Two Worldcom Officials Indicted

Former WorldCom finance chief Scott Sullivan was indicted yesterday on charges of securities fraud, setting the stage for another high profile trial of a once respected US corporate executive.

A second former WorldCom executive and a new name in the alleged $7.2bn fraud was indicted: Buford Yates Jr, the telecom company's former director of general accounting. Two other workers in the finance department were named as co-conspirators, suggesting that prosecutors believe the alleged fraud ran deep.

Mr Sullivan, 40, was arrested at the start of the month and faces seven counts of fraud and making false filings to the securities and exchange commission. The indictment is reported to have followed a breakdown of talks with prosecutors aimed at a plea deal. Mr Sullivan, who could spend up to 65 years in prison, is still able to strike a deal ahead of a trial.

Negotiations are continuing with David Myers, the former WorldCom controller who was arrested alongside Mr Sullivan but was not indicted yesterday.

The US justice department is eager to show that it is getting a grip on the financial scandals that have dented confidence on Wall Street this year. It has made a series of high-profile arrests at companies including drugs firm ImClone and cable network Adelphia.

Former WorldCom chief executive Bernie Ebbers, who resigned in April owing the company $408m, is still under investigation.

Two other accounting executives, Betty Vinson and Troy Normand, were named as co-conspirators yesterday but not indicted. They allegedly followed Mr Sullivan's instructions to shift costs improperly from operating to capital accounts, to make the company appear profitable. Mr Sullivan is free on $10m bail.

Prosecutors filed documents indicating that Mr Myers, Mr Normand and Ms Vinson are cooperating with investigators.