In the first admission of guilt in the multibillion dollar scandal, WorldCom's former controller pleaded guilty to securities fraud Thursday, saying he was told by "senior management" to falsify records.
David Myers, 44, entered the plea in U.S. District Court after telling Judge Richard Casey he wanted to waive his right to be indicted on the charges. It was the first admission of guilt in what became the largest corporate accounting scandal in U.S. history.
Casey accepted Myers' guilty plea and set a tentative trial date of Dec. 26. The two fraud charges each carry a sentence of five years, while the false filing charge carries 10 years.
Prosecutors say Myers and Scott Sullivan, the former chief financial officer at WorldCom, directed employees to falsify balance sheets to hide more than $3.8 billion in expenses. The deception enabled WorldCom to report a profit when it was actually losing money, according to regulators.
WorldCom, which owns the nation's No. 2 long-distance telephone company MCI, became the biggest corporate bankruptcy in U.S. history in July. The company has since revised the amount of accounting improprieties up to $7.1 billion, and recent reports said the final total may reach $9 billion.
Prosecutors say the fraud began when Myers and Sullivan ordered WorldCom accounting executives Buford Yates, Betty Vinson and Troy Normand to record billions in operating expenses as capital expenses.
Vinson and Normand are also expected to plead guilty as part of cooperation agreements with prosecutors, according to court papers filed earlier. They have yet to appear in court.
Sullivan and Yates were indicted a month after the bankruptcy filing on securities fraud charges.
Myers' possible cooperation could help prosecutors build a case against indicted Sullivan, his immediate higher-up in the now-bankrupt company, and even against former Chief Executive Bernard Ebbers. Ebbers has not been charged.
Sullivan's lawyer, Irv Nathan, has said his client is "an honorable and honest man" victimized by a rush to judgment. Ebbers' lawyer has said the former CEO knew nothing about any misreporting.
Vinson and Normand are also expected to plead guilty as part of cooperation agreements with prosecutors, according to court papers.