Risk & Compliance

CFO Sullivan Praised for Ebbers Takedown

Prosecutors must perform a balancing act in their reports to the judge regarding the former WorldCom finance chief: they must avoid being so laudat...
Craig SchneiderJuly 28, 2005

Former WorldCom CFO Scott Sullivan is likely to get considerably less jail time than the maximum 25 years because prosecutors credit him with the conviction of WorldCom founder Bernard Ebbers, The Wall Street Journal reported.

Sullivan, who pleaded guilty to fraud, conspiracy, and making false financial statements in the case, will be sentenced on August 11.

A memo sent by prosecutors to judge Barbara Jones reportedly praises Sullivan’s cooperation and cites his cool demeanor in the face of tough cross-examination and his willingness to do exhaustive “homework” to buttress the case against his ex-boss. It also commends him for volunteering unsolicited information and for traveling willingly between New York and Florida at their request during a period when he was caring for his diabetic wife, who sometimes slips into a coma, as well as his young daughter.

The Journal notes that prosecutors must balance their reports to the judge on Sullivan. On the one hand, they must avoid being so laudatory as to yield a sentence that would encourage would-be white-collar crime offenders; on the other hand, they want to reward the ex-finance chief enough to possibly persuade other defendants to cooperate. Sullivan, who originally faced up to 165 years if convicted, reportedly has said that it was the experience of others in a similar position that moved him to cooperate in the hope of a minimal sentence.

Prosecutors also reportedly filed memos with the judge praising the cooperation of four other participants in WorldCom’s $11 billion fraud: former controller David Myers, former director of general accounting Buford Yates, and former accountants Betty Vinson and Troy Normand. All of their sentencing dates are before Sullivan’s, the Journal reported, noting that Normand and Vinson are hoping to avoid jail altogether.

Ebbers was sentenced to 25 years in prison earlier this month. He maintains his innocence, however, and plans an appeal.

In a separate item, on Thursday federal judge Denise Cote gave preliminary approval to a settlement in the WorldCom class-action lawsuit, according to the Associated Press. Under the terms of the settlement, Sullivan would hand over about $5 million from proceeds relating to the pending sale of his Florida mansion and his retirement account to the telecom company’s investors. Myers and Yates were also granted approval of their settlements.