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 Business News | July 2005 
Ebbers Sentenced to 25 Years in Prison for $11 Billion Fraud
 Jennifer Bayot - NYTimes
| | Bernard Ebbers, the folksy entrepreneur who built WorldCom Inc. into a telecommunications giant, was sentenced to 25 years in prison for his role in the business fraud that led to the largest U.S. corporate bankruptcy. |
Bernard J. Ebbers, the founder and former chief executive of WorldCom, was sentenced to 25 years in prison for his role in an $11 billion accounting fraud that brought down the telecommunications company in 2002.
Judge Barbara S. Jones handed down the sentence in federal district court in Manhattan, saying he deserved a stiff sentence.
"Mr. Ebbers was the instigator of the fraud," the judge said as she prepared to pronounce his sentence, according to The Associated Press.
On his arrival in court this morning, Mr. Ebbers, 63, appeared tense, and he shoved one of the news photographers covering the scene.
The punishment is among the toughest of those given to top executives implicated in large-scale corporate wrongdoing, and it should help the government negotiate settlements as it prosecutes others, legal analysts said. More important, prosecutors said, it should prove to be a deterrent.
As WorldCom's chairman and chief executive, Mr. Ebbers was accused for orchestrating the largest corporate fraud in United States history, an accounting scheme that inflated the company's profits by $11 billion over several years.
With the money it raised from investors who bought its high-flying stock, WorldCom acquired dozens of other businesses, and competitors like AT&T overhauled their own operations to try to keep pace with its phantom earnings.
When the extent of WorldCom's fraud became clear in 2002, its stock price plummeted, and the company soon filed for bankruptcy protection. It has since emerged from Chapter 11 bankruptcy under the name of a company it acquired, MCI and agreed in May to an acquisition by Verizon.
Mr. Ebbers took the witness stand during the trial - a move that legal analysts described as a gamble - and maintained that he had no knowledge of the fraud at the company.
A few jurors later said that Mr. Ebbers's testimony had at time seemed evasive and had persuaded them of his guilt.
After eight days of deliberation, the jurors convicted him in March of securities fraud, conspiracy and seven counts of filing false reports with regulators. Federal sentencing guidelines, which a Supreme Court ruling last year declared nonbinding, pointed to a sentence of 30 years to life imprisonment.
Federal prosecutors had sought a life sentence as a deterrent. "Corporate executives will, in the future, consider the sentence imposed on Ebbers whenever those executives are tempted to mislead shareholders or manipulate the financial statements of their companies," the prosecutors said in their brief requesting life in prison.
The defense asked for a more lenient sentence in light of Mr. Ebbers's age and failing health, as well as his philanthropy, and his lawyers submitted 169 letters written on his behalf by friends and former colleagues.
They argued that Mr. Ebbers had made no money from the fraud because he had held onto his WorldCom shares even as their value plunged, and they contended that the size of the loss to investors - billions of dollars by all estimates - exaggerated the severity of the fraud itself.
Mr. Ebbers already agreed in a civil settlement last month to give investors nearly all of his personal assets, including his house in Mississippi and various businesses, which in total are valued at about $40 million, after once topping $1 billion.
Mr. Ebbers is appealing his conviction. |
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