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WorldCom
WorldCom's Chapter 11 filing was the largest bankruptcy filing in American history, and the SEC has now accused the company of misrepresenting earnings to the tune of $11 billion. Investors lost $200 billion as a direct result of the bankruptcy. WorldCom's rise and fall epitomizes the corruption of the telecom sector during the boom. The story of the WorldCom scandal is still unfolding, as prosecutors build their case against its key executives.
Oklahoma filed charges against the former WorldCom CEO, stating that he violated securities laws and defrauded Oklahoma residents of over $64 million. Then the state decided to delay its case, pending a federal trial.
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Five indictments, four guilty pleas so far in WorldCom case. No jail time yet. |
Federal authorities subpoenaed documents from WorldCom, now doing business as MCI, in an investigation to find out whether the corporation disguised long-distance calls as local calls to limit fees paid to other companies
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The settlement with the SEC, the largest in history, does not amount to an admittance of guilt. Many critics consider it no more than a slap on the wrist.
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Corporate monitor proposes steps to further reform and police MCI |
What Went Wrong at WorldCom
The WorldCom fraud is a study in complex crime. The most extensive examination to date of the scandal has been by former Attorney General Richard Thornburgh, who was appointed bankruptcy examiner by the U.S. Bankruptcy Court. His two reports -- especially the second one -- provide an in-depth look at how history's fraud was executed.
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