Lead Plaintiff's Memorandum of Law in Opposition to Defendants'

Finally, WorldCom’s founder and long-time CEO Ebbers argues that, as a matter of law, he
cannot be held liable for the $9 billion fraud at WorldCom on the basis of the allegations in the
Complaint. Ebbers’ argument is essentially that the fraud implemented by his hand-picked CFO may
not be ascribed to him, even though Sullivan told investigators that Ebbers was fully aware that
hundreds of millions of dollars of expenses had been moved into capital expenditures accounts to inflate
the Company’s earnings. Ebbers’ argument runs directly contrary to the well-established principle that
allegations in a complaint are to be viewed most favorably to the plaintiff (Point II.A.). His related
argument that the facts alleged in this Complaint are somehow not credible or reliable must likewise be
rejected. Indeed, when offered the opportunity to put his own credibility on the line and explain to
Congress last summer how he could have been oblivious to the fact that his management team was
orchestrating the largest corporate fraud in history, Ebbers invoked the Fifth Amendment.
As shown below, the Complaint amply satisfies the requirements of the Federal Rules of Civil
Procedure and the PSLRA. The motions to dismiss should be denied.
STATEMENT OF FACTS 5
The Fraud at WorldCom
By now, the world is painfully aware of the fraud that engulfed WorldCom, bringing what was
once the second largest telecommunications company in the world to its knees. Between early 1999
and June 2002, WorldCom overstated its publicly reported earnings by an almost incomprehensible $9
5
On a Rule 12(b)(6) motion to dismiss, the Court must presume that the Complaint’s
allegations are true and give Lead Plaintiff the benefit of every favorable inference that can be drawn
from its allegations. See Taylor v. Vermont Dept. of Educ., 313 F.3d 768, 776 (2d Cir. 2002);
Cromer Fin. Ltd. v. Berger, 137 F. Supp. 2d 452, 468 (S.D.N.Y. 2001) (Cote, J.).
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