NEW YORK – WorldCom Inc's former top finance executive pleaded not guilty Wednesday to charges that he orchestrated one of the largest corporate accounting scandals in U.S. history by allegedly masking billions of dollars in expenses at the telecommunications giant.
Former WorldCom Chief Financial Officer Scott Sullivan, 40, entered his not guilty plea in Manhattan federal court to charges that he was behind the alleged scheme aimed at artificially inflating WorldCom's earnings by hiding expenses. The indictment alleges that the scheme allowed Worldcom to report earnings inflated by some $5 billion.
WorldCom's former director of general accounting, Buford Yates, 46, also pleaded not guilty to his alleged role in the conspiracy. He was released on a personal recognizance bond of $500,000.
Both men were named in a seven-count indictment last week accusing them of one count of securities fraud, conspiracy to commit securities fraud, and fraud in connection with the purchase or sale of securities. It also charges them with three counts of making false filings with the Securities and Exchange Commission.
WorldCom, the nation's No. 2 long-distance carrier, filed the world's largest bankruptcy in July as it buckled under $40 billion in debt and the huge accounting fraud. It has also been sued by the SEC. Overall, the company has admitted to $7.68 billion in accounting errors.
The indictment alleges that the defendants and their co-conspirators began an illegal scheme in October 2000 aimed at hiding expenses and thus inflating WorldCom earnings to meet Wall Street expectations. The court papers allege the scheme lasted through this June. Government prosecutors said the probe was continuing and more charges were probable.