Bernard Ebbers, the former WorldCom CEO who spent 13 years in federal prison for his involvement in a notorious $11 billion accounting scandal, died on Sunday. He was 78.
Everything began to unravel in 2000, when MCI WorldCom's stock price fell, during the dotcom bust. It soon emerged that MCI WorldCom had personally lent Ebbers some $400 million to cover loans he'd made against his own shares of stock.
A subsequent investigation by the Securities and Exchange Commission revealed the company had been disguising operating costs as capital expenses,MCI WorldCom declared bankruptcy and was later acquired by Verizon for $8.5 billion. Former U.S. Attorney General Richard Thornburgh, who was hired by a federal bankruptcy court to examine WorldCom's finances, reported that the company engaged in"a smorgasbord of manipulative schemes designed to cook the books to falsely state the earnings and sustain the price of the stock.
Ebbers maintained that he was unaware of the fraud and that it was engineered by Scott Sullivan, the company's chief financial officer. "I believe that no one will conclude that I engaged in any criminal or fraudulent conduct during my tenure at WorldCom," Ebbers said at a 2002 congressional hearing, where he nevertheless pleaded the Fifth Amendment and declined to answer questions.. Sullivan, who cooperated with prosecutors, received a five-year sentence.
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