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Wednesday, May 22, 2024 | Back issues
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Bernard Ebbers, Disgraced WorldCom Banker, Dies

The former chief of WorldCom, convicted in one of the largest corporate accounting scandals in U.S. history, died just over a month after his early release from prison. Bernard Ebbers was 78.

NEW YORK (AP) — The former chief of WorldCom, convicted in one of the largest corporate accounting scandals in U.S. history, died just over a month after his early release from prison. Bernard Ebbers was 78.

The former telecommunications executive died Sunday, according to a family statement cited by WAPT-TV in Mississippi.

WorldCom collapsed and went into bankruptcy in 2002, after revelations of an $11 billion accounting fraud that included pressure from top executives on subordinates to inflate numbers to make the company seem more profitable. The collapse caused losses to stockholders, including those who had invested through retirement plans.

Canadian-born Ebbers was convicted in New York in 2005 on securities fraud and other charges and received a 25-year sentence. A federal appeals court judge who upheld Ebbers’ conviction in 2006 wrote that WorldCom's fraudulent accounting practices were "specifically intended to create a false picture of profitability even for professional analysts that, in Ebbers' case, was motivated by his personal financial circumstances."

According to an October 1997 profile by The Associated Press, Ebbers received a basketball scholarship to Mississippi College, where he majored in physical education. After graduating, he coached high school teams for a year before investing in a hotel; he eventually amassed a chain of Best Westerns in Mississippi and Texas and a car dealership in Columbia, Mississippi.

Following the advice of friends and knowing little about the phone business, he invested in a small long-distance company, LDDS, in 1983. He eventually took over the day-to-day operations and bought up competitors, transforming LDDS — later renamed WorldCom, based in Clinton, Mississippi — into the fourth-largest long-distance company by 1996.

He was considered a "no-nonsense" man with a brash attitude who preferred jeans to a suit. One analyst in the late ’90s said Bernie Ebbers was "the telephone equivalent of Bill Gates."

By the time of its collapse in the accounting fraud scandal in 2002, WorldCom was the nation's second-largest long-distance business. Ebbers left that year and after his conviction was imprisoned from September 2006 until Dec. 21 last year, when he was released from the custody of the Bureau of Prisons.

In the meantime, WorldCom reemerged as MCI, taken over by Verizon, and relocated to Ashburn, Virginia.

U.S. District Judge Valerie E. Caproni said late last year that it fell within her discretion to order the early release of Ebbers after a lawyer cited severe medical problems and said that Ebbers had suffered severe weight loss. Over 6 feet tall, he had dropped from more than 200 pounds to 147 pounds. Attorney Graham Carner told the judge it was possible his client might not live another 18 months.

Among other ailments, Ebbers had heart disease, Carner said. Ebbers was not in court when Caproni announced her ruling on Dec. 18; his lawyers said he was hospitalized.

"While Mr. Ebbers is physically alive ... his quality of life is gone," Carner said in December. "If he was released today, Mr. Ebbers is not going to be playing tennis or running a business."

In court papers in September, his lawyers said Ebbers unintentionally bumped into another prisoner while walking in the prison in September 2017, and the prisoner went to Ebbers' open cell later in the day and attacked him.

The court filing said the attack fractured bones around Ebbers' eyes and caused blunt head trauma and other injuries. They said Ebbers was put into solitary confinement because his "severely limited eyesight" made him unable to identify the attacker.

In July 2019, one of Ebbers' daughters submitted a request that her father receive compassionate release from a federal prison medical facility in Fort Worth, Texas. Court papers say a Bureau of Prisons official denied that request in August. The family statement said that the Bureau of Prisons "had no diagnosis or treatment plan in place" and Ebbers suffered a "rapid decline" in October, followed by multiple hospitalizations in November and December.

While prosecutors acknowledged that Ebbers' health had deteriorated in prison, they opposed early release. Assistant U.S. Attorney Jason Cowley told the judge that such a move would send "a terrible message to the rule of law" because it would cut Ebbers' sentence in half.

The family statement acknowledged resistance to Ebbers' early release from victims of WorldCom's collapse, but said that many victims expressed support.

"Many stockholders and employees lost their investments in the fall of WorldCom. Many of our friends — and many in our family — did too," the statement said. "Thankfully, Judge Caproni agreed with us — keeping Dad in prison, especially in his unexplained and undiagnosed deteriorated condition, would not bring back anyone's investments."

The statement, which repeatedly praised Caproni, said family members plan eventually to advocate for others "who are deserving of compassionate release to their families."

Categories / Business, Criminal

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