Former WorldCom Boss Ebbers Sentenced to 25 Years

Bernard Ebbers, a former basketball coach from Mississippi, helped start a small long distance reselling business in the early 1980s. By working hard and taking over other companies, eventually even giants such as MCI, Ebbers earned respect and admiration as the chief executive of WorldCom. People who knew him even called him the Telecom Cowboy because of his hard-charging business style and success. He was known for his frequent charitable works, often performed anonymously.

Four months ago, the Telecom Cowboy was convicted of orchestrating and leading the largest corporate fraud in U.S. history, bilking over $11 billion dollars out of hapless investors and employees, most of whom lost their retirement savings and thus their future hopes and dreams. Wednesday Ebbers learned that he shouldn’t be counting on any hopes for his future either, because he’ll be spending the next 25 years of his life in prison for his crimes. Even if he behaves himself in prison and gets time off for good behavior, Ebbers will not be released any earlier than 2007, when he would be 85. His lawyers say that he has serious health problems, so he may not even make it to 2007 anyway. When handing down the sentence, Judge Barbara Jones of U.S. District Court in Manhattan said, "I find that a sentence of anything less would not reflect the seriousness of this crime."

When the fraud at WorldCom first began unfolding a little more than three years ago, stock shares immediately plummeted from over $60 per share to just pennies a share. Billions of dollars in market value vanished, and the company filed for the largest bankruptcy in U.S. history in the summer of 2002. But Ebbers and other company principals didn’t suffer losses because they sold their stock before the prices dropped. The defense had argued it was impossible to find whether investors had sold WorldCom stock early in 2002 directly because of the fraud, company personnel changes, or the generally poor economy. But the judge was unmoved, saying that this series of events was not a minor fraud. "Mr. Ebbers committed a fraud that caused numbers of investors to suffer losses. His statements deprived investors of the truth about WorldCom's financial condition," the judge said.

The sentence was the harshest one imposed on a corporate executive since the huge wave of financial scandals began with the fall of Enron in 2001. Ebbers is the highest-ranking of the six WorldCom executives and accountants who were charged by federal prosecutors in the fraud. The other five who face sentencing in late July and early August include Scott Sullivan, the former CFO of WorldCom who testified at Ebbers trial that he carried out the fraud according to Ebbers' orders. The packed courtroom listening to the sentencing hearing included many WorldCom employees hoping to feel somewhat vindicated by Ebbers receiving a tough sentence for ruining their lives. One of them actually had the chance to take the stand and tell the judge how much the fraud had devastated his life. Henry J. Bruen Jr., a former high-ranking sales executive at WorldCom, lost his job in 2003 and has not been able to find work since. He said that his life has been "sheer hell" since he lost his job. "Where do I get my life savings back from?" he demanded. "Or my career reinvigorated?"

As the judge began reading the penalty to the assembled crowd, Ebbers leaned forward in his chair and sobbed. At the end, as the courtroom was emptying, Ebbers’ wife Kristie walked up to the defense table and embraced her husband tightly. Kristie had cried silently throughout the hearing, and many of her tears may have been due to the fact that her life will also change dramatically as a result of her husband’s actions. Under an agreement reached in order to settle a civil suit filed by the people he defrauded, Ebbers will forfeit nearly all of his personal assets including his lavish family mansion in Brookhaven, Mississippi. Kristie Ebbers will be left with only about $50,000 of her husband’s assets, along with a modest home in Jackson.