Posted on 03/02/2004 8:51:24 AM PST by retrokitten
NEW YORK (AFP) - Bernie Ebbers, former chief executive of telecom giant WorldCom, was expected to be charged with fraud and conspiracy in connection with the biggest bankruptcy in US history, media reported.
Citing Justice Department (news - web sites) sources, New York's NewsChannel 4 said US Attorney General John Ashcroft (news - web sites) was expected to announce the charges here later Tuesday.
Ashcroft scheduled a news conference for 1:00 pm (1800 GMT) in New York on a criminal matter, according to a Justice Department statement.
WorldCom, the number-two US long-distance phone carrier, declared bankruptcy in July 2002. The extent of the fraud was eventually revealed as close to 11 billion dollars.
Ebbers was charged last by Oklahoma state officials, but prosecutors there dropped the charges as part of a deal with federal authorities.
Ebbers has always denied knowledge of the massive accounting fraud at WorldCom, although investors have said he has a near-imperial reign at the company.
The company, which is being renamed MCI, agreed to pay creditors 750 million dollars in cash and stock as part of its plan to emerge from bankruptcy.
A report prepared in January for the bankruptcy court found that WorldCom could sue Ebbers as well as its investment bankers and auditors for contributing to its collapse.
The firm has cause to sue Ebbers for "breaches of the fiduciary duties" for, among other things, awarding investment banking business to Salomon Brothers and Salomon Smith Barney "in return for lucrative financial favors," such as access to hot stock offerings.
The report said that Salomon Smith Barney, which is part of Citigroup, allowed Ebbers and others to get in on hot new initial public offerings (IPOs) that were soaring in the late 1990s.
The report said that while it could not prove collusion, there was strong evidence that the Wall Street firm was doing favors for Ebbers to keep its investment banking business.
"The examiner concludes that the evidence strongly supports the conclusion that the extraordinary allocations to Mr. Ebbers were made to obtain and then to keep WorldCom as an investment banking client."
This also came out today. Hmmm...coincidence?
Ken, my darling, I never doubted you for a minute. LOL.
Yup, looks like Lay's going down, too. Andy did the deal and Kenny and the boys got nailed. Such was corporate life at Enron.
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