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Myers Expected to Plead Guilty

Telecom: Reports say former WorldCom controller is cooperating with the government in its case against former CFO Scott Sullivan.

September 26, 2002|From Times Wire Reports

The former controller of WorldCom Inc., David Myers, is expected to plead guilty today for his role in the telecommunications company's accounting scandal, the Wall Street Journal reported in its online edition.

Myers is expected to plead guilty to two felony counts as part of a plea bargain and cooperate with the government, the newspaper reported, citing people familiar with the matter.

WorldCom officials were not available for comment.

The guilty plea, which would be the first in the case against the telecommunications giant, comes after WorldCom's former chief financial officer, Scott D. Sullivan, and director of general accounting, Buford Yates Jr., pleaded not guilty this month to charges that they directed employees to hide $3.9 billion in expenses at WorldCom, which owns MCI. WorldCom, which transmits nearly half of the world's Internet traffic, filed for bankruptcy protection in July after disclosing that it inflated profit by improperly booking $3.9 billion in expenses.

Less than a week ago, sources said additional accounting errors of nearly $3 billion had been found. Myers' cooperation, the Journal said, is expected to be key in the case against Sullivan.

Federal prosecutors, who have spoken to 40 to 50 people, have been trying to link former Chief Executive Bernard J. Ebbers to the accounting fraud scheme, sources have said.

After building the Clinton, Miss.-based firm into the nation's No. 2 long-distance company through two decades of mergers, Ebbers was forced out in April over concerns about declining revenue, mushrooming debt and questionable accounting practices.

Myers was known to have been in plea negotiations with the government.

For weeks, prosecutors have threatened potential defendants in the WorldCom case with jail time to get them to cooperate with the government in bringing additional charges against more senior company executives, including Ebbers.

The government is said to be weighing several new charges against Sullivan and possibly other defendants. The charges include insider trading on nonpublic information, obstruction of justice, perjury and filing false financial reports.

Noting that WorldCom prosecutors have faced off in court against drug lords and organized crime groups, some experts say racketeering charges against some former WorldCom executives also are a possibility. To prove racketeering, prosecutors would have to show that WorldCom executives had engaged in a criminal enterprise to shortchange investors and employees.

The threat of more charges ups the ante in a criminal case that could have significant repercussions for corporate bookkeeping and for Wall Street, where negative investor reaction to the scandals has pummeled stock prices.

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