August 11, 2005
Sullivan Receives Five-Year Prison Term for His Role in WorldCom Accounting Fraud
Former WorldCom CFO Scott Sullivan received the second longest sentence arising from the accounting fraud at the company when U.S. District Judge Barbara Jones sentenced him to a five year prison term. Judge Jones characterized Sullivan as the "architect of the fraud at WorldCom" and said that his crimes "were of the highest magnitude." The judge noted that Sullivan's cooperation was the key to the prosecution of former CEO Bernie Ebbers who was not indicted until after Sullivan agreed to cooperate, and also found that his family situation -- Sullivan's wife is quite ill and they have a young daughter -- was an additional ground for a lighter sentence. Stories from the Wall Street Journal (here) and AP (here) discuss the sentencing.
Ellen Podgor's post from earlier today (below) raises questions about the fairness of giving significant sentencing breaks to the cooperator versus higher sentences for the defendant who goes to trial. Ebbers has maintained his innocence, so that affects the calculation, at leas somewhat. Sullivan's cooperation certainly brought him a much lighter sentence than his former boss, 80% less, and it's hard to ever say whether the benefit he received from cooperating was too great. The government certainly touted Sullivan's cooperation, and will cite the 20 year difference in other cases in trying to entice agreements to assist. The HealthSouth trial showed one of the dangers from cooperation agreements that largely give a defendant a nearly complete pass on punishment, but it is unlikely the government can stop seeking cooperation from corporate insiders if it ever wants to pursue higher-level officers of a company. In the end, five years is a significant amount of time to spend in prison. (ph)
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