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WorldCom’s Ebbers to be released from prison after 13 years

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Via Financial Times

Bernard Ebbers, the telecommunications executive who came to symbolise an era of corporate corruption, was granted early release from prison on Wednesday — 13 years into a 25-year sentence — after a judge found that his health was declining, his lawyer said.

Ebbers, 78, the former chief executive of WorldCom, was sentenced in 2005 to 25 years in prison for orchestrating an $11bn accounting fraud that was then the largest in US history.

The lengthy sentence sent shivers through the defence bar at the time, with some lawyers saying it was more appropriate for a drug lord or violent criminal. But Barbara Jones, the federal judge who imposed it, reasoned that “anything less would not reflect the seriousness of the crime”.

On Wednesday, another judge said she would grant a petition for early release after finding that Ebbers was suffering from dementia and dramatic weight loss, according to Graham Carner, an attorney for Ebbers, and media reports. Prosecutors had argued in a recent filing that he might be faking these ailments.

It was not immediately clear how soon Ebbers would be released from the Fort Worth prison where he has been confined.

Mr Carner said: “The Ebbers family is elated that the court ordered the release of Ebbers. He is in very poor health, and the family is grateful that they will be able to care for him for however many days he has yet to live.”

Ebbers, the son of a Canadian travelling salesman, began his business career operating motels in Mississippi, where he attended university on a basketball scholarship. With friends, he entered the nascent long-distance telephone business. Within a few years, they had taken over dozens of competitors and bundled them into WorldCom.

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After rapid growth in the 1990s, the company stumbled after the collapse of the first internet bubble when it began to miss Wall Street earnings forecasts. After Ebbers implored his accountants to “hit the numbers”, they began to book expenses as capital investments, thereby boosting its reported income. The scheme eventually unravelled, and WorldCom in 2002 became what was then the largest US bankruptcy.

Ebbers’ six-week trial was a pivotal moment in an era of white-collar criminal trials in which chief executives from Enron, Tyco, Adelphia and Martha Stewart Living, among others, were hauled into court to face public wrath after a stock market crash. Rare among other white-collar defendants, Ebbers testified in his defence.

That era has been somewhat overshadowed by the much larger losses that accompanied the 2008 financial crisis. WorldCom’s bankruptcy, for example, has since been overshadowed by that of Lehman Brothers.

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