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CNN Live At Daybreak
Coffey Talk: WorldCom Turf Battle
Aired August 28, 2003 - 06:34 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: The state of Oklahoma beats federal prosecutors to the punch. Can you say "turf war?"
The state's attorney general has filed the first criminal charges against WorldCom, its former CEO, Bernard Ebbers, and five other former top executives. This stems from that accounting scandal that plunged the long distance giant into bankruptcy. That bankruptcy cost investors about $180 billion. It was the biggest bankruptcy in U.S. history.
The former executives face 15 felony charges, which could total up to 150 years in prison. But now, Oklahoma has gotten into the game, so the turf battle is on between the states and the feds.
It sounds like a good topic for "Coffey Talk" this morning. Legal analyst Kendall Coffey is live on the phone with us from Miami.
Good morning -- Kendall.
KENDALL COFFEY, CNN LEGAL ANALYST: Hey, good morning, Carol.
COSTELLO: You know, something I've been trying to figure out. WorldCom is based in Mississippi. Why Oklahoma?
COFFEY: Well, because Oklahoma jumped out first. A lot of states have securities laws that allow, in effect, extraterritorial jurisdiction. And what that means is if somebody does something outside of a state but with the intention to cause injury within the state, some state criminal laws apply.
So, when you're looking at Wall Street, they may be concerned not only about Oklahoma when they wake up this morning, but what about 49 other states, many of which have similar securities laws?
COSTELLO: Yes, does Oklahoma know something the feds don't?
COFFEY: Well, that's the biggest question, because we know they brought the charges. But what is the actual evidence or the real strength of their case? Of course, part of their rationale, Carol, is they don't want to wait for the feds anymore. They have a lot of victims in their state. And a lot of state securities laws have relatively short statutes of limitation, meaning if they don't move quickly, the state of Oklahoma may lose its right to later prosecute if the feds don't.
COSTELLO: An important distinction in what Oklahoma has done, it's filed criminal charges against Bernie Ebbers and others. COFFEY: That's why this is a blockbuster. Other state attorney generals have pursued civil remedies. Certainly, the traditional role of the district attorney in Manhattan has been to look into some state criminal charges. We've seen that with respect to Dennis Kozlowski at Tyco. But this is in many ways an unprecedented development, and we'll soon see whether it's an aberration or an inspiration to others.
COSTELLO: Well, I'm sure that investors are frustrated by the fact this has been a year in the making. I mean, they were charged last year.
COFFEY: It's very frustrating. And yet, even though WorldCom may have been really bad and Bernie Ebbers was the captain of this pirate ship, it doesn't mean that the state or the federal authorities have specific evidenced based on believable evidence, believable witnesses that can tie him to an actual crime beyond the exclusion of a reasonable doubt. Easy to be frustrated, but not so easy to prove these things to the satisfaction of a jury sometimes.
COSTELLO: And just a reminder to our viewers who don't remember what Bernie Ebbers is accused of, he's accused of borrowing hundreds of millions of dollars from the company to pay off personal loans and more, right?
COFFEY: There are a lot of different accusations made in different contexts. But the state of Oklahoma has said that Ebbers was responsible for the false filings with the SEC. It hasn't explained how, but said basically, he did it; he must be responsible.
COSTELLO: It will be interesting to see what happens. Kendall Coffey live by phone from Miami. Thanks for waking up early with DAYBREAK.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.
Aired August 28, 2003 - 06:34 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: The state of Oklahoma beats federal prosecutors to the punch. Can you say "turf war?"
The state's attorney general has filed the first criminal charges against WorldCom, its former CEO, Bernard Ebbers, and five other former top executives. This stems from that accounting scandal that plunged the long distance giant into bankruptcy. That bankruptcy cost investors about $180 billion. It was the biggest bankruptcy in U.S. history.
The former executives face 15 felony charges, which could total up to 150 years in prison. But now, Oklahoma has gotten into the game, so the turf battle is on between the states and the feds.
It sounds like a good topic for "Coffey Talk" this morning. Legal analyst Kendall Coffey is live on the phone with us from Miami.
Good morning -- Kendall.
KENDALL COFFEY, CNN LEGAL ANALYST: Hey, good morning, Carol.
COSTELLO: You know, something I've been trying to figure out. WorldCom is based in Mississippi. Why Oklahoma?
COFFEY: Well, because Oklahoma jumped out first. A lot of states have securities laws that allow, in effect, extraterritorial jurisdiction. And what that means is if somebody does something outside of a state but with the intention to cause injury within the state, some state criminal laws apply.
So, when you're looking at Wall Street, they may be concerned not only about Oklahoma when they wake up this morning, but what about 49 other states, many of which have similar securities laws?
COSTELLO: Yes, does Oklahoma know something the feds don't?
COFFEY: Well, that's the biggest question, because we know they brought the charges. But what is the actual evidence or the real strength of their case? Of course, part of their rationale, Carol, is they don't want to wait for the feds anymore. They have a lot of victims in their state. And a lot of state securities laws have relatively short statutes of limitation, meaning if they don't move quickly, the state of Oklahoma may lose its right to later prosecute if the feds don't.
COSTELLO: An important distinction in what Oklahoma has done, it's filed criminal charges against Bernie Ebbers and others. COFFEY: That's why this is a blockbuster. Other state attorney generals have pursued civil remedies. Certainly, the traditional role of the district attorney in Manhattan has been to look into some state criminal charges. We've seen that with respect to Dennis Kozlowski at Tyco. But this is in many ways an unprecedented development, and we'll soon see whether it's an aberration or an inspiration to others.
COSTELLO: Well, I'm sure that investors are frustrated by the fact this has been a year in the making. I mean, they were charged last year.
COFFEY: It's very frustrating. And yet, even though WorldCom may have been really bad and Bernie Ebbers was the captain of this pirate ship, it doesn't mean that the state or the federal authorities have specific evidenced based on believable evidence, believable witnesses that can tie him to an actual crime beyond the exclusion of a reasonable doubt. Easy to be frustrated, but not so easy to prove these things to the satisfaction of a jury sometimes.
COSTELLO: And just a reminder to our viewers who don't remember what Bernie Ebbers is accused of, he's accused of borrowing hundreds of millions of dollars from the company to pay off personal loans and more, right?
COFFEY: There are a lot of different accusations made in different contexts. But the state of Oklahoma has said that Ebbers was responsible for the false filings with the SEC. It hasn't explained how, but said basically, he did it; he must be responsible.
COSTELLO: It will be interesting to see what happens. Kendall Coffey live by phone from Miami. Thanks for waking up early with DAYBREAK.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.
