‘Telecom Cowboy’ faces 85 years in jail
A federal jury in Manhattan deliberated for eight days before returning guilty verdicts on counts of conspiracy, securities fraud and seven counts of false regulatory filings crimes that carry up to 85 years in jail.
Ebbers, 63, sat with his hands folded as the verdict was read and showed little reaction.
His wife, Christie, and other family members broke into tears.
He will be sentenced on June 13. The conviction comes more than two years after an internal auditor began asking questions about curious accounting at WorldCom, igniting a
scandal that unearthed $11 billion (€8.26bn) in cooked books.
Prosecution testimony at the six-week trial portrayed Ebbers as obsessed with keeping WorldCom's stock price high, panicked about $400 million (€300m) in personal loans that were backed by his shares.
Ebbers took the stand late in the trial, insisting he was unfamiliar with the details of accounting and knew nothing about the fraud.
The star witness against him was Scott Sullivan, the former finance chief, who claimed Ebbers repeatedly ordered him to "hit our numbers" a command, Sullivan said, to falsify the books to meet Wall Street expectations.
Sullivan, who pleaded guilty to fraud, admitted to essentially masterminding the fraud but said he did it on the instructions of Ebbers, who ignored his pleas that the adjustments were wrong.
With the telecom industry suffering a dot-com hangover, the fraud was driven by soaring "line costs" the fees WorldCom paid to smaller local telephone carriers to use their networks.
Prosecutors said the fraud began in late 2000, until 2002, sometimes amounting to nearly $1bn (€750m) per quarter in hidden expenses and improperly recognised revenue.
Pressure from the loans, the money he stood to lose and the power of the CEO's job combined to form a "perfect storm of corruption" that drove Ebbers to commit fraud, prosecutor William Johnson said.
"He was WorldCom, and WorldCom was Ebbers," the prosecutor said.
"He built the company. He ran it. Of course he directed this fraud."
Ebbers disputed the testimony of Sullivan, saying he became aware of the fraud only in the summer of 2002, after he was asked to leave WorldCom.
"He's never told me he made an entry that wasn't right," Ebbers said.
"If he had, we wouldn't be here today."
The conviction completes a staggering fall for Ebbers, nicknamed 'Telecom Cowboy'.
He still faces civil litigation, including from the company, which backed his $400m (€300m) in personal loans when Bank of America demanded more collateral as the stock price fell. WorldCom has since re-emerged as MCI Inc.
The company struck a $750m settlement with regulators to repay investors, a small sum compared to the billions of dollars of market capitalisation that evaporated in the scandal.
Twelve former directors of the company, plus some investment banks that underwrote WorldCom securities, and auditing firm Arthur Andersen, also face a civil trial brought by investors. That trial is set for later this month.
In winning a conviction against Ebbers, prosecutors rang up another victory in a remarkable string of white- collar prosecutions that began in the summer of 2002.
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