The Regents - University of California | Office of The President
The Regents - University of California | Office of The President
The Regents - University of California | Office of The President
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misrepresented the financial condition <strong>of</strong> WorldCom through filings with the SEC,<br />
annual statements, press releases, analyst statements, and other documents<br />
provided to the public.<br />
94. As the Defendants knew from their close relationship with<br />
WorldCom, WorldCom was always an aggressive company that engaged in illegal<br />
activity. For example, according to a July 8, 2002 article in Time, the Mississippi<br />
Attorney General investigated WorldCom and discovered that its employees, at<br />
Ebbers direction, made a series <strong>of</strong> campaign contributions which were illegally<br />
reimbursed by the company. In 1995, WorldCom pled guilty to a felony charge<br />
and paid a $120,000 penalty.<br />
95. From WorldCom’s beginnings through 2002, WorldCom manipulated<br />
its financial statements to show increasing revenues. Its purported extraordinary<br />
growth was a fraud and its financial statements were false.<br />
96. <strong>The</strong> Defendants accomplished the scheme to defraud through mergers<br />
and acquisitions which allowed revenues to be inflated and expenses minimized.<br />
From at least 1994 through 2002, financial manipulations rather than real growth<br />
made WorldCom appear to be a successful company.<br />
97. For example, through the mergers from at least 1994 through 2002,<br />
WorldCom, with the substantial assistance <strong>of</strong> Defendants, was able to improperly<br />
record extraordinary charges or capitalized expenses that it could hide through<br />
mergers. As a result, WorldCom’s expenses on its financial statements were<br />
understated. WorldCom, with the substantial assistance <strong>of</strong> Defendants during the<br />
period from at least 1994 through 2002, overvalued assets, including goodwill.<br />
WorldCom, with the substantial assistance <strong>of</strong> Defendants, shifted revenue.<br />
Revenues which should have been recorded in a quarter before a merger were<br />
improperly booked in the quarter after the acquisition so that WorlCom could<br />
claim the revenue and make it appear as if the acquisition had real benefits to<br />
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COMPLAINT
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