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WorldComs Background
Owns a third of the US data cables
U.S. 2nd largest long-distance operator
WorldComs Background
Awoke the sleeping giant
WorldCom led the telecom industry into profitability in the 90s. Bernie Ebbers purchased over 60 firms in 2nd half of the 90s. Handles 50% of US Internet traffic Handles 50% of e-mails worldwide
"I am confident that WorldCom will continue to lead the industry, setting the standards others will follow.
NET INCOME
=HAPPY INVESTORS
its assets Essentially, they were buying paper clips and recording them as buildings
5.
The Internal Audit started digging Found $2 billion company announced for capital expenditures (Internal Auditors found it was never authorized for capital expenditures.) Found the undocumented $500 million in computer expenses that were recorded as assets. Searching WorldComs computers, Mr. Morse found $2 billion in questionable entries
Post-Fraud Happenings
17,000 jobs cut to save $1 billion.
Not directly related to the fraud
Post-Fraud Happenings
Some werent surprised by the fraud
announcement:
"When you look at the history of WorldCom, and their acquisition trail, you have a classic wheeler-dealer. This is the age where wheelerdealers get called for who they are," said Frank Dzubeck, president of the Communications Network Architects consultancy.
Post-Fraud Happenings
New WorldCom CEO, John Sidgmore
wants to move forward:
We want the bad guys exposed. We want the bad guys punished. And we want to move on with our lives at WorldCom." Ebbers
Myers
Post-Fraud Happenings
WorldCom soon to be
renamed MCI
Post-Fraud Happenings
Post-Fraud Happenings
Stock price topped out @ $64 in 1999
The company filed bankruptcy on July 21, 2002, and its stock price bottomed after it was delisted from the Nasdaq
The Officers:
CEO: Fired CFO: Committed the fraud
The Officers:
CEO: Fired CFO: Committed the fraud
Fraudulent Amount:
At Least $9 billion
Fraudulent Amount:
$600 million