WorldCom Settles With Investors

(CBS/AP)  A federal judge Wednesday approved legal settlements that will return more than $6.1 billion to investors who lost money in the WorldCom accounting fraud.

The deals, approved by U.S. District Judge Denise Cote, will divide payments among approximately 830,000 people and institutions that held stocks or bonds in the telecommunications company around the time of its collapse in 2002.

Money for the payouts will come from a long list of defendants, including investment banks, auditing firms and former WorldCom directors.

The largest chunks are a $2.58 billion payment by Citigroup Inc. and a $2 billion payment by JPMorgan Chase & Co. Investors claim the companies, which were among those that underwrote or traded WorldCom securities, should have been aware of the fraud.

Throughout the summer, former WorldCom executives and accountants were sentenced to prison for their roles in the fraud. Top among them was Bernard Ebbers, the CEO of WorldCom who received 25 years in prison.

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.

Following Ebbers' sentence, former WorldCom finance chief Scott Sullivan received five years in prison. The judge in the trial called Sullivan "the architect" and "day-to-day manager" of the fraud.

Also, controller David Myers and former accounting director Buford Yates each were sentenced to a year and a day in prison.

Accounting manager Betty Vinson will serve five months in prison and five months of house arrest. Another accountant, Troy Normand, got three years of probation.

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.