Risk Management

Ebbers Prosecutors Get on the Same Page

After raising hackles last year, Oklahoma's attorney general makes peace with the feds. The state also strikes a deal with WorldCom that will add s...
Dave CookApril 5, 2004

Oklahoma authorities will defer to federal prosecutors in the matter of former WorldCom chief executive officer Bernard Ebbers — even at the expense of losing some counts to the statute of limitations — according to ChannelOklahoma.com.

On Friday, not long after Judge Michael Obus declared a mistrial in the Tyco case in State Supreme Court in Manhattan, Oklahoma Attorney General Drew Edmondson agreed to delay refiling state charges until Ebbers is tried in federal court in New York. That trial is expected to begin in November.

Ebbers faces three criminal charges — conspiracy to commit securities fraud, securities fraud, and making false statements to the Securities and Exchange Commission — regarding his role in misstating $11 billion in revenue and expenses at the telecommunications giant he founded. WorldCom’s former chief financial officer, Scott Sullivan, pleaded guilty to those same three charges in March and has agreed to cooperate with prosecutors in the case against his former boss.

Edmondson’s announcement followed a “frank and productive discussion” with U.S. Attorney David Kelley of the Southern District of New York. “The sharing of information and coordination with Attorney General Edmondson’s office will be helpful to our case,” said Kelley. “I appreciate the opportunity to come to Oklahoma and work out the arrangement.” An Oklahoma prosecutor will attend Ebbers’ federal trial, added Edmondson.

Last August, Edmondson had drawn sharp criticism from the Securities and Exchange Commission and federal prosecutors when he charged Ebbers, Sullivan, former controller David F. Myers, three other former finance staffers, and WorldCom itself with 15 violations of the Oklahoma Securities Act. Not only did Edmondson fail to inform federal authorities in advance, but the state charges appeared to be piggybacked onto the federal case rather than based on independent investigation. (See CFO magazine’s February article “Cheese It, the States!“)

In December, Edmondson deferred to federal prosecutors by dismissing the state case against Ebbers, saying he would refile charges at a later date. The attorney general acknowledged Friday that his office may lose some counts against Ebbers because of the statute of limitations, reported ChannelOklahoma.com, but that more than enough counts will remain. Each of the 15 state counts is punishable by up to 10 years in prison and a $10,000 fine.

Charges against WorldCom itself were dropped last month, reported the Associated Press, when the company agreed to create 1,600 new jobs in the state over the next 10 years. The jobs will be based in the company’s Tulsa office, where WorldCom had employed about 3,000 until layoffs in 2002 reduced that number to about 1,875, according to the AP.

The jobs will carry an an average annual salary of $35,000. State officials estimate that Oklahoma will garner $12.3 million in new tax revenue over the 10-year life of the agreement, the AP reported.

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