Former WorldCom CEO Bernard Ebbers pleaded innocent Wednesday to federal charges he conspired to cook the company’s books in the biggest corporate fraud in American history.
Ebbers, 62, was released on $10 million bail.
He appeared in handcuffs at his arraignment after surrendering to the FBI earlier Wednesday, a day after former WorldCom chief financial officer Scott Sullivan pleaded guilty and agreed to testify against his one-time boss.
Ebbers’ lawyer, Reid Weingarten, said Ebbers will clear his name at trial.
“Bernie Ebbers never sought to mislead investors, never sought to improperly manipulate WorldCom’s numbers, never improperly took any money and never sought to hurt the company he built,” Weingarten said.
Ebbers’ bail was secured by his home in Mississippi. He was to surrender his passport, and his travel was restricted to New York City, Mississippi, Louisiana and Washington, D.C.
His trial was set for Nov. 9, but prosecutor William Johnson said it could be delayed because additional charges against Ebbers may be filed in connection with the conspiracy and for “other conduct.” He said other people may also be charged.
The $11 billion fraud at WorldCom came amid a series of corporate scandals that raised questions about the honesty of accounting at U.S. companies.
Ebbers amassed a personal fortune estimated at $1.4 billion while building the giant telecommunications company now called MCI.
Sullivan, 42, of Boca Raton, Fla., agreed to testify to trim a potential 25-year prison sentence on charges of conspiracy, securities fraud and submitting false filings to the Securities and Exchange Commission.
“I took these actions, knowing they were wrong, in a misguided effort to preserve the company to allow it to withstand what I believed were temporary financial difficulties,” Sullivan said in court.
Lawyers in the case said Sullivan agreed to sell his lavish $15 million Boca Raton estate, which has a movie theater and six Jacuzzis, and use the proceeds to reimburse victims.
Ebbers, of Brookhaven, Miss., was portrayed in the indictment as a hands-on administrator who “carefully scrutinized” every internal report on WorldCom’s revenue.
In September 2000, the company’s results had fallen beneath analysts’ expectations but “Ebbers nevertheless insisted that WorldCom publicly report financial results that met analysts’ expectations,” the indictment said.
The indictment said Ebbers and Sullivan agreed to tell subordinates “to falsely and fraudulently book certain entries in WorldCom’s general ledger, which were designed to increase artificially WorldCom’s reported expenses.”
WorldCom, the nation’s second-largest long-distance telephone company, filed for bankruptcy protection in July 2002, about three months after Ebbers resigned amid questions about the company’s finances.
WorldCom changed its name to MCI last April and moved its headquarters from Mississippi to Ashburn, Va.
Four former company executives, including controller David Myers, have pleaded guilty in the federal fraud investigation and are helping prosecutors.