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CNN Live Event/Special

Attorney General Speaks About Former WorldCom Higher-ups in Court

Aired August 01, 2002 - 14:12   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.
KYRA PHILLIPS, CNN ANCHOR: We want to take you now live to Washington, D.C., the Department of Justice, Attorney General John Ashcroft now speaking about the two former higher-ups at WorldCom, led to court in handcuffs after surrendering to the FBI.

Let's listen in.

(JOINED IN PROGRESS)

JOHN ASHCROFT, ATTORNEY GENERAL: ... enforcement at the Securities and Exchange Commission is also here today. Steve, thank you. In investigating this case, we received outstanding cooperation from the Securities Exchange Commission, which made a substantial contribution to our effort.

I also thank Director Robert Mueller and all of the agents of the Federal Bureau of Investigation who have dedicated themselves to justice in this case.

And I'm grateful for the work of Assistant Attorney General Michael Chertoff and the men and women of the criminal division here at the Justice Department.

In particular, I want to commend the work of the Corporate Fraud Task Force, which is leading our campaign to investigate, prosecute, and punish corporate corruption. The vast majority, the vast, overwhelming majority of corporate executives are hardworking, honest people of integrity.

The Department of Justice today acts both out of conviction and necessity against the few who have betrayed the investing public. The survival of the free market depends on a marketplace of integrity, a marketplace that operates on information that must be information of integrity. The vast majority of American companies are businesses of integrity. The reliable, truthful information they provide is the invisible hand that directs our economy.

But when financial transactions are fraudulent are fraudulent and balance sheets are falsified, the invisible hand that guides our market is replaced by a greased palm. Information is corrupted. Trust is abused. And the state of the market dissolves into a state of nature where there ruthless and the corrupt profit at the expense of the truthful and law-abiding. Thanks to the leadership of the president and the quick action of the Congress, law enforcement has new tools with which to restore America's marketplace of integrity and to safeguard it. And we will use these tools. We will enforce that law. We will all we do all we can within the law and under the Constitution to protect and secure the savings of everyday Americans.

Now, it's my pleasure to ask the individual who heads up the Corporate Fraud Task Force, permission by the president of the United States, deputy Attorney General Larry Thompson to provide more details about this case.

It's with a sense of honor and gratitude that I introduce this public servant whose service to America is indeed commendable.

Larry?

LARRY THOMPSON, DEPUTY ATTORNEY GENERAL: Thank you, General, for those inspiring words.

Ladies and gentlemen, today's charges are the product of an intensive, thorough, and I might add, extremely swift investigation by the U.S. Attorney's Office for the Southern District of New York, the Southern District of Mississippi and the FBI. And I would also like to commend the work of our Corporate Task Force members of the SEC who have been investigating these matters alongside the Department of Justice.

As the attorney general said, the defendants in today's complaint are WorldCom former CFO Scott Sullivan and Senior Vice President and Controller David Myers. The complaint accuses these defendants of egregious violations of the securities laws that concealed billions of dollars of expenses at WorldCom.

Now, WorldCom is one of the largest carriers of telephone and Internet traffic in this country. Together with others who are not named in today's complaint, defendant CFO Sullivan and defendant Controller Myers systematically flouted the rules of accounting and lied outright to investors to perpetuate the false image that WorldCom was succeeding.

As the complaint alleges, the defendants orchestrated a scheme to defraud the investigating public by convincing them that WorldCom was meeting stock analysts' expectations, when in fact the complaint alleges that WorldCom's revenues had begun falling off. And beginning in early of 2001, the defendants began to concoct phony accounting entries to close the gap between that expectation and the disappointing reality.

The complaint alleges that WorldCom's strategy...

PHILLIPS: You are listening to Deputy Attorney General Larry Thompson there at the Department of Justice talking about two former higher-ups at WorldCom that have now been lead to court in handcuffs after surrendering to the FBI -- Scott Sullivan, former CFO of WorldCom, also David Myers, former senior VP and controller. They now face fraud and conspiracy charges for allegedly cooking WorldCom's books to the tune of billions of dollars.

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