By ,
Published January 13, 2015
The jury at the fraud trial of former WorldCom (search) chief Bernard Ebbers (search) has slogged through a swamp of numbers, watching one arcane accounting document after another placed into evidence. Some jurors have nodded off.
But they perked up noticeably for the more than 30 hours of testimony by Scott Sullivan (search), Ebbers' former finance chief. And with good reason: Both the government and the defense have placed their hopes on him.
• Click here to read the indictment against Bernard Ebbers
Sullivan, whose testimony ended Thursday, came across as calm and collected for the most part, but was forced to concede that no one else was in the room on the many occasions he says he expressed his worries about falsifying WorldCom's books.
He is the only government witness so far to link Ebbers directly to the fraud. Sullivan testified he repeatedly warned Ebbers that the only way WorldCom could meet Wall Street expectations would be to cook its books.
"I told Bernie, 'This isn't right,'" Sullivan said, describing an October 2000 meeting in which he said he showed Ebbers a plan to improperly create $133 million in revenue.
"He just stared at it, and he looked up at me and he said, 'We have to hit our numbers,'" Sullivan testified.
The phrase — "We have to hit our numbers" — became a refrain during Sullivan's week on the witness stand. He said Ebbers made the remark almost every quarter, and said he interpreted it as a command to commit fraud.
Once in 2001, he said Ebbers went so far as to ask him "how we were doing it" — covering up hundreds of millions of dollars in expenses and booking revenue where none existed.
But Sullivan admitted on cross-examination that there were no witnesses to the many conversations with Ebbers in which he told his boss he believed it was wrong to book improper accounting entries.
"It was Bernie and I," Sullivan said. "It had been that way since I was CFO of the company."
And a handwritten letter that Sullivan said he sent to Ebbers protesting the false entries has not turned up, despite Sullivan's claim that he sent it through his assistant, who kept copies of his outgoing notes.
Ebbers' chief lawyer, Reid Weingarten, hammered away at Sullivan's credibility, getting him to admit that he had lied over and over to the board of directors, the marketplace, the government, even his own friends.
"The key question is: Did the defense create a reasonable doubt in the jury's mind that Sullivan is lying?" said Timothy Hoeffner, a Philadelphia white-collar attorney at the law firm Saul Ewing.
He noted that Sullivan had related "undocumented and uncorroborated conversations with Ebbers concerning the accounting fraud."
Ebbers, 63, is charged with fraud, conspiracy and false regulatory filings — in essence, with directing and overseeing the $11 billion fraud that drove WorldCom into bankruptcy in 2002.
Sullivan, 43, has already pleaded guilty in the case and hopes to win a lighter sentence by cooperating with prosecutors. The trial, in Manhattan federal court, resumes Tuesday with more prosecution testimony.
It has been clear from opening statements that the case rests on whether jurors believe Sullivan. Legal observers said his demeanor on the witness stand would be critical.
Under 23 hours of rehearsed questioning from prosecutors, Sullivan showed little emotion, spoke matter-of-factly and occasionally appeared contrite.
He maintained his composure under eight hours of cross-examination, when many witnesses can do damage to their credibility by appearing combative or defensive.
He even had a laugh: When Weingarten quizzed him about past cocaine use, and about once lying on a government security form, the defense attorney quickly clarified he did not mean Sullivan was high on cocaine while he was filling out the form. Sullivan, Weingarten and rows of spectators broke into snickers.
While the cross-examination covered Sullivan's admitted history of lies and drug use, it did not touch on the issue of marital infidelity — a line of questioning Judge Barbara Jones said she would allow.
It did lay bare the difficult relationship between Ebbers, the folksy former basketball coach who built WorldCom through a series of mergers and acquisitions, and Sullivan, his sharp-minded young CFO.
Asked by a prosecutor whether he was intimidated by Ebbers, Sullivan said the chief executive sometimes made disparaging remarks about him in front of others.
"We'll just get a new CFO, that's what we'll do," Sullivan said, quoting his former boss. "He said it in a kidding way, but I didn't take it as a joke."
https://www.foxnews.com/story/ex-cfo-testimony-key-in-worldcom-trial