How to Aggressively Create Money!!! Gene Eller, Brian Finlay, Christine Tilling The WorldCom Way!!!

What do you do? Stock prices are dropping. – There is a lot of competition in the Telcom industry today. You have $3.8 billion in daily operating expenses. – ($3,853,000,000 to be exact as possible) You have a massive need to CUT costs.

Creative (illegal) Accounting 101 Take that $3.8 billion you have been spending on local carriers, to use their lines and equipment, and move it from the expense of doing business to capital expenditures!!! – WIN WIN!!! By doing this we create an appearance on the balance sheet that we are building infrastructure and creating assets. – Treated the same as buying network hardware, installing fiber, or real-estate!

Bernard Ebbers WorldCom The "Telecom Cowboy “

Background Born in Edmonton, Alberta, August 27, 1941 Father was a Traveling Salesman Worked as a milkman and a bouncer while in college

Education Bachelor in Physical Education, minor in Secondary Education Honorary Doctor of Law from Mississippi College Honorary doctorate from Tougaloo College

Timeline 1983 Ebbers is a founding Member of Long Distance Discount Service (LDDS) LLDS purchases six communications companies including IDB WorldCom LDDS changes its name to WorldCom Inc and makes Bernard Ebbers CEO.

Timeline Continued 1997 WorldCom and MCI merge – Merger worth $37 billion, by June of 1999 stock is worth $64.50 a share Early 1999 Bernie Ebbers is worth and estimated 1.4 billion in personal holdings 2000-Q (15 month period) WorldCom uses “creative accounting” to make the company look healthier than it was.

WorldCom’s Death Bernie Ebbers resigns as CEO on April 29, In June of 2002 WorldCom announces it will lay off 17,000 Employees and the stock drops below $1 a share. Also that month WorldCom admits to the $3.8 billion Inflation of the companies records.

WorldCom's Death In June and July of 2002 the SEC files fraud charges against WorldCom and WorldCom then files for bankruptcy to a tune of $30 billion.

Indictments and Sentences Among others, Bernie Ebbers was indicted on one count of securities fraud, one count of conspiracy, and seven counts of regulatory filings. His defense was that he had no idea about the accounting discrepancies. – The prosecutor, Assistant US Attorney William F Johnson coined this as the “Aw Shucks” defense. – Started his sentence on September 26, 2006

Ethical Dilemma Q&A Taking out approximately $400 million in loans from his own company. Do you believe that Ebbers really knew nothing about the “creative accounting”? Whistle Blower (Cynthia Cooper) Working with Arthur Anderson ever? (remember they were with Enron too) How does cooperate America restore the peoples faith?

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