The company has local ties: MCI, its subsidiary, has a 1,100-worker call center in Niles.

The company has local ties: MCI, its subsidiary, has a 1,100-worker call center in Niles.
STAFF/WIRE REPORTS
JACKSON, Miss. -- WorldCom Inc. spiraled toward the brink of bankruptcy after the long-distance giant reported that it disguised $3.8 billion in expenses in what appears to be one of the nation's largest cases of accounting fraud.
With the stunning revelation, WorldCom became the latest in a line of companies to be struck by accounting scandals that have shaken public faith in corporate America.
Locally, MCI Communications Corp., a wholly owned subsidiary of WorldCom, has a 1,100-worker call center in Niles. The communications giant opened its Niles facility two years ago in a former Kmart building on Youngstown-Warren Road and has become that city's largest employer.
WorldCom, the nation's No. 2 long-distance carrier, said Tuesday that more than $3 billion of expenses in 2001 and $797 million in the first quarter of 2002 were wrongly listed on company books as capital expenses, thus not reflected in its earnings results.
That means the company may have actually lost millions of dollars when it reported profits. The Clinton, Miss.-based company said it will restate earnings for all of 2001 and the first quarter of 2002.
"Our senior management team is shocked by these discoveries," said CEO John Sidgmore, who was appointed in April to replace Bernard Ebbers amid questions about the company's growth and finances.
Layoffs coming
WorldCom also announced Tuesday that its chief financial officer, Scott Sullivan, has been fired. In addition, the company said it would lay off 17,000 workers beginning Friday.
Russ Meier, manager of MCI's Niles call center, could not be reached to comment this morning. A spokesman at the company's media relations office did not return a call requesting comment.
The local center has telemarketing and customer service divisions. Telemarketing employees make outgoing calls selling the company's long distance service and other products; customer service workers accept incoming calls and assist with billing problems, new service requests and other customer needs.
Niles Mayor Ralph Infante has praised MCI as a good neighbor that has kept its promises to the city. He said its workers contribute more than $350,000 in income taxes to the city yearly.
Infante declined to comment this morning on MCI's financial troubles, saying he had just learned about the situation. His secretary said the city has not been informed of any staffing changes for the Niles call center.
The news could be the final blow to WorldCom, which is reeling from a low stock price, a crumbling telecommunications market and an ongoing Securities and Exchange Commission investigation.
"Clearly, it means ... that the company has made a few giant leaps toward bankruptcy," said John C. Hodulik, an analyst for UBS Warburg.
The Nasdaq Stock Market halted trading in the two stocks representing WorldCom Inc.'s business, saying it was seeking more information from the company.
Shares of WorldCom Group, which represent the company's data and commercial telecom services, last traded at 83 cents, down from a 52-week high of $16.06. MCI Group stock, which tracks the company's consumer long-distance business, last traded at $1.68, down from as high as $17.33 in the last year.
Corporate scandals
WorldCom's sudden fall comes when the nation is dealing with a rash of corporate scandals that have rattled Wall Street and created a flood of shareholder lawsuits.
Enron Corp. collapsed last year in what was the biggest bankruptcy in the nation's history amid revelations that it kept millions of dollars in losses off the books through shady accounting practices. Scandals followed at several other big-name companies, including Tyco International Ltd., Global Crossing and Adelphia Communications, which filed for bankruptcy Tuesday.
Arthur Andersen
The accounting firm that audited WorldCom's financial statements during 2001 and the first quarter of 2002 was Arthur Andersen LLP, which was convicted of obstruction of justice for shredding documents as Enron tumbled. Andersen said its work for WorldCom was in compliance with SEC standards.
"It is of great concern that important information about line costs was withheld from Andersen auditors by the chief financial officer of WorldCom. The WorldCom CFO did not tell Andersen about the line cost transfers nor did he consult with Andersen about the accounting treatment," Chicago-based Andersen said.
The SEC said in a statement late Tuesday that WorldCom's disclosures "confirm that accounting improprieties of unprecedented magnitude have been committed in the public markets."
The agency said it has ordered WorldCom to file "under oath, a detailed report of the circumstances and specifics" of the accounting problems.
The Washington Post, citing unnamed sources, reported today that the Justice Department had begun a criminal investigation.
WorldCom, second to only AT & amp;T in the long-distance market, grew from a small long-distance company into a telecommunications force through more than 60 acquisitions in the past 15 years.
The growth was stopped in 2000 when federal and European regulators blocked WorldCom's proposed $129 billion merger with Sprint Corp., citing competition concerns.