Risk Management

Sullivan’s Wife to Keep $2.2 Million

The SEC chooses not to pursue a trust fund set up by former WorldCom CFO Scott Sullivan in 2000 for his wife and daughter.
Stephen TaubAugust 3, 2006

Under settlement proposed by the Securities and Exchange Commission, Carla Sullivan, wife of former Worldcom CFO Scott Sullivan, will be able to keep $2.2 million, according to Bloomberg.

Last week, CFO.com reported that the SEC recommended waiving $13.5 million in disgorgement and civil penalties against Scott Sullivan because the ex-CFO was unable to pay.

According to the wire service, SEC lawyer Peter Bresnan Wednesday told a New York federal court that Sullivan transferred $2.24 million to a trust for his wife and adopted daughter after receiving a $10 million bonus from WorldCom in 2000.

The SEC chose not to pursue this sum since Sullivan lacks control over the trust, according to Bloomberg.

“We determined there was no more money we could get from Mr. Sullivan,” Bresnan reportedly told U.S. District Judge Jed Rakoff, who will decide whether to sign off on the deal with Sullivan and former WorldCom chief accountant Buford Yates, whose $360,000 payment also would be waived by the SEC.

According to the report, the trust, which had previously been confidential, was earmarked for the care of Sullivan’s wife and daughter.

When the former finance executive was sentenced last August to serve five years in prison, he told the Judge that his wife is severely diabetic and was taken to the hospital for emergencies nine times that year alone, according to an Associated Press article at the time. Sullivan reportedly cooperated with prosecutors in part because his wife’s condition left him as the girl’s main caregiver

“The life of a 4-year-old girl hangs in the balance,” Sullivan’s lawyer Irv Nathan reportedly told the judge before the sentence was imposed.