- The Washington Times - Thursday, September 5, 2002

NEW YORK (AP) Federal prosecutors said yesterday they will press new charges and may indict new defendants in the WorldCom accounting investigation.
Assistant U.S. Attorney David Anders told U.S. District Court Judge Barbara Jones that he intends to file a superseding indictment in the case that already has branded five WorldCom executives co-conspirators in the largest accounting scandal in U.S. history.
"The government is continuing its investigation and we do plan to supersede at some point, to add charges to the same scheme and to potentially add defendants," Mr. Anders said after Judge Jones asked him whether he was prepared to set a trial date.
Mr. Anders spoke to the judge during the arraignment of former WorldCom Chief Financial Officer Scott Sullivan and accounting executive Buford Yates Jr. Both pleaded innocent to securities fraud charges.
A pretrial hearing was scheduled for Dec. 9.
The prosecutor said he was preparing to turn over to defense lawyers 100 to 150 boxes of evidence seized in the case.
Mr. Sullivan remains free on $10 million bail, while Mr. Yates who was making his first court appearance was released on a $500,000 bond.
David Schertler, Mr. Yates' attorney, said he will soon file papers seeking to have his client's trial moved out of New York. If the request is granted, that could lead to a separate trial for Mr. Yates, 46, who lives in Brandon, Miss.
Outside court, Mr. Schertler declined to comment further.
Mr. Sullivan and his attorney, Irv Nathan, ducked into a waiting black Cadillac without speaking to a crush of reporters. Mr. Nathan has said that his client was a victim of a "rush to judgment."
WorldCom, which owns the nation's No. 2 long-distance telephone company, MCI, recorded the biggest corporate bankruptcy in U.S. history on July 21.
Mr. Sullivan and former Comptroller David Myers are charged with directing other WorldCom employees to hide $3.8 billion in expenses, allowing the company to misstate earnings by an even greater amount.
At their orders, accounting executives Mr. Yates, Betty Vinson and Troy Normand helped carry out the mammoth corporate accounting fraud, prosecutors charge.
"Sullivan, Yates and their co-conspirators were able to assure that WorldCom's reported earnings exceeded its actual earnings for the period from October 2000 through April 2002 by approximately $5 billion," the indictment said. "As Sullivan, Myers, Yates, Vinson and Normand well knew, there was no justification in fact or under generally accepted accounting principles for these entries."
Under federal sentencing guidelines, Mr. Sullivan, Mr. Myers and Mr. Yates each face 10 years in prison if convicted of securities fraud.
Court papers filed last week indicate Mr. Myers, Miss Vinson and Mr. Normand are on the verge of pleading guilty as part of cooperation deals, which greatly increases the pressure on Mr. Sullivan to strike a deal with prosecutors and tell them what, if anything, former Chief Executive Officer Bernard Ebbers knew about the purported accounting crimes.
Mr. Ebbers' attorney did not immediately return a call for comment.
But has said earlier that his client knew nothing about any misreporting.

Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times is switching its third-party commenting system from Disqus to Spot.IM. You will need to either create an account with Spot.im or if you wish to use your Disqus account look under the Conversation for the link "Have a Disqus Account?". Please read our Comment Policy before commenting.

 

Click to Read More and View Comments

Click to Hide