Money, power and pressure combined to form a “perfect storm of corruption” that led WorldCom chief Bernard Ebbers to commit an enormous fraud, a federal prosecutor said Wednesday in closing arguments.
Prosecutor William Johnson said Ebbers, worried about repaying huge loans that were backed by WorldCom Inc. stock, ordered his subordinates to cover up expenses and inflate earnings.
Even when former finance chief Scott Sullivan warned Ebbers it would be wrong to cook the books, “Ebbers commanded Sullivan to do it anyway,” and then lied to the public about it, Johnson said.
“WorldCom had truly become World-con,” the prosecutor said. “He lied over and over again. All of his lies were criminal.”
Judge Barbara Jones said the defense would present its closing argument Thursday morning and jurors might begin deliberations in the afternoon.
The defense rested its case earlier Wednesday after two days in which Ebbers took the witness stand and denied any role in the $11 billion accounting fraud.
Defense lawyers called four witnesses over five days of testimony, none more important than the 63-year-old ex-CEO, who testified he only learned about the massive fraud after he resigned from WorldCom in April 2002.
Prosecutors declined to call additional witnesses in a rebuttal case.
Ebbers took the stand Monday and claimed his chief financial officer, Scott Sullivan, never told him about the huge adjustments WorldCom accountants were making to inflate earnings and hide out-of-control expenses.
“He’s never told me he made an entry that wasn’t right,” Ebbers told jurors. “If he had, we wouldn’t be here today.”
Sullivan, who testified as the star prosecution witness, claimed Ebbers pressured him into committing the fraud. He said he repeatedly told Ebbers it was wrong, but Ebbers insisted that WorldCom must “hit our numbers.”
Prosecutors say the remark was an indication that Ebbers, worried about $400 million in personal loans that were backed by his WorldCom stock, was desperate for the company to meet Wall Street estimates.
In a daylong cross-examination Tuesday, Ebbers gave an even more detailed denial, insisting to federal prosecutor David Anders that he was unaware of the adjustments being made each quarter from late 2000 to early 2002.
Presented with a report that reflected so-called line costs dropping from $1.6 billion in October and November 2000 to just $858 million in December, Ebbers said he had reviewed the document as CEO but “I just didn’t see it.”
And shown with a report with a similar gap for the first quarter of 2001, Ebbers said he probably just tossed it in the trash — probably, he said, because it did not compare the results with the company’s budget.
“So it’s your testimony,” Anders said at the end of the day, “that WorldCom reduced its line costs through adjustments of more than $2 billion — and you had no idea?”
“That’s correct,” Ebbers said.
Ebbers is charged with fraud, conspiracy and filing false financial statements seven times to the Securities and Exchange Commission. The counts carry up to 85 years in prison.