Monday, January 17, 2005

Another Take on Ebbers Trial

The New York Times weighed in with its take on the upcoming trial of Bernie Ebbers, former CEO of WorldCom.  In an article on Jan. 16 "Superlatives (and Contradictions) in a Fraud Trial", reporter Ken Belson writes:

Many trials involving former corporate highfliers come down to whether the executive planned or knew about the fraud, or whether the dirty work was done by subordinates with his or her direct knowledge. Proving that Mr. Ebbers was "in the loop" will not be easy. According to managers who worked with him, Mr. Ebbers was a detail-oriented and hands-on executive who was concerned - even obsessed - with sales growth figures and efforts to cut costs.

But he did not appear to be a financial whiz capable of devising Enronlike accounting schemes, they said, and instead was more focused on buying companies to merge into WorldCom and on increasing revenue. While prosecutors say they have damning voice mail messages and memos, Mr. Ebbers rarely sent e-mail messages, making it harder to compile a paper trail of instructions to subordinates.

As noted in an earlier posts (here and here), the key to the government's case is whether the testimony of former WorldCom CFO Scott Sullivan, who worked closely with Ebbers through the late 1990s to its collapse, will be sufficient to link Ebbers to the accounting fraud perpetrated at the company.  Without the e-mail and document trail, it will be harder to show that Ebbers was a member--even the mastermind--of a conspiracy to misstate the company's revenue by playing games with WorldCom's books and records. (ph)

http://lawprofessors.typepad.com/whitecollarcrime_blog/2005/01/next_take_on_eb.html

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