Posted on 09/05/2002 2:30:13 AM PDT by kattracks
Prosecutors in the WorldCom fraud case appear to be zeroing in on the bankrupt telecom's ex-CEO Bernie Ebbers.In court yesterday, government lawyers said they were looking to add to the list of defendants in the case - the biggest accounting scandal in U.S. history.
The disclosure came at an arraignment for two ex-Worldcom execs, Scott Sullivan and Buford Yates, indicted last week on charges of cooking the books to defraud investors.
"The government is continuing its investigation," said Assistant U.S. Attorney David Anders. "And we do plan to add charges to the same scheme and to potentially add defendants."
Anders provided no names.
But a source close to the investigation said it will depend on the evidence - prosecutors have seized 100 to 150 boxes of records - and witnesses.
Those witnesses could include WorldCom's ex-controller David Myers, arrested with Sullivan last month but not indicted.
Prosecutors said they were involved in plea discussions with Myers that could lead to a deal to cooperate.
A law enforcement source indicated that a deal is close.
Two ex-WorldCom accountants Betty Vinson and Troy Norman may also be close to pleading guilty and cooperating.
The indictment accuses Sullivan, 40, and Yates, 46, of jiggering the books to understate expenses and jack up earnings and the stock price.
They wore business suits and subdued expressions for their arraignment before Manhattan Federal Judge Barbara Jones. "I plead not guilty," said Sullivan. Yates also entered a not guilty plea.
Anders said prosecutors would be turning over the boxes of seized evidence to allow the defense to prepare for trial.
No trial date was set, but Jones ordered a conference on Dec. 9.
The judge also ordered Sullivan to remain free on $10 million bail. She ordered Yates released on $500,000 bond.
Outside court, Washington defense attorney David Schertler said Yates would seek a change of venue for the trial to Mississippi, where WorldCom has its headquarters.
"He lives there and that's where the witnesses are. It's more convenient," Schertler said.
Sullivan also has an attorney from Washington, Irv Nathan.
Asked if he was worried about Myers cooperating, he said, "We'll do our talking in court."
Sullivan and his wife Carla then walked out of the courthouse, past a gauntlet of photographers and into a waiting black Cadillac.
At the time of his arrest, Sullivan, along with Myers, was paraded into court in handcuffs by FBI agents.
Ebbers' lawyer said he knew nothing about any accounting ploys to hide $3.8 billion in expenses.
WorldCom's disclosure of the fraud in June resulted in the company filing for bankruptcy.
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