New charges coming in WorldCom case
The government plans to add additional charges and possibly new defendants to its case against the officials behind WorldCom Inc.'s collapse, prosecutors said Wednesday during a court hearing on last week's indictment of several former executives.
Former Chief Financial Officer Scott Sullivan and former Director of General Accounting Buford Yates Jr. pleaded not guilty at the hearing to charges of securities fraud, conspiracy to commit securities fraud and making false filings with the U.S. Securities and Exchange Commission. Sullivan, charged in an earlier complaint at the end of July, was already free on bail of US$10 million. Bail for Yates, who was not named in the initial complaint, was set Wednesday at $500,000.
Sullivan and Yates are accused of helping WorldCom hide billions in expenses to create the illusion of profitability. Soon after the accounting irregularities were revealed, Clinton, Mississippi-based WorldCom filed the largest Chapter 11 bankruptcy in U.S. history.
Several WorldCom executives not indicted but named in court papers by prosecutors as co-conspirators are on the verge of pleading guilty and are cooperating with the government's investigation, according to press reports. Betty Vinson and Troy Normand, former WorldCom accounting office employees under Yates' direct supervision, helped orchestrate the inflation of WorldCom's reported earnings, as did former controller David Myers, prosecutors charge. Myers was arraigned in August and freed on a $2 million bail.
Uncharged as yet is former WorldCom Chief Executive Officer Bernie Ebbers, who left the company in late April. But that could soon change, as the U.S. Department of Justice (DOJ) continues its investigation and the discovery phase of its proceedings.
Assistant U.S. Attorney David Anders told U.S. District Court Judge Barbara Jones that he intends to file a superseding indictment in the case, including new charges and potentially adding defendants. He did not say in court what those charges might be. That indictment will come during or soon after the DOJ's discovery in the case, which is ongoing and is expected to take another three to four weeks, Anders said.
The next scheduled court date for Sullivan and Yates is a motions hearing on Dec. 9.