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Scott Sullivan also agrees to cooperate in the case against company founder and ex-CEO Bernard Ebbers.
John Goff, CFO.com | US
March 2, 2004
Early this afternoon Scott Sullivan, the former finance chief at scandal-ridden telecommunications company WorldCom, agreed to plead guilty to three counts related to the accounting fraud at the company. Sullivan, who had held out for months despite the fact that several former WorldCom managers were said to be cooperating with investigators, was scheduled to begin trial on April 7. He agreed to plead guilty to conspiracy, fraud, and making false statements.
Moments after the announcement, U.S. Attorney General John Ashcroft reported that Sullivan's former boss, WorldCom founder and ex-CEO Bernard Ebbers, had been charged with the same three counts. Sullivan's attorney reportedly claimed that the former WorldCom CFO was cooperating with federal investigators.
WorldCom filed for Chapter 11 bankruptcy protection in July 2002 following revelations that the company had manipulated its financial statements — most notably by counting operating costs as expenses. The ploy enabled the teetering telco to hold its line costs to 40 percent of total sales from 1999 to 2001. In reality, the costs had grown close to 50 percent.
WorldCom, known now as MCI Inc., is slated to come out of bankruptcy in the next few months.