The Fraud of World Com

The Fraud of WorldCom

The Fraud of WorldCom

MCI WorldCom combined financial strength and resources to pursue the industry's growth opportunities with an advanced global network built for communications.  WorldCom was brought to a halt after an internal audit revealed accounting anomalies which led to a largest corporate fraud scandal in the history of the United States. 

Company Background 

• 1983:  Bernie Ebbers and three investors buy a near-bankrupt long-distance company, LDDS.  One of the investors, Carl Aycock, notes that Ebbers’ only prior telecom experience was “using the phone.”

• 1985:  Ebbers becomes CEO of LDDS

• 1995:  LDDS buys Williams Telecommunications Group for $2.5 billion; changes name to WorldCom

• 1996:  In August, World/Com buys MFS Communications – which had just acquired Internet Access Company UUNet Technologies – in a stock deal valued at $14 billion.

• 1998:  In a $37 billion deal, WorldCom merges with MCI.  That same year Ebbers acquires the largest ranch in Canada for $65 million and a yacht-building company for $14 million.

• June 21, 1999:  WorldCom stock peaks at $64.50, giving it a market value of $180 billion. 

• 1999:  Ebbers’ $142 million pay package- about double his ’98 compensation – includes a $935,000 salary, $7.5 million bonus and 1.8 million stock options worth about $133.6 million.

• April 29, 2002:  Ebbers resigns from WorldCom in cloud of controversy over $408 million in loans.

• June 25, 2002:  WorldCom restates financial results for 2001 and early 2002 after identifying $3.9 billion in improper shifting of line costs to capital accounts.  Stock plunges 90%.

• July 21, 2002:  WorldCom makes largest filing for bankruptcy-court protection in U.S. history 

• April 2003:  WorldCom changes name to MCI and moves headquarters from Clinton, Mississippi to MCI headquarters in Ashburn, Virginia.

• March 2, 2004:  Ebbers indicted on federal charges of...