NEW YORK - Former WorldCom boss Bernard Ebbers, weeping in court as he learned his fate, was sentenced to 25 years in prison yesterday for leading the largest corporate fraud in U.S. history.
It was the toughest sentence imposed on an executive since the fall of Enron in 2001 touched off a record-breaking wave of business scandals.
Even with possible time off for good behavior, Ebbers, 63, and with what his lawyers describe as serious heart problems, would remain locked up until 2027, when he would be 85.
The sentence came four months after Ebbers was convicted of overseeing the $11 billion WorldCom fraud — much of it a pattern of chalking up expenses as long-term capital expenditures, which are classified as assets.
Ebbers, an imposingly tall man with white hair, leaned forward in his chair and cried, sniffling audibly, after Judge Barbara Jones of U.S. District Court in Manhattan read his penalty.
“I find that a sentence of anything less would not reflect the seriousness of this crime,” the judge said.
As a packed courtroom emptied after the hearing, Ebbers’ wife, Kristie, who had cried quietly during the hearing, walked up to the defense table and embraced her husband tightly. Ebbers did not speak to reporters.
It was just more than three years ago that the fraud at WorldCom began to come to light, reducing shares of stock once worth more than $60 to mere pennies. Billions of dollars in market value vanished.
Mississippi-based WorldCom filed for bankruptcy — also the largest in U.S. history — in the summer of 2002. It has since reemerged under the name MCI Inc., with headquarters in Ashburn, Va.
The sentence completed a staggering fall for Ebbers, whose homespun Mississippi manner and hard-charging business style earned him status as an admired chief executive — and the nickname Telecom Cowboy.
The former basketball coach helped start a small long-distance reselling business in the early 1980s, then gradually built it into a business titan by swallowing ever-larger companies, eventually even MCI.
Judge Jones ordered Ebbers to report to prison Oct. 12, and said she would recommend that federal prisons officials assign him to Yazoo City, Miss., so his family could see him easily.
But the judge said she would take written arguments over the next six weeks on whether she should allow Ebbers to remain out of prison while he appeals his conviction, a process likely to take at least a year.
She imposed the 25-year sentence after a two-hour hearing in which defense lawyers and federal prosecutors debated exactly how much money was lost because of the fraud, a key factor in determining the penalty.
Defense lawyer Reid Weingarten had asked for leniency, mentioning Ebbers’ heart condition and his considerable, often anonymous, charitable works, cited repeatedly in 169 letters sent to the judge.
“If you live 60-some-odd years, if you have an unblemished record, if you have endless numbers of people who attest to your goodness, doesn’t that count? Doesn’t that count particularly on this day?” Mr. Weingarten said.
The judge also heard briefly from Henry J. Bruen Jr., a former high-ranking sales executive at WorldCom who lost his job in 2003 and said he has been unable to find work since, putting him through “sheer hell.”
“Where do I get my life savings back from?” he demanded. “Or my career reinvigorated?”
Judge Jones did not impose a fine or seek restitution, partly because of an agreement late last month under which Ebbers will forfeit nearly all his personal assets to settle a civil suit filed by aggrieved investors.
Under that settlement, Ebbers’ wife will be left about $50,000 of Ebbers’ assets and a modest home in Jackson, Miss. A far more lavish family home in Brookhaven, Miss., will be sold off as part of the settlement.
“Simply put, justice was served,” said New York state Comptroller Alan Hevesi, the lead plaintiff in the civil suit against WorldCom, which has racked up $6 billion in settlements.
The 25-year term is the harshest yet as corporate executives have been paraded through American courtrooms in a series of business scandals that have cost investors untold billions.
Ebbers is the highest-ranking of six WorldCom executives and accountants who were charged by federal prosecutors in the fraud.
The other five face sentencing in late July and early August.
Among them will be Scott Sullivan, the former chief financial officer under Ebbers, who testified at Ebbers’ trial that he carried out the fraud but did so on Ebbers’ orders.