Ebbers’ Defense Begins Case

Ex-WorldCom Inc. Chairman Bernard J. Ebbers began his defense to federal fraud charges Wednesday by showing that auditor Arthur Andersen didn’t detect the $11-billion fraud that helped drive the long-distance company into bankruptcy.

Defense lawyers called their first witness after the government rested after 17 days of trial. Cynthia Cooper, who headed WorldCom’s internal auditing unit, told the jury of seven women and five men in U.S. District Court in New York that outside auditor Arthur Andersen twice approved WorldCom’s books and didn’t discover the fraud.

Cooper was asked about a Feb. 6, 2002, meeting of WorldCom’s board of directors, which she attended. Jurors were shown minutes from the meeting that said “Andersen was comfortable with the company’s accounting” and “Andersen did not have any disagreements with management.”

The defense is trying to show that Ebbers had no reason to suspect fraud when neither Arthur Andersen nor the board’s audit committee detected any, Ebbers’ lawyers have said. Defense attorney Brian Heberlig said in court that he was offering Cooper’s testimony to show Ebbers’ “state of mind.”

Ebbers, 63, is charged with securities fraud, conspiracy and seven counts of filing false statements with the Securities and Exchange Commission from 2000 to 2002. He faces a maximum of 25 years in prison if convicted.

Prosecutors rested their case Wednesday after presenting 14 witnesses. Their case hinges on the testimony of ex-finance chief Scott D. Sullivan, who said he had told Ebbers about hidden expenses and overstated revenue at the long-distance company. Sullivan has pleaded guilty to fraud and is seeking leniency at his sentencing.

At the close of the prosecution’s case, U.S. District Judge Barbara Jones rejected a defense request to dismiss the case, saying the government had presented enough evidence for the case to go forward.

WorldCom emerged from bankruptcy in April as MCI Inc.