Engaging in Multi-Billion Dollar Financial Fraud
After declaring bankruptcy and before Verizon acquired it in 1998, the telecommunications industry began to slow down and WorldCom’s stock was declining. Sullivan Consents to Anti-Fraud Injunction, Permanent Bar from Serving as an Officer and Director of a Public Company, and Permanent Suspension from Practicing as an Accountant Before the Commission. Sullivan Also Pleads Guilty to Criminal Charges Filed by the Department of Justice, Which Announces Related Indictment of Former WorldCom CEO Bernard J. Ebbers. WorldCom Company began as a Long Distance Discount Service, Inc. (LDDS) in 1983, based in Hattiesburg, Mississippi. In 1985 LDDS selected Bernard Ebbers to be its CEO. The company went public in 1989 through a merger with Advantage Companies Inc. The company name was changed to LDDS WorldCom in 1995, and later just WorldCom. The company’s growth under WorldCom was fueled primarily through acquisitions during the 1990s and reached its prime with the acquisition of MCI in 1997. On November 4, 1997, WorldCom and MCI Communications announced their US$37 billion merger to form MCI WorldCom, making it the largest merger in US history. Among the companies that were bought or merged with WorldCom were Advanced Communications Corp. On September 15, 1998 the new company, MCI WorldCom, opened for business, after MCI deprived itself of its successful "internetMCI" business to gain approval from US DOJ. CEO Bernard Ebbers became very wealthy from the rising price of his holdings in WorldCom common stock. However, in the year 2000, the telecommunications industry entered a downturn and WorldCom’s aggressive growth strategy suffered a serious setback when it was forced by the US Justice Department to abandon its proposed merger with Sprint in mid 2000. By that time, WorldCom’s stock price was declining and Ebbers came under increasing pressure from banks to cover margin calls on his WorldCom stock that...
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