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Breaking News

Criminal Charges May Be Brought Against WorldCom Execs

Aired August 01, 2002 - 10:17   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.
DARYN KAGAN, CNN ANCHOR: Other breaking news going on today, and that is with WorldCom. This is a story that broke only six weeks ago as getting word that executives there had allegedly cooked the books. Criminal charges could be in today.

And we have Allan Dodds Frank with us to bring us the latest on that, on perhaps more executives to be meeting some handcuffs, possibly.

Allan, good morning.

ALLAN DODDS FRANK, CNN CORRESPONDENT: Good morning, Daryn.

In fact, just before 10:00 a.m., Scott Sullivan, the former chief financial officer of WorldCom and David Myers, the former controller, were led out of the FBI Building in Manhattan in handcuffs, put into two black vans, and then driven about three blocks to the federal courthouse, where I am now, and where they shortly will face a preliminary hearing on seven-count criminal complaint alleging conspiracy to commit securities fraud.

This is all in connection with overstating nearly $4 billion in revenue on WorldCom's books, and Sullivan was in charge of those books. Right now, they are the two executives who have been charged -- Daryn.

KAGAN: Allan, what about Bernie Evers? He was the figurehead of the company, stepping down even before these two men did. Will he face criminal charges?

FRANKS: Daryn, we don't know. At the moment, his lawyer, Reid Weingarten (ph), has told us that he does not believe Mr. Evers will be charged once the authorities get to the bottom of this. However, it is classic in cases like this to charge people who are lower down the corporate ladder to see what they can provide in terms of information about the men at the top. So I would say Bernard Evers is an open question.

KAGAN: This is not done yet.

The last time we saw executives led off in handcuffs, just last week, the Rigas family, John Rigas and his two sons. How do the charges that were are looking at for WorldCom compare with those against the Rigas family? FRANKS: Well, conspiracy to commit securities fraud is serious crime with 15 years of more in prison and fines, obviously. Now, it's quite serious. The lawyers for these defendants had hoped to surrender their clients. They did surrender to the FBI at about 7:00 a.m. and had hoped to avoid a (UNINTELLIGIBLE), but obviously, that was now in the cards.

KAGAN: Yes, I think that's just a little bit too delicious of an opportunity for officials right now, knowing how well the public responds to those pictures right now.

But one more question about these charges. With the Rigas family and Adelphia, there was also an additional civil lawsuit by the SEC. Any indication that that's going to come in this case as well?

FRANKS: Well, actually, it has come, Daryn. Harvey Pitt himself, the SEC chairman, announced civil charges, but did not name these two individuals -- but it was against WorldCom -- for this very scheme, at the end of June. And in that case, there were civil charges only, but they alleged accounting fraud. It will be the same set of facts here in the criminal case.

KAGAN: All right, Allan Dodds Frank in Manhattan. Thank you so much.

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