The Regents - University of California | Office of The President

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146. In October of 2002, Buford Yates, Jr., former Director of General
Accounting at WorldCom, was charged with, and has pled guilty, to securities
fraud, conspiracy to commit securities fraud and filing false statements with the
SEC. He supervised the closing of WorldCom’s book at the end of financial
reporting periods and also had responsibility in preparing WorldCom’s
consolidated financial statements. According to an October 8, 2002 article in the
New York Law Journal:
judge that:
Mr. Yates admitted his role in the multi-billion dollar
accounting scandal, telling Southern District Magistrate
Judge Andrew J. Peck that he was part of a scheme to
conceal spiraling costs on the company’s balance sheet
in a failed effort to boost WorldCom’s stock price.
“I came to believe that the adjustments I was being
directed to make in WorldCom’s financial statements
had no justification and contravened generally
accepted accounting principles,” Mr. Yates told
Magistrate Judge Peck. “I concluded that the
purpose of these adjustments was to incorrectly
inflate WorldCom’s reported earnings in order to
meet the expectations of securities analysts and
mislead the investing public.” (Emphasis added).
147. According to the November 8, 2002 Montreal Gazette, Yates told the
[H]e was first directed to misreport WorldCom’s
finances in October 2000, when it became clear that the
company’s expenses were far higher than in previous
quarters and higher than analysts had expected. []
Starting in April 2001, Yates said, he was also instructed
to report large amounts of operating expenses as capital
expenses. He said he had “serious concerns” about this
practice, which vastly increased WorldCom’s reported
earnings, and said he expressed those concerns to his
supervisor, Myers.
148. In October of 2002, Betty L. Vinson, the former director of
management and reporting, and Troy M. Normand, director of legal entity
accounting, both CPAs in the General Accounting Department under Yates, pled
guilty to conspiracy and securities fraud charges for participating in the illegal
scheme. The SEC has also filed charges against Vinson and Normand.
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COMPLAINT