Former WorldCom CEO Gets 25 Years

Bernard Ebbers, who as CEO of WorldCom oversaw the largest corporate fraud in U.S. history, was sentenced Wednesday to 25 years in prison.

The sentence was handed down by Judge Barbara Jones of Manhattan federal court three years after WorldCom collapsed in an $11 billion accounting fraud, wiping out billions of investor dollars.

Ebbers is the first of six former WorldCom executives and accountants facing sentencing this summer. The other five all pleaded guilty and agreed to cooperate against their former boss.

Jones said Ebbers deserved a stiff sentence because he was a leader of the epic accounting fraud that toppled the telecom giant.

"Mr. Ebbers was the instigator of the fraud," said U.S. District Judge Barbara Jones as she prepared to pronounce his sentence.

Jones said she believed federal guidelines called for a sentence of between 30 years and life in prison. But she invited lawyers and the defendant to speak to her before a sentence was imposed.

Jones spoke shortly after a former employee told the court how his life was destroyed by Ebbers' greed.

Henry J. Bruin Jr., 37, a former salesman, said at Ebbers' sentencing hearing that the company's collapse three years ago caused him "untold human carnage" and put him through "sheer hell." He lost all of his savings and couldn't get another sales job.

Defense lawyer Brian Heberlig told the court Wednesday that Ebbers should not be punished more severely because of money lost by shareholders. He noted that economic factors led WorldCom stock to plummet from $35 a share to less than $1 before the fraud was revealed in June 2003.

Assistant U.S. Attorney David Anders said the government acted conservatively in estimating loss. Jones said she agreed with the government's estimate that the fraud cost investors about $2 billion after it was disclosed.

In papers filed last month, prosecutors asked Judge Barbara Jones to follow a probation report that suggested Ebbers receive a life sentence after calculating his crimes under federal sentencing guidelines.

The prosecutors also noted that Adelphia Communications Corp. founder John Rigas, 80 and in poor health, received a 15-year sentence last month, amounting to a life term, for his role in the fraud at that company.

"The enormity of the crimes that Ebbers committed cannot be overstated: The fraud at WorldCom was the largest securities fraud in history," prosecutors wrote, noting the name WorldCom is now "synonymous with fraud."

Though Ebbers will most likely appeal the sentence he receives, it is doubtful the court will significantly reduce his punishment, says CBSNews.com Legal Analyst Andrew Cohen.

"There are a few issues that might get some traction on appeal, in particular an instruction the trial judge gave to jurors, and right now that's about the only hope that Ebbers has to avoid what could amount to a life sentence," says Cohen.

A Supreme Court ruling earlier this year made the sentencing guidelines only advisory for federal judges, not mandatory, giving Jones far greater flexibility in determining Ebbers' penalty.

The sentencing was coming a day after the judge denied a bid by Ebbers for a new trial, a ruling in which she cited "strong" evidence supporting the conviction, including government witnesses who "outlined the fraud in painstaking detail."

Ebbers had argued the judge or prosecutors should have granted immunity to three witnesses that Ebbers contends could have helped clear him of charges related to the fraud.

His lawyers also said prosecutors unfairly prejudiced jurors by suggesting in their closing statement that there was evidence outside the trial record that proved government witnesses were telling the truth.

The sentencing was also part of a damaging week for Ebbers, once known as a swaggering and successful CEO as WorldCom grew ever larger in the late 1990s.

On Monday, another judge gave her blessing to a settlement under which Ebbers must forfeit almost all his personal assets, including $5 million cash up front, to resolve a shareholder lawsuit.

That settlement will leave Ebbers' wife with about $50,000 of Ebbers' assets and a modest home in Jackson, Miss. A far more lavish family home in Brookhaven, Miss., will be sold off as part of the settlement.

Ebbers resigned as CEO in 2002, shortly before the widespread fraud at the company came to light. Investigators eventually uncovered $11 billion in improper accounting.

That summer, WorldCom collapsed in the largest bankruptcy in U.S. history, wiping out billions of dollars of investors' money. It has since re-emerged under the name MCI Inc., based in Ashburn, Va.

At trial, Ebbers argued he was completely unaware of the fraud, and that he simply did not look at some key WorldCom financial documents that showed glaring accounting irregularities.

Five other WorldCom executives and accountants, all of whom pleaded guilty in the fraud and cooperated against Ebbers, face sentencing later this summer.

The stiffest sentence could go to Scott Sullivan, the former finance chief under Ebbers, who said he carried out the fraud in 2000, 2001 and 2002 on Ebbers' orders.

WorldCom remains the largest of the corporate frauds that began making headlines with the fall of Enron Corp. in late 2001. Three top executives from that company are due to go on trial in Houston in January.