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Last Updated: Thursday, 17 April, 2003, 09:21 GMT 10:21 UK
WorldCom ex-chief 'lied for loans'
MCI control room

The former finance chief of bankrupt telecoms firm WorldCom has been hit with a new list of federal charges, accusing him of obtaining $4.25bn (2.7bn) of bank loans by deception.

Scott Sullivan, who is currently free on $10m bail while awaiting trial for various counts of illegal accounting, lied on applications for loans from Bank of America, Chase Manhattan and others, the new indictment alleges.

He has also been charged with conspiracy and securities fraud, as well as making false statements to the Securities and Exchange Commission.

Some of the new offences carry prison sentences of up to 30 years, far more than Mr Sullivan previously faced if found guilty of falsifying WorldCom's books.

Black hole

The charges are, however, a refinement of the indictment against Mr Sullivan, rather than anything particularly new.

WorldCom - now in Chapter 11 bankruptcy and renamed MCI - was the focus of one of the biggest frauds in US corporate history.

The basis of the scandal was the illegal practice of reporting various rental expenses as capital investment, allowing the firm to appear vastly more profitable than it ever was.

The total of misrepresented funds could be as much as $11bn, prosecutors say.

As the former chief financial officer of the company, Mr Sullivan has been the focus of the various investigations into its convoluted accounts.

But according to some theories, investigators are putting him under heavy pressure in order to force him to testify against Bernie Ebbers, WorldCom's founder.

Mr Ebbers has so far not been charged with any misconduct relating to WorldCom's collapse.




SEE ALSO:
WorldCom plans image change
14 Apr 03  |  Business
Worldcom makes a profit
27 Mar 03  |  Business
WorldCom posts mammoth loss
14 Mar 03  |  Business
WorldCom axes 5,000 staff
04 Feb 03  |  Business
WorldCom names new boss
15 Nov 02  |  Business
WorldCom fraud reaches $9bn
05 Nov 02  |  Business


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