Louis Lanzano  /  AP
Bernard Ebbers former CEO of WorldCom exits Manhattan federal court with wife Kristie, left, Tuesday in New York. Ebbers was convicted on all counts in the trial in which he was accused of orchestrating an accounting scandal.
updated 3/16/2005 8:35:19 AM ET 2005-03-16T13:35:19

Some former employees and investors who lost jobs and billions of dollars in the collapse of WorldCom said the conviction of former CEO Bernard Ebbers was a fitting final act to the epic accounting scandal.

"This just proves that when you don't use ethics, when you take your power and misuse it, that there is a price to pay," said Kate Lee, who formed a group of former WorldCom employees and successfully fought for severance.

Ebbers was found guilty Tuesday of fraud, conspiracy and false regulatory filings after a six-week federal trial in Manhattan. He could spend the rest of his life in prison.

Still, Lee cautioned that the victims of the $11 billion fraud could not take much joy in the verdict. She called it a "shame" that it took three years for Ebbers to be brought to justice.

"I think we all would have preferred that it never had happened and that all of us were still working at very productive jobs doing a great thing," she said.

Ebbers, 63, turned red in the face as the jury of seven women and five men returned its verdict. His wife, Kristie, cried quietly in the front row of the courtroom.

Judge Barbara Jones set sentencing for June 13.

The former CEO did not speak to reporters after the verdict. His lawyer Reid Weingarten promised an appeal, saying prosecutors kept important witnesses off the stand by not offering them immunity.

"The fight will continue," Weingarten said. "Mr. Ebbers will ultimately be vindicated." He said there was "not a chance in the world" that Ebbers cooked the books at WorldCom.

Some investors who put money in WorldCom — and in some cases their entire retirement savings — felt different.

"I believed all along that he knew what was going on," said Stephen Teel of Allen, Texas, a former WorldCom worker who had amassed more than $1 million in his 401(k) account and invested it all in WorldCom stock.

"My plans were to retire early. Now, unless I hit the lotto, I'll never retire."

John Mosley, a body shop owner in Clinton, Miss. — the former headquarters of WorldCom — lost about $20,000 when the accounting scandal broke in 2002. He said he was trying not to be bitter or vengeful.

"I believed that if the evidence was put before the judge and the jury and he was guilty, he would be found guilty," Mosley said Tuesday. "That satisfies me that he knew what was going on."

Prosecutors said at the trial that Ebbers, worried about $400 million in personal loans that were backed by WorldCom's rapidly declining stock, pressured subordinates to falsely inflate the company's revenue and earnings.

Scott Sullivan, the former WorldCom finance chief, said Ebbers repeatedly instructed him to "hit our numbers" _ a command he said he interpreted as an order to commit fraud. He pleaded guilty in the case earlier.

In Washington, Attorney General Alberto Gonzales hailed the conviction as a triumph of the legal system.

"We are satisfied the jury saw what we did in this case — that fraud at WorldCom extended from the middle management levels of the company all the way to its top executive."

Ebbers himself took the witness stand at trial's end and flatly denied any role in the fraud. He said he viewed his role at the company as a visionary and cheerleader, was uncomfortable with accounting and left it to Sullivan.

"He's never told me he made an (accounting) entry that wasn't right," Ebbers said of Sullivan. "If he had, we wouldn't be here today."

The largely blue-collar jury of seven women and five men considered the case for eight days, an uncommonly long deliberation for white-collar cases, but never showed signs of discord.

The jurors were ushered away from the courthouse without speaking to the press, and Judge Barbara Jones instructed reporters not to badger them.

The nine criminal counts against Ebbers _ securities fraud, conspiracy and seven counts of making false filings to the Securities and Exchange Commission _ carry up to 85 years in prison. He will be free on bail until sentencing.

The conviction comes more than two years after an internal auditor began asking questions about curious accounting at WorldCom, touching off a scandal that eventually unearthed $11 billion in cooked books.

With the entire telecom industry suffering a dot-com hangover, the fraud was driven by soaring "line costs" _ the fees WorldCom paid to smaller local telephone carriers to use their networks.

Besides Sullivan, three former WorldCom accounting officials who have pleaded guilty in the case testified they were pressured to cover up the expenses. Only Sullivan directly implicated Ebbers.

The company struck a $750 million settlement with federal regulators to repay aggrieved investors, a small sum compared to the tens of billions of dollars of market capitalization that evaporated in the scandal.

Ohio Rep. Michael Oxley, one of the two congressmen behind the Sarbanes-Oxley corporate reform legislation that was passed the same summer of the WorldCom debacle, said investors could be cheered by the Ebbers verdict.

"Due process takes time, and the prosecutors are to be congratulated," he said. "Every investor and everyone harmed by the WorldCom bankruptcy should take heart at today's verdict in the Ebbers case."

Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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