July 25, 2002, 9:04 AM — New York federal prosecutors are planning to file indictments against two former WorldCom Inc. executives for their roles in the company's accounting scandal, according to reports published Thursday.
Fired WorldCom Chief Financial Officer (CFO) Scott Sullivan, who is thought to be the mastermind behind the accounting fracas, and former company controller David Myers, could face indictments by Wednesday of next week, according to Thursday's online edition of the Wall Street Journal.
Fallen WorldCom chief executive Bernard Ebbers could also face indictment, the report said, citing sources familiar with the matter.
Additionally, the Journal reported that the U.S. Department of Justice (DOJ) is considering indicting WorldCom as a corporation.
The news comes less than a week after the beleaguered telecommunications company filed for Chapter 11 bankruptcy protection, which gives it protection from its creditors and allows it to continue operations. If WorldCom is indicted as a corporation the company's survival could be threatened, the report said, given that it could face paying hefty fines that would leave its creditors and 20 million residential customers empty handed.
WorldCom revealed last month that it hid US$3.85 billion in expenses and falsely reported five consecutive quarters of quarterly earnings. The company is being investigated by both houses of Congress, the DOJ and the U.S. Securities and Exchange Commission (SEC). The SEC has already filed civil fraud charges against the telecom giant.