Two Former WorldCom Executives Surrender To Face Federal Charges

WorldCom

Former chief financial officer Scott Sullivan and former controller David Myers surrendered at 7 a.m. at an undisclosed location and were being held by the FBI in Manhattan pending a court appearance.

"They are here and they are in custody," said FBI spokesman Jim Margolin.

The charges were not immediately disclosed. A complaint was to be unsealed in federal court later Thursday.

The charges followed reports that authorities had targeted the former executives while investigating allegations of billions of dollars in accounting frauds at the company.

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Sullivan and Myers were dismissed in June after the company admitted it inflated revenues by nearly $4 billion.

The Justice Department has also considered taking the more drastic step of charging WorldCom as a corporation. A conviction of the long-distance phone company could drive it out of business.

In June, the Securities and Exchange Commission, citing "accounting improprieties of unprecedented magnitude," filed civil fraud charges against WorldCom.

The Clinton, Miss.-based company admitted June 25 it falsely accounted for $3.8 billion in expenses. The inflated revenues allowed the company to report profits when it otherwise would have losses. That day, it fired Sullivan, who was subsequently accused by the company's auditor, Arthur Andersen, of withholding crucial information about WorldCom's bookkeeping.

WorldCom filed for bankruptcy under Chapter 11 on July 21, the largest such filing in U.S. history.

U.S. Bankruptcy Judge Arthur Gonzalez approved $2 billion in financing to keep WorldCom operating as it reorganizes its finances. He also granted the Justice Department's request for an independent examiner to ensure an honest accounting of the company's value and investigate for mismanagement, irregularities and fraud.

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