Sullivan's cooperation, Mr. Ebbers never would have been brought to justice," Assistant U.S. Attorney David B. Anders said.
Earlier, Nathan presented a study indicating that half of the nation's white-collar criminals receive probation rather than prison time. But the judge said that Sullivan was an "architect" of the fraud and that some incarceration was warranted. She said Sullivan initially denied responsibility for the scheme to internal auditors and to WorldCom's board. The company has since emerged from bankruptcy as MCI Inc., headquartered in Ashburn.
Last month, the same judge sentenced Ebbers, 63, to 25 years in prison. His defense lawyers have said they will appeal, citing improper jury instructions and the judge's refusal to move the case to Mississippi, where WorldCom had been based. Defense lawyer Reid H. Weingarten also pointed out wide disparities in the sentences the judge has given former WorldCom officials.
Earlier this week, the judge sentenced former controller David F. Myers to serve one year and one day behind bars. Accounting director Buford T. Yates Jr. also received a one-year, one-day sentence.
"By any reckoning of the evidence in the case, CFO Sullivan came up with the accounting shenanigans and Controller Myers made them happen," Weingarten said in an e-mail. "At worst, according to the government's evidence, Ebbers approved them, and Ebbers receives a sentence 5 times Sullivan's and 25 times Myers. I understand that prosecutors need to encourage snitches to snitch, but these sentences simply cannot be reconciled with fairness and they create overwhelming incentives for snitches to fabricate evidence against superiors, which is exactly what happened in this case."
Sullivan got $700,000 in salary and a $10 million bonus and exercised nearly $10 million worth of WorldCom stock options in 2000, the judge said. Those proceeds are gone. Last month, Sullivan agreed to sell his 30,000-square-foot Boca Raton mansion, giving about $5 million to shareholders who lost billions when WorldCom collapsed, according to New York officials. He also will turn over $200,000 in retirement savings. Defense lawyer Nathan told the judge his client had "no assets to fall back on."
After the proceeding, Sullivan walked out of the courthouse trailed by reporters and cameramen. Sullivan crossed the intersection and descended into the Chambers Street subway station.