Saturday, August 30, 2003
Oklahoma files 15 felony charges against WorldCom.
OKLAHOMA CITY (AP) -- Oklahoma's effort to prosecute WorldCom Inc. and several of its former executives is vexing federal agencies who fear the state's case will undermine their own pursuit of the company over its massive accounting fraud.
Oklahoma prosecutors became the first to file criminal charges against former WorldCom CEO Bernard Ebbers, as part of a wider complaint that named the company -- now known as MCI -- and five other former top executives.
The action Wednesday came on Ebbers' 62nd birthday.
WorldCom collapsed last year into the nation's largest bankruptcy amid an $11 billion accounting scandal.
Facing charges
Although the state case is the first criminal charges against Ebbers and the company itself, former WorldCom executives such as ex-chief financial officer Scott Sullivan have been charged in federal court. Sullivan was named in the Oklahoma complaint.
Four other ex-executives who have pleaded guilty to federal charges and are helping federal prosecutors are also charged in Oklahoma: David Myers, Buford Yates Jr., Betty Vinson and Troy Normand.
In New York, U.S. Attorney James Comey, who is prosecuting the five executives, expressed concern that the Oklahoma charges could interfere with federal actions.
"In the name of cooperation and coordination, we are disappointed that we were not told that charges were imminent, as we have enjoyed a cooperative relationship with the Attorneys General of other states," Comey said in a statement. "Competing interests can impede and delay the administration of justice."
The Securities and Exchange Commission said it was "disappointed" by the state action.
"Our goal and our hope is to coordinate federal and state enforcement actions in a manner that results in the most effective and efficient enforcement possible for violators of our securities laws," the SEC said in a statement. Meanwhile, some legal experts cheered Oklahoma Attorney General Drew Edmondson's move, while others questioned his reasons for filing 15 felony charges accusing WorldCom and its former officials of defrauding Oklahoma investors.
Edmondson said he would cooperate with federal officials but intended to press his case on behalf of the state, including retirement funds that lost $64 million on WorldCom investments.
"By falsifying information, the company looked stronger on paper than it really was," he said. "Investors counted on this information when buying WorldCom securities. The company lied. These employees lied. The law was broken. It's that simple."
The charges carry up to 10 years in prison and $10,000 in fines.
Also on Wednesday, Oregon filed a civil lawsuit against WorldCom, hoping to recoup $24 million lost on WorldCom bonds.