Worldcom

Worldcom

  • Submitted By: mzmba
  • Date Submitted: 12/01/2008 5:12 PM
  • Category: Business
  • Words: 1317
  • Page: 6
  • Views: 970

On March 15, 2005 Bernard Ebbers sat in a federal courtroom waiting for the verdict. As the former CEO of WorldCom, Ebbers was accused of being personally responsible for the financial destruction of the communications giant. In July 2002, an internal investigation had uncovered $11 billion dollars in fraudulent accounting practices. A second report in 2003 found that during Ebber’s 2001 tenure as CEO, the company had over-reported earnings an understated expenses by an astonishing $74.5 billion dollars (Martin, 2005, para 3). This report included the mismanagement of funds, unethical lending practices among its top executives, and false bookkeeping which led to loss of tens of thousands of its employees. They also uncovered a series of clever manipulations intended to bury almost 4 billion in misallocated expenses and phony accounting entries (Moberg &, Romar, 2002, section 5, para 1). Hoping too sway the jury with an “ignorance is bliss” defense, he braced for the verdict. In his second day on the witness stand, former WorldCom CEO Bernie Ebbers professed ignorance of the accounting fraud taking root beneath his eyes and fended off a barrage of questions from a federal prosecutor suggesting that the fraud got underway only because the company's plummeting stock price put Ebbers' personal fortune at risk. (Farrell, 2005, para 1). Unfortunately for Ebbers, the grand jury wasn’t ignorant to the facts of the case and found Ebbers guilty on nine counts of fraud. He was sentenced to 25 years in prison. Many critics felt that the sentence was too harsh and others not harsh enough. The sentencing of Ebbers did not change the situation of the shareholders and employees who lost more than $100 billion in stock value, 17,000 jobs and their entire retirement savings. Ebbers was allowed to keep one of his homes, $50,000 in cash and a retirement account (Ernst & Young, 2005, para 6). Many supporters of Ebbers still questioned how much of a role he actually...

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