By ERIN McCLAM, Associated Press Writer
2 hours, 33 minutes ago
NEW YORK – Former WorldCom finance chief Scott Sullivan was sentenced Thursday to five years in prison by a judge who called him «the architect» of the company’s epic fraud — but gave him a break because he helped convict his onetime boss, CEO Bernard Ebbers.
U.S. District Judge Barbara Jones praised Sullivan for pleading guilty last year and helping the government build its case against Ebbers, who was sentenced to 25 years in prison.
Still, «Mr. Sullivan’s offenses were of the highest magnitude,» Jones said. «Mr. Sullivan, I believe, was the architect of the fraud. Mr. Sullivan was the day-to-day manager, if you will, of the scheme.»
Five former WorldCom executives have now been sentenced to prison, their terms totaling more than 32 years, for orchestrating the $11 billion fraud that sank the telecommunications company three summers ago.
Sullivan, 43, has already agreed to sell his $11 million mansion in Boca Raton, Fla. — a lavish Mediterranean-style estate with 10 bedrooms and seven fireplaces — and turn the money over to former WorldCom investors.
Under the settlement he also forfeited his decimated WorldCom retirement account. His lawyer said Thursday that Sullivan had been left without any assets. Sullivan’s wife will set up a trust fund to care for their daughter.
Sullivan, pleading for leniency before the judge issued her sentence, said he accepted responsibility for his crimes and would «carry the burden of my failing always.»
«I am sorry for the hurt that has been caused by my cowardly actions. I truly am, Your Honor,» he said. «I stand before you today ashamed and embarrassed.»
The judge also took some pity on Sullivan because his wife has diabetes, and during her frequent hospitalizations has been unable to care for the couple’s daughter.
Sullivan said his wife had been hospitalized in emergencies nine times this year alone, suggesting a prison sentence would be an «extreme burden» on his spouse and daughter.
As WorldCom grew from a small Mississippi long-distance reseller into a global communications titan, Sullivan came to be seen by Wall Street as an exceptional chief financial officer and something of a whiz-kid.
He was indicted in 2002 shortly after the company went bankrupt, and initially denied wrongdoing. But he pleaded guilty to fraud and conspiracy in 2004 just before he was to go to trial, turning on his former boss.
At Ebbers’ trial earlier this year, Sullivan was the star witness, telling jurors Ebbers repeatedly urged him to «hit the numbers» — a kind of mantra that Sullivan said he interpreted as a command to commit fraud in order to meet Wall Street expectations.
«I told Bernie, ‘This isn’t right,'» Sullivan said from the witness stand, describing an October 2000 meeting in which he said he showed Ebbers a plan to improperly create $133 million in revenue. «He just stared at it, and he looked up at me and he said, ‘We have to hit our numbers.'»
Sullivan admitted he examined WorldCom’s financial performance each quarter, compared it to what analysts were expecting, then ordered subordinates to make up the difference.
Three of those subordinates — controller David Myers, accounting director Buford Yates and accounting manager Betty Vinson — all face prison terms, although significantly less than Sullivan’s and Ebbers’.
The judge made clear Thursday that Sullivan would have faced much longer than five years in prison had he not agreed to cooperate with federal prosecutors.
The lead WorldCom prosecutor, David Anders, praised the time and effort Sullivan put into the Ebbers case, and noted he was in plea discussions as early as August 2002.
«Mr. Sullivan was not the cause of the fraud,» the prosecutor said in court. «Mr. Ebbers was. Yet without Mr. Sullivan’s cooperation, it’s likely that Mr. Ebbers never would have been brought to justice.»
The bulk of the fraud scheme, which prosecutors said took place from 2000 to 2002, was an illegal decision by WorldCom executives to record regular operating expenses as long-term capital expenditures.
When the fraud came to light in the summer of 2002, the company went bankrupt, costing investors billions of dollars and tens of thousands of employees their jobs. The company emerged from bankruptcy last year under the name MCI.
While the fraud wrecked retirement accounts and crippled college savings funds for people around the country, a class-action lawsuit has recovered more than $6 billion from WorldCom executives and board members, an auditing firm and major investment banks that underwrote WorldCom securities.
Ebbers, 63, is scheduled to report to a federal prison Oct. 12. The same judge is considering whether he should be allowed to remain free while he appeals his conviction on nine criminal counts.
Sullivan made one final reference to his old boss before the sentence came down.
«In the face of intense pressure inside the company, I turned away from the truth,» Sullivan said. «»I knew it was wrong. My intentions were not to hurt people.»
By ERIN McCLAM, Associated Press Writer