No New Trial For WorldCom's Ebbers

A federal judge has denied a bid by former WorldCom CEO Bernard Ebbers for a new trial, paving the way for him to be sentenced Wednesday in the record $11 billion fraud.

Ebbers had argued, among other reasons, that 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.

"I find that none of these new grounds requires a new trial," Judge Barbara Jones wrote in a ruling made public Tuesday.

"New trial motions like the one Ebbers made almost always lose because trial judges usually figure that any problems can be fixed on appeal. But just because Ebbers lost this round doesn't necessarily mean that he'll come up empty on appeal and that's what his attorneys now will be focusing upon," says CBSNews.com Legal Analyst Andrew Cohen.

Ebbers' lawyers had sought the testimony of the three witnesses — former WorldCom executives Ron Beaumont, Ron Lomenzo and Stephanie Scott — but each invoked their Fifth Amendment right and did not testify.

"Defendant fails to show that the government has used immunity to gain a tactical advantage over him, or that the testimony of Beaumont, Lomenzo or Scott would be exculpatory," Jones wrote.

Ebbers' lawyers had also argued Jones unfairly told jurors they could find him guilty based on "conscious avoidance," which they said allowed jurors to convict Ebbers because he "should have known" about the fraud.

The ruling by Jones means Ebbers' sentencing hearing will go forward Wednesday morning.

"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.

"I don't expect Ebbers to get the maximum but I don't figure he'll get the minimum either," Cohen said. "The only things he has going for him are his age, his lack of a record, and whatever remorse he may decide to share with the judge."

In papers filed last month, federal prosecutors asked Jones to follow a probation report that calculated Ebbers' crimes under federal sentencing guidelines and suggested he receive a life sentence.

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."
Still, 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.

For his part, the former 63-year-old CEO has asked for a term "substantially below" life in prison, citing his poor health and a history of charitable works. More than 100 people have also written to Jones on his behalf.

The sentencing will be the back end of an extremely 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 preliminary approval to a civil 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.

He'll be sentenced on criminal charges Wednesday.

"The question for the judge really is whether she is going to cut Ebbers a break because of his background and age or whether she is going to focus upon the enormity of the financial crimes here," says Cohen. "But either way, Ebbers is going to go to prison for quite some time."

WorldCom collapsed into bankruptcy in 2002, and investigators eventually uncovered $11 billion in fraud — much of it because accountants were classifying regular expenses as long-term capital expenditures. The company has since re-emerged under the name MCI Inc.

After Ebbers is sentenced, five more former company executives and accountants who pleaded guilty in the fraud will face sentencing later this summer.