New Charges Against WorldCom Ex-CFO
WorldCom Inc.’s former finance chief Scott Sullivan on Wednesday was hit with charges of bank fraud and lying in credit applications, adding to earlier indictments relating to the $11-billion accounting scandal that pushed the telecom company into bankruptcy protection last year.
The 11-point grand jury indictment, unsealed in federal court in Manhattan, included new allegations that Sullivan defrauded Bank of America, Chase Manhattan Bank and other creditors by submitting false information in applications for $4.25 billion in loans.
The 40-year-old Sullivan, who was fired as chief financial officer of WorldCom in June, could not be reached for comment. His attorney did not return calls seeking comment.
Sullivan was indicted previously on seven charges that included securities fraud, conspiracy and making false statements about WorldCom’s financial health in filings with the Securities and Exchange Commission. He pleaded not guilty to those charges.
The additional charges put more pressure on Sullivan to cooperate with prosecutors as they try to assemble a case against former WorldCom Chief Executive Bernard J. Ebbers, legal experts said. Ebbers has not been charged with any crime, and he has said that he had no knowledge of any misconduct.
“There’re so many allegations of misconduct against [Sullivan] already, so it looks to me like they’re trying to put additional pressure on him to point the finger at Ebbers,” said J. Boyd Page, a senior partner with Atlanta law firm Page Gard Smiley & Bishop.
“It also may be that the government thinks it can make a clear-cut case on bank fraud. It’s like going after Al Capone for tax evasion,” Page said, referring to the Chicago gangster of the 1920s who was nailed for tax evasion rather than violent crimes.
Four former WorldCom executives have pleaded guilty to fraud and have agreed to cooperate with authorities probing the case. WorldCom, which aims to emerge from bankruptcy protection this year, also is cooperating with the investigation.
Sullivan, who lives in Florida and remains free on a $10-million bond, is due to appear in court Tuesday regarding the new charges and is scheduled to face trial in Manhattan in September, a spokesman for the U.S. attorney’s office in New York said.
