WorldCom Securities Fraud Lawyers
The lawyers and attorneys at our firm are offering free consultations to victims of WorldCom securities fraud. Accounting fraud at WorldCom led to the largest bankruptcy in U.S. history in July 2002. If you or someone you know suffered financial losses as a result of this bankruptcy, you may be entitled to compensation. We urge you to contact on of our WorldCom securities fraud lawyers right away to protect your legal rights.
To pump up its financial statements, WorldCom began classifying operating expenses as long-term capital investments in 2000. Hiding these expenses in this way gave the company another $3.85 billion. These newly classified assets were expenses that WorldCom paid to lease phone network lines from other companies to access their networks. They also added a journal entry for $500 million in computer expenses, but supporting documents for the expenses were never found. As a result of this fraud, it appeared that WorldCom posted a profit of $1.38 billion in 2001.
It is now known that the accounting fraud at WorldCom was discovered as early as June 2001, when several former employees gave statements alleging instances of hiding bad debt, understating costs, and backdating contracts. However, WorldCom's board of directors did not investigate these claims. In June 2001, a shareholder lawsuit was filed against WorldCom, but it was thrown out of court due to lack of evidence.
In March 2002, the SEC decided to launch its own investigation of WorldCom accounting practices. An internal audit turned up the billions WorldCom had announced as capital expenditures, as well as the $500 million in undocumented computer expenses. There was also another $2 billion in questionable entries.
The SEC asked WorldCom's audit committee for documents supporting capital expenditures, but it could not produce them. The controller admitted to the internal auditors that they weren't following accounting standards. WorldCom then admitted to inflating its profits by $3.8 billion over the previous five quarters. A little over a month after the internal audit began, WorldCom filed for bankruptcy.
WorldCom emerged from bankruptcy in 2004, under the name MCI. As a result of the SEC investigation, criminal charges were filed against several WorldCom executives. Former CEO Bernie Ebbers and former CFO Scott Sullivan were charged with fraud and violating securities laws. Ebbers was found guilty on all counts in March 2005 and sentenced to 25 years in prison, but is free on appeal. Sullivan pleaded guilty and took the stand against Ebbers in exchange for a more lenient sentence of five years.
Legal Help for Victims of WorldCom Securities Fraud
If you or someone you know owned stock in WorldCom and suffered financial losses because of the accounting fraud committed by the company, you have valuable legal rights. Please contact one of the WorldCom securities fraud lawyers at our firm by filling out our online form or calling 1-800-LAW INFO (1-800-529-4636).