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F. Criminal and SEC Charges Against WorldCom Executives
144. On June 24, 2002, the Audit Committee told Scott Sullivan, the Chief
Financial Officer and Director of WorldCom, that he would be terminated if he did
not resign before the board meeting the next day. When Sullivan refused,
WorldCom terminated him. In August of 2002, Sullivan was charged with
conspiracy to commit securities fraud, filing false statements with the SEC and
other criminal violations. Sullivan has pled not guilty to the charges.
145. In September of 2002, David F. Myers, Controller and Senior Vice
President of WorldCom from August of 1995 until June 25, 2002, was charged
with, and has pled guilty to, one count each of securities fraud, conspiracy to
commit securities fraud and filing false statements with the SEC. He had reported
directly to Sullivan and was responsible for tax, general accounting, accounts
receivable, accounts payable, payroll, property accounting, budgeting, foreign
controllers’ group and management reporting. He and his group were responsible
for consolidating the financial statements from the company’s different operations
and providing underlying information to the Financial Reporting Group.
According to a September 27, 2002 Washington Post report:
In court today, Myers acknowledged the central elements
of the government’s case and, without identifying the
other executives by name, described a wide circle of
company employees who were involved in the scheme.
“I was instructed on a quarterly basis by senior
management to ensure that entries were made to
falsify WorldCom’s books to reduce WorldCom’s
actual reported costs and therefore to increase
WorldCom’s reported earnings,” he told Judge
Casey.
“Along with others who worked under my
supervision, and at the direction of WorldCom senior
management, such accounting adjustments were
made for which I knew there was no justification or
documentation and were not in accordance with
generally accepted accounting principles,” he said.
(Emphasis added).
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COMPLAINT