Ebbers Surrenders to Prison Officials

[TELECOM Digest Editor's Note: About the time the last issue of the Digest was being distributed, word came through that Bernie Ebbers had surrendered to prison officials. This was a major item on our various news wires, and I am printing three versions of the event, since they differ slightly in their reports. PAT]

WorldCom's Ebbers Reports to Louisiana Prison for 25-Year Term

By Andrew Dunn

Sept. 26 (Bloomberg) -- Former WorldCom Inc. Chief Executive Officer Bernard Ebbers, convicted of overseeing one of the biggest frauds in U.S. history, reported to a federal prison in Louisiana today to begin serving a 25-year term.

Officials at the U.S. Bureau of Prisons confirmed that Ebbers, 65, had reported to the Federal Correctional Institution in Oakdale, Louisiana, this afternoon. Oakdale, a low-security prison housing about 1,400 male inmates, is 230 miles from Ebbers's home in Jackson, Mississippi.

Ebbers, who built a small telephone company into the second-largest U.S. long-distance provider, was convicted last year of directing an $11 billion fraud that drove WorldCom into bankruptcy in July 2002. He was ordered by U.S. District Judge Barbara Jones in New York to report to prison by 2 p.m. today.

Ebbers was convicted of conspiracy, securities fraud and seven counts of making false filings to the U.S. Securities and Exchange Commission. A federal appeals court in New York upheld his conviction in July.

Ebbers has been free on bail and living at his home in Mississippi since he was sentenced in July 2005.

At the sentencing, defense lawyers asked Jones to recommend that Ebbers be allowed to serve his time in the federal prison complex in Yazoo City, Mississippi. Yazoo City has a minimum security prison camp and a medium security facility, both for men.

Briefed Ebbers

The government's star witness at Ebbers's trial, former WorldCom Chief Financial Officer Scott Sullivan, testified that he briefed his boss on efforts to hide costs at WorldCom and inflate revenue. Sullivan pleaded guilty and is serving a five- year prison term at a federal prison complex in Jesup, Georgia.

WorldCom filed the largest bankruptcy in U.S. history after Ebbers was ousted as CEO. It emerged from bankruptcy as MCI Inc. and moved from Clinton, Mississippi to Ashburn, Virginia. New York-based Verizon Communications Inc. later acquired MCI.

Ebbers last year agreed to pay as much as $45 million -- almost all his assets -- to help settle claims in related civil suits. He and his wife were left with about $50,000 and a 'modest' home in Jackson, Mississippi, a lawyer for the plaintiffs said.

The case is U.S. v. Ebbers, 02-CR-1144, U.S. District Court, Southern District of New York.

To contact the reporter on this story: David Glovin in New York at snipped-for-privacy@bloomberg.net ; Andrew Dunn in New York at snipped-for-privacy@bloomberg.net

Copyright 2006 Bloomberg.net

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