Bernard Ebbers found guilty

[imported_Reck]

NEW YORK (CNN/Money) - Bernard Ebbers, the former CEO of WorldCom, was found guilty Tuesday for his role in the mammoth accounting scandal that resulted in the largest bankruptcy in U.S. history.

A federal jury in New York, on its eighth day of deliberations, convicted Ebbers on all nine counts that he helped mastermind a $11 billion accounting fraud at WorldCom, now known as MCI.

Ebbers, 63, had been charged with one count of conspiracy, one count of securities fraud and seven counts of filing false statements with securities regulators. He faces up to 85 years in prison; sentencing is scheduled for June 13.

The verdict comes two days before a massive securities fraud class action brought by WorldCom investors against more than a dozen investment banks, including many of Wall Street's top names, is set for trial. Settlements in that case total $4 billion, making it the largest securities class action settlement ever.

WorldCom first disclosed the accounting irregularities that led to Ebbers' prosecution and the investor lawsuit in June 2002. The news catapulted the No. 2 long-distance phone giant into the top tier of companies then reeling from accounting scandals, among them Tyco International, Global Crossing, Adelphia Communications and Enron.

The admission of WorldCom's fuzzy math drove the company into bankruptcy in July 2002, eclipsing the filing of fallen energy giant Enron.

Less than two weeks after WorldCom's downfall, President Bush signed into law one of the toughest corporate governance laws in history. The Sarbanes-Oxley Law, which included a provision making corporate chiefs criminally responsible for false regulatory filings, was a direct response to the corporate chicanery that cost investors billions of dollars and untold workers their jobs.
Ebbers: I knew nothing

Ebbers, a former milkman, basketball coach and Best Western hotel owner before he discovered the telecom business in 1983, wasn't at WorldCom's helm at the time of its final fall from grace. He had resigned as CEO -- a post he held since the mid-1980s -- two months before the bankruptcy scandal involving $400 million in personal loans that WorldCom made to him.

In March 2004 prosecutors indicted Ebbers for allegedly masterminding the fraud at WorldCom, starting in 2000 when companies were beginning to slash spending on telecom services and equipment.

Prosecutors say Ebbers allowed the accounting fraud because he wanted to protect his personal fortune, which consisted mostly of WorldCom stock.

The formal charges came on the same day that Scott Sullivan, WorldCom's ex-chief financial officer and Ebbers' chief lieutenant, pleaded guilty to the same charges leveled against Ebbers. Sullivan, 43, agreed to cooperate with prosecutors in the hopes of receiving a lighter sentence.

Sullivan was the government's key witness at Ebbers' trial, which began in mid-January. He was the only witness to link Ebbers directly to the fraud.

Ebbers, who took the stand in his own defense, insisted that he knew nothing of WorldCom's shady accounting and that he left much of the minutiae of running the company to underlings. Ebbers' lawyers say that Sullivan orchestrated the accounting scheme without Ebbers' knowledge.

Ebbers and Sullivan aren't the only ones accused of bringing down WorldCom. A handful for former company executives have pleaded guilty to charges of securities fraud and are cooperating with prosecutors.

WorldCom emerged from bankruptcy in 2004 with a cleaner balance sheet and a new name. Headquartered in Ashburn, Va., MCI is the target of a bidding war between Verizon Communications and Qwest Communications.

http://money.cnn.com/2005/03/15/news/newsmakers/ebbers/index.htm?cnn=yes

 

[Doggiedog]

Good.

I hated dealing with that company.

Someone should pay for all the hardships that company has caused.

 

[cyclistca]

Good. His whole "I'm a hick from down South and don't understand accounting" routine was an insult to inverstors.

He got greedy and now his going to pay for it.

 

[Stark]

my uncle used to work for worldcom. i'm sure he's happy today.

 

[moshquerade]

his lawyers are teh suck

 

[Nitemare]

I'd rather just see him executed or be forced into hard labor until he dropped dead.

 

[jalaram]

Let's hope Ken Lay and the others are found guilty as well.

 

[n666]

he'll be out in a couple months

 

[rh71]

he should ask Martha how prison worked out for her... he could only hope for the same treatment.

 

[Harvey]

Great!

Now, I hope they continue down the chain of Arthur Anderson Accounting frauds and get Dick Cheney for cooking the books at Haliburton, along with Enron, Global Crossing and more. :|

 

[dmcowen674]

Originally posted by: Harvey
Great!

Now, I hope they continue down the chain of Arthur Anderson Accounting frauds and get Dick Cheney for cooking the books at Haliburton, along with Enron, Global Crossing and more. :|

I hope they continue down the chain of Arthur Anderson Accounting frauds

Me too

Hayes Modems was the first Test case they destroyed on purpose.

 

[sandorski]

Originally posted by: rh71
he should ask Martha how prison worked out for her... he could only hope for the same treatment.

He'll hear about all the Girl on Girl action and be sadly disappointed later!

 

[conehead433]

Unfortunately his being found guilty does little to repay the millions of shareholders who lost billions of dollars.

 

[MisterCornell]

Well, I guess the South won't rise again. :beer:

 

[imported_Reck]

Originally posted by: conehead433
Unfortunately his being found guilty does little to repay the millions of shareholders who lost billions of dollars.

i found it funny the shareholders were only entitled to recieve any money at all after the banks(?) got paid off. my family got completely screwed thanks to worldcom. :frown:

 

[KK]

Originally posted by: Harvey
Great!

Now, I hope they continue down the chain of Arthur Anderson Accounting frauds and get Dick Cheney for cooking the books at Haliburton, along with Enron, Global Crossing and more. :|

Cheney cooked the books at Haliburton? Any proof of this or is this just more sh1t cooked up from a typical liberal idiot?

As far as Ebbers is concerned, I hope he goes to a regular prison and not a country club prison.

 

[mordantmonkey]

it's because the stock market is unsecured like that. it is risky. stilll sucks though. damn and i was totally gonna put my private account money into worldcom.
he will get 8 years max, out in 4, house arrest for 1, parole for 3. our legal system is teh suxorz.
what the hell ever happened to ken lay anyway? wtf? guess he won't get it till after bush's term is up.

 

[Harvey]

Originally posted by: KK
[Cheney cooked the books at Haliburton? Any proof of this or is this just more sh1t cooked up from a typical liberal idiot?

I am not your "typical liberal idiot." I am quite proud of being my own distinct, individual liberal idiot. It could be worse. At least, I'm not a name calling neocon putz with a single digit IQ, nothing to say and far too many words to say it. However, since you asked, try this Federal complaint:

DALLAS DIVISION

STEPHEN S. STEPHENS, LYLE LIONBARGER AND DEANNA J. LIONBARGER as trustees for the LW & Deanna J. Lionbarger Family Trust Dated 06/25/96,

Plaintiffs,

v.

HALLIBURTON COMPANY, D/B/A
HALLIBURTON ENERGY SERVICES;
RICHARD B. CHENEY;
DAVID J. LESAR;
RAY L. HUNT;
ROBERT L. CRANDALL;
CHARLES J. DIBONA;
LAWRENCE S. EAGLEBURGER;
WILLIAM R. HOWELL;
JAMES LANDIS MARTIN;
JAY A. PRECOURT;
CECIL J. SILAS;
DOUGLAS L. FOSHEE;
JERRY H. BLURTON;
CEDRIC BURGHER;
ROBERT CHARLES MUCHMORE, JR.;
ANDERSEN;
ANDERSEN WORLDWIDE;
ARTHUR ANDERSEN, LLP;
TERRENCE EDWARD HATCHETT;

and DOES 1-20, inclusive,

Defendants.
.
.
.
DIRECTOR AND OFFICER DEFENDANTS

10. Defendant Richard B. Cheney ("Cheney") is currently the Vice-President of the United States, domiciled in the State of Texas or Washington, D.C., a resident of Washington, D.C., and was the Chief Executive Officer of Halliburton from 1995 into 2000. Cheney is sued herein under Texas state law as a direct participant, aider and abettor, and co-conspirator in the fraudulent acts, omissions, and scheme set forth below.
.
.
. (continues)

Then, try this from CBS News:

Veep Accused Of Accounting Fraud

(CBS) Oil field services provider Halliburton Co. Wednesday said claims made in a lawsuit filed by a public interest group against a company and U.S. Vice President Cheney, its former chief executive, were without merit.

"The claims in this lawsuit are untrue, unsupported and unfounded," Halliburton Chief Financial Officer Doug Foshee said in a statement Wednesday.

Earlier Wednesday, the legal watchdog group Judicial Watch sued Cheney and the oil services company he once ran, Halliburton Co., alleging they defrauded shareholders by overstating the company's revenues. Cheney headed Halliburton from 1995 to 2000.

The accounting fraud lawsuit also names as defendants Halliburton's directors and its accounting firm, Arthur Andersen LLP.

The civil lawsuit was filed in federal court one day after President Bush went to Wall Street to outline proposals aimed at stopping the accounting scandals that have shaken investor faith in the U.S. financial markets.

In a separate development, an embarrassing promotional videotape has surfaced that features Cheney praising now-disgraced Arthur Andersen for going above and beyond routine audits for Halliburton. On the tape, Cheney and six other executives applaud the accounting firm.

"One of the things I like that they do for us is that, in effect, I get good advice, if you will, from their people based upon how we're doing business and how we're operating, over and above the, just sort of the normal by-the-books audit arrangement," said Cheney in the 1996 tape.

The four-minute video was produced by Andersen in 1996, well before the company was damaged by revelations about its role in such corporate scandals as the collapse of Enron Corp. and WorldCom Inc.

In May, Andersen was convicted of obstruction of justice by shredding documents that had to do with Enron, which admitted it exaggerated profit to appeal to investors.

A spokeswoman for the vice president said Halliburton had no reason to question Andersen at the time.

"Arthur Andersen was Halliburton's accountant for 50 years," said Jennifer Millerwise. "Obviously, they had never had a problem, so of course under those circumstances the vice president, along with many other CEOs, did a piece."

Millerwise said Cheney was unhappy that Andersen identified him as "vice president" in a recent copy of the video.

In the lawsuit filed Wednesday, the legal group Judicial Watch alleges that while Cheney was Halliburton's chief executive officer, the Texas company reported as income money that had not been received, from contract claims that were still "speculative" and in dispute.

"They overstated their revenues by tens of millions of dollars and that's an understatement," Larry Klayman, chairman of the Washington-based Judicial Watch, told reporters in Miami, where he was visiting on unrelated business.

The suit was filed in Dallas, where Halliburton is based.

In Washington, White House spokesman Ari Fleischer said he had spoken to Cheney's office and "they believe the suit is without merit, and that's where it stands."

Judicial Watch targets government corruption and has sued politicians of every stripe in the past.

Klayman said the inflated revenues resulted from accounting changes that were never made public as required by law, and inflated Halliburton's stock price.

The lawsuit, filed on behalf of two Halliburton shareholders who lost "a lot" of money, did not specify the amount of compensation the plaintiffs are seeking. But Klayman said: "We're seeking millions and millions of dollars ... It's to punish the people involved."

Fleischer said Tuesday the SEC would take its investigation of Halliburton "wherever it leads," dismissing suggestions investigators would come under pressure to back off if Cheney was implicated.

Cheney was chairman and chief executive of Halliburton from 1995 to 2000. The oil field services company announced on May 28 that it received notice from the Securities and Exchange Commission that the commission was looking into Halliburton's accounting methods - adopted in 1998 - for reporting cost overruns on construction jobs.

The SEC has not filed any charges against the Dallas-based company.

Before 1998, the company had been more conservative, reporting such revenue only after settling with customers.

The Washington-based group Judicial Watch alleges those accounting practices resulted in the overvaluation of Halliburton's shares, deceiving investors.

"We're seeking actual and punitive damages for allegations of securities fraud, for changing accounting practices and not advising the public of these changes," said Judicial Watch chairman and general counsel Larry Klayman, who is to hold a news conference Wednesday in Miami to announce further details on the legal action.

A spokesman for Cheney declined comment and instead referred all questions on the matter to Halliburton.

"We don't believe that there's any merit to this case," Halliburton spokeswoman Zelma Branch said.

The lawsuit, which is expected to be filed Wednesday in federal court in Dallas, also names ten of Halliburton's board members.

Judicial Watch is no stranger to conflict with the Bush administration, having previously sued for access to records of the Cheney-led energy task force that drafted the Bush administration's energy policy.

The leader of the group charges that President Bush's public campaign to crack down on corporate fraud - underscored with a speech on Wall Street yesterday - appears intended to deflect attention away from his and Cheney's own past business practices.

"To look the other way for the vice president would be to set a precedent that the Washington elite are above the law," said Klayman, arguing his case that Cheney and Halliburton were in the wrong.

Then, try this from the New York Times:

Halliburton Settles S.E.C. Accusations

By FLOYD NORRIS (NYT) 991 words
Late Edition - Final , Section C , Page 1 , Column 5

ABSTRACT - Securities and Exchange Commission says Halliburton Co secretly changed its accounting practices when Vice Pres Dick Cheney was its chief executive; fines company $7.5 million and brings actions against former financial officials Robert Muchmore Jr and Gary V Morris; says accounting change enabled Halliburton to report annual earnings in 1998 that were 46 percent higher than they would have been had change not been made; also allowed company to report substantially higher profit in 1999; commission does not say Cheney acted improperly, and papers released by commission do not detail extent to which he was aware of change or of requirement to disclose it to investors; Cheney's lawyer Terrence O'Donnell says Cheney's conduct as chief executive officer of Halliburton was proper in all respects (M)

Is that a foot in your mouth, or are you just glad to see me? :laugh:

 

[Michael]

Harvey,

Anyone can file a lawsuit. The change in accounting policy was not a "fraud" in that the new policy was wrong. The SEC said they didn't disclose the change properly and fined them for it. GAAP (basically what the SEC rukes are) say taht he need to disclose a material change in accounting policy and provide information to reconcile between the new policy and the old policy.

If the SEC thought this was really bad, there would have been orders issued banning the officers from working in public companies. This didn't happen.

This is highly likely to be a Finace department issue. Especially for the dates listed as the CEO had a lot less responsibility for the 10K filing.

I consider you a liberal idiot because you take a good news case where they finally nail the CEO properly (jury didn't buy the attempt to paint him as a CEO that left the numbers to the accountants) and try and turn it into an attack on Bush. To be fair, the fraud cases that are in court now all pretty much happened before Bush even took power.

------

As for this case, I was smiling from ear to ear when I read the result of the verdict. Those crooks not only hurt their company, they seriously hurt all the other phone companies who tried to show results just as good but via honest numbers.

Michael

 

[Harvey]

Originally posted by: Michael
Harvey,

Anyone can file a lawsuit. The change in accounting policy was not a "fraud" in that the new policy was wrong. The SEC said they didn't disclose the change properly and fined them for it.

Michael -- It took less than five minutes to find those links on Google, and they're just a few examples of pages and pages of similar information. You can try to defend Cheyney and Halliburton by parsing the words and playing with semantics, but there's enough out there to raise more than a little suspicion, including the fact that the Arthur Anderson accounting firm was telling them how to do the same stunts they showed to Enron and the rest of the list.

If the SEC thought this was really bad, there would have been orders issued banning the officers from working in public companies. This didn't happen.

The SEC has been a patsy for the financial crowd since at least 2001 when their lapdog and former attorney, Harvey Pitt took over.

I consider you a liberal idiot because you take a good news case where they finally nail the CEO properly (jury didn't buy the attempt to paint him as a CEO that left the numbers to the accountants) and try and turn it into an attack on Bush.

I consider your opinion not worth considering. FOAD.

To be fair, the fraud cases that are in court now all pretty much happened before Bush even took power.

Uh-huh. Are you including Bush contributors like "Kenny Boy" Lay in that?

As for this case, I was smiling from ear to ear when I read the result of the verdict. Those crooks not only hurt their company, they seriously hurt all the other phone companies who tried to show results just as good but via honest numbers.

It's about time you figured out that criminality like that can't be justified or overlooked just because they're heavy Republican contributors. Hope you'll keep that outlook for the rest of the crooks.

 

[Michael]

Harvey,

Results 1 - 10 of about 19,700 for harvey liberal idiot. (0.29 seconds)

If there are 19K results for 'Harvey Liberal Idiot", why does the fact that you can find links about Cheney prove anything when he has been under attack for years?

I'll respond to the rest of your comments later, I have to get to a breakfast meeting.

Michael

 

[Harvey]

Michael -- You're the one who started calling names. Shove it. I won't bother replying to you, anymore. :|

 

[Michael]

Harvey,

OK - now on to the rest of your response.

You're making a big assumption that I didn't look at the SEC filings involved and you're forgetting what I do for a living. I actually looked at this when it first hit the news and it is not even close to an Enron or Worldcom case.

As for AA - they had a flaw in their audit approach and client service approach. However, every AA partner and every AA client is not guilty by association. AA did not direct Worldcom to capitalize expenses. Their failure was not not find the material error, not that they directed what should be done. In the case of Enron, accounting firms often give advice on accounting for very complicated transactions. The problem there was that they were giving advice and then auditing it. That is no longer allowed.

As for your comments about the SEC, the worst of the abuses that are now being tried happened while Clinton was in office and his appointees were running the SEC. They came to light and were tried and found guilty once Bush took over. An overly lax SEC is as two party problem and certainly is not a defining Bush issue. You also do not have the personal experience that I do in dealing with them, and they are not and have never been "lax" to the degree you are insinuating they were. Pitt was in the wrong spot at the wrong time and had too big of an opinion of himself.

"FOAD" - I love you, too. More than words can possibly describe.

As for Ken Lay, most of the Enron problems started before 2000 and blew up in 2001. So, yes, I'm including him.

I don't care what party people contribute to. If they break the law, they should do the time. I have always said that and always stood behind that.

Michael