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WorldCom CEO sentenced to 25 years prison


New York / AFP
07/15/2005

Former WorldCom chief executive Bernard Ebbers was sentenced Wednesday to 25 years in prison for his role in the fraud scheme at the telecom giant that led to the biggest corporate collapse in US history.

It was an effective life term for the 63-year-old Ebbers who wept and hugged his tearful wife after US District Judge Barbara Jones pronounced sentence.

"A sentence of anything less would not reflect the seriousness of the crime," said Jones, who rejected defense arguments that the fraud-related losses suffered by WorldCom investors had been exaggerated and that Ebbers was not the architect of the 11-billion-dollar accounting scam.

"It is quite clear to me that Mr. Ebbers was a leader of criminal activity in this case," she said.

Ebbers, who built one of the biggest US telecom empires and became a symbol of the corporate scandals that rocked the financial world, was ordered to report to a federal prison in Mississippi on October 12.

Although sentencing guidelines suggested a range of 30 years to life, the judge said she had decided on 25 years after taking into account Ebbers' heart condition and charity work.

The sentence is nonetheless one of the stiffest in recent memory in a white-collar crime case and reflects the effort to crack down on corporate misconduct in the wake of the scandals at Enron, WorldCom and other companies that roiled financial markets and prompted legislative reforms.

In a passionate plea for leniency, defense lawyer Reid Weingarten described Ebbers as a charitable "angel," who had given more than 100 million dollars to orphanages, schools and other organizations and who had "grieved every day" for those who lost their jobs and savings in WorldCom's collapse.

"If you live 60 years, if you have an unblemished record, if you have endless numbers of people who attest to your goodness, doesn't that count?" Weingarten said, his voice cracking with emotion.

An opposing point of view was offered by former WorldCom sales manager Henry Bruen, who told the court of the "untold human carnage" and "sheer hell" reaped by Ebbers' fraud on the personal and professional lives of many people.

Shareholders lost about 180 billion dollars in WorldCom's collapse, 20,000 workers lost their jobs and the company went bankrupt. The company came out of bankruptcy last year, renamed MCI Inc.

The company struck a 750-million-dollar settlement with federal regulators to repay investors. The fraud stretched from 2000 to 2002 as Ebbers struggled to have the company appear in shape during the dot-com meltdown.

After the sentencing, a defiant Weingarten said he could not wait for the appeal process to begin.

"I think an innocent man got sentenced today," he said, adding that Ebbers had been unfairly transformed into a distorted symbol of corporate corruption. Bruen, on the other hand, said he was satisfied with the 25-year term handed down by the court.

"In effect it's a life sentence and sends a signal that this type of corporate behaviour is not going to be tolerated anymore," he said.

"The judge threw the book at him," said Jake Zamanksy, an attorney who attended the sentencing and represents victims of securities fraud.

"This sends a message to corporate America ," Zamansky said. "Ebbers hurt tens of thousands of investors." Ebbers last month reached a settlement on civil litigation that calls for him to lose virtually all of his assets.

He will pay five million dollars and surrender his other assets, including real estate, in a deal to compensate those who lost money in the collapse of the telecom giant.

His business and real estate holdings are estimated to be worth between 25 million and 40 million dollars. The deal calls for Ebbers to transfer all of his remaining cash for the settlement, "other than certain amounts set aside to pay legal bills and a modest living allowance for his wife," according to court documents.