Ex-WorldCom CFO Sullivan Indicted

The indictment accuses Scott Sullivan, 40, of overseeing a scheme to conceal billion of dollars in company expenses. It was unsealed in federal court in New York's borough of Manhattan after an apparent breakdown in plea negotiations between Sullivan and prosecutors.

The indictment also names Buford Yates Jr., WorldCom's former director of general accounting, as a defendant.

WorldCom, which owns MCI, the nation's second-largest long-distance company, filed for Chapter 11 bankruptcy protection on July 21 after disclosing the accounting abuses. It was the biggest such filing in U.S. history.

The new court papers also name two other accounting executives, Betty Vinson and Troy Normand, as unindicted co-conspirators. Sullivan allegedly instructed the executives to hide WorldCom's increasing expenses by improperly shifting costs from operating to capital accounts. That can make profits look better than they were.

"Sullivan, Yates, and their co-conspirators were able to assure that WorldCom's reported earnings exceeded its actual earnings for the period from October 2000 through April 2002 by approximately $5 billion," the indictment said.

David Myers, 44, Worldcom's former controller, was not indicted Wednesday. He was charged along with Sullivan in the earlier criminal complaint, but has been negotiating with prosecutors.

Prosecutors filed papers indicating Myers, Vinson, and Normand were all cooperating with investigators.

The papers say the three defendants have waived their right to be indicted by a grand jury and will respond to a document known as an information, a procedure used for guilty pleas by cooperating suspects.

Calls to defense attorneys were not immediately returned. Sullivan's attorney, Irv Nathan, has said his client was a victim of "a rush to judgment."

The indictment came amid reports that prosecutors were seeking plea deals with Sullivan and others in hopes of building a case against former chief executive Bernard Ebbers.

Ebbers' lawyers have said he had no knowledge of the accounting decisions in question.

Sullivan, who is free on $10 million bail, could get up to 65 years in prison if convicted on charges of securities fraud, conspiracy and filing false statements with the SEC. But federal guidelines call for a sentence of 10 years or less.

Copyright © 2002 The Associated Press. All rights reserved. The information contained in the AP News report may not be published, broadcast, rewritten or redistributed without the prior written authority of The Associated Press.