U.S. Still Focused on Ebbers, Experts Say
Although Bernard J. Ebbers was not named in Thursday’s criminal complaints charging top WorldCom Inc. executives with cooking the books, the former chief executive is believed to be very much in prosecutors’ sights.
The securities fraud and conspiracy charges filed against WorldCom’s former chief financial officer, Scott D. Sullivan, and former controller, David F. Myers, may be a critical step in the development of a case against Ebbers, according to defense lawyers and former federal prosecutors.
“It’s clear they are trying to pressure these guys to flip,” said Gary Lincenberg, a white-collar criminal defense lawyer at Bird Marella Boxer & Wolpert in Los Angeles. “It’s a pressure tactic. It suggests that there are discussions going on, but it is not yet clear there is a deal.”
Sullivan and Myers turned themselves in to federal authorities in New York at 7 a.m. Thursday. They later appeared before a judge but did not enter pleas. Each faces up to 65 years in prison, although it is highly unlikely either would serve that much time.
In a news conference announcing the charges against Sullivan and Myers, U.S. Atty. Gen. John Ashcroft said the WorldCom investigation was not over, but he declined to name targets.
“I think it’s fair to say this is an ongoing matter, and for us to comment further on it would be inappropriate,” Ashcroft said.
When called before congressional investigators earlier this month, Ebbers denied any role in the scheme to hide billions of dollars in expenses at the telecommunications company. He then invoked his 5th Amendment right to avoid self-incrimination and refused to answer questions.
Through his lawyer, Reid H. Weingarten, Ebbers reasserted his innocence Thursday.
“While Mr. Ebbers had no involvement in or knowledge of the accounting decisions at issue in this case, he always believed Messrs. Sullivan and Myers to be competent, ethical and loyal employees devoted to the welfare of WorldCom,” Weingarten said in a statement.
“Today’s actions may be good theater for the media and useful to the politicians, but they don’t prove that Sullivan and Myers ever acted with criminal intent, an essential element we doubt the government will ever be able to prove in this case.”
Lincenberg, a former assistant U.S. attorney, said prosecutors may be in negotiations with lawyers for Sullivan and Myers to determine what they know about Ebbers’ role, if any, and how willing they are to cooperate.
They may be saying, “ ‘We want your help in nailing down Ebbers. These are the terms. This is the bottom line,’ ” Lincenberg said. “And the defense is saying, ‘No. You have to give me this or that.’ And they haven’t gotten to final resolution.”
Prosecutors may have believed they needed to bring charges against Sullivan and Myers and bring them before a court to convince them the case is serious and that the prospect of going to prison is real, said Jean Rosenbluth, an assistant law professor at USC and a former federal prosecutor.
“A lot of times, with defendants of this type, there’s a bit of a feeling that nothing is going to happen to them,” she said. “They’ve been so successful in their lives, made a gazillion dollars and have a feeling of invincibility. They don’t really believe it’s going to happen. They think it’s a bluff.”
J. Michael Nolan, a white-collar criminal defense lawyer in New York, said Sullivan and Myers may already have struck a deal, at least in principle, to cooperate in exchange for leniency at sentencing.
“If I’m representing the CFO and controller, I’m trying to get them in to the government to make a deal as quickly as possible,” said Nolan, a former prosecutor in Newark, N.J. “Whoever gets to the courthouse first gets the best deal. The second guy doesn’t get as good a deal, and the third guy they probably don’t need.”
