An independent review of accounting fraud at WorldCom shows former CEO Bernard Ebbers participated in schemes to artificially inflate company revenues, according to a newspaper report.
The review details how WorldCom sought to conceal more than $10 billion in losses through accounting fraud starting in 1999, The Wall Street Journal reported in Friday editions, citing sources familiar with the matter.
Results of the probe, commissioned by WorldCom and conducted by William McLucas of the law firm of Wilmer Cutler & Pickering, were expected to be released Monday.
WorldCom filed the largest bankruptcy case in U.S. history last July, and investors have lost more than $180 billion from the plunge of its stock.
Former chief financial officer Scott Sullivan and former controller David Myers were charged in the case.
Myers pleaded guilty in October to securities fraud and is cooperating with prosecutors. Sullivan has denied any wrongdoing. He is free on $10 million bail. Three other WorldCom executives have pleaded guilty to federal charges.
No decision has been made yet on whether to bring a civil or criminal case against Ebbers, the Journal said. His attorney, Reid Weingarten, said prosecutors are examining revenue issues because they have been unable to connect Ebbers to other issues.
"It sounds to me that they are looking at every business decision that was ever made at WorldCom to find something wrong," Weingarten told the newspaper. "I am hopeful and confident that the prosecutors will not proceed with some razor-thin case based on an allegation that does not directly implicate Mr. Ebbers."
The McLucas report addresses $7 billion in fraud and other accounting irregularities, not the $3.8 billion in expenses WorldCom hid in its financial reports.
The report says Ebbers carefully monitored monthly revenue reports and knew that revenue for the third quarter of 2001 was short of what he had told Wall Street to expect.
A separate report, led by Richard Thornburgh, a former U.S. Attorney General who was appointed as bankruptcy examiner, also is scheduled to be released Monday.