- The Washington Times - Thursday, June 30, 2005

NEW YORK (AP) — Former WorldCom boss Bernard Ebbers will give up nearly everything he owns — including his Mississippi home and his stake in a golf course — in a settlement with angry investors in the fraud-toppled company.

Ebbers, who faces sentencing July 13 for his role in the WorldCom debacle, will pay $5 million up front and place the rest of his assets in a trust to be sold off for an estimated $25 million to $40 million.

Ebbers is a defendant in a class-action lawsuit brought by investors who lost billions of dollars when WorldCom went under in the largest bankruptcy in U.S. history in 2002.

The cash from his assets will be added to the more than $6 billion paid by former WorldCom directors, major investment banks that underwrote WorldCom securities and auditing firm Arthur Andersen — all defendants in the suit.

New York Comptroller Alan Hevesi, the lead plaintiff in the suit on behalf of the state employees pension fund, hailed the settlement as a win for the millions who lost money.

“This is an important step in conveying a message that the crimes committed by Mr. Ebbers and others in the series of securities scandals will be responded to very, very forcefully,” he said.

As part of the deal, the government will not seek restitution when Ebbers is sentenced. Federal prosecutors have asked a judge to send Ebbers, 63, to prison for the rest of his life.

The once-swaggering CEO was convicted in March of fraud, conspiracy and false regulatory filings in the $11 billion accounting fraud at WorldCom, the largest in history.

Authorities involved in the settlement said Ebbers must sell his multimillion-dollar home in Clinton, Miss., and his family must move out of it by Oct. 31.

In addition, Ebbers’ property, including thousands of acres of timberland and his stakes in a golf course, a lumber company, a trucking company and a rice farm, will go into a liquidation trust.

For most of the property, 75 percent of the proceeds will go to the investors. MCI, the postbankruptcy version of WorldCom, will get 25 percent.

Sean Coffey, a lawyer for Mr. Hevesi, said a “modest” living allowance would be made for Ebbers’ wife, Kristie. He would not give the amount. Money will also be set aside for Ebbers’ legal bills.

A lawyer for Ebbers did not immediately return a call for comment on the settlement.

Five other former WorldCom executives who pleaded guilty in the fraud and helped the government prosecute Ebbers will be sentenced after him later this summer.

Three of them are the remaining defendants in the class-action investor suit. Mr. Coffey said he expected settlements soon with those three.

A federal judge still must approve the Ebbers settlement.


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

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.

 

Click to Read More and View Comments

Click to Hide