Myers Enters Guilty Plea in WorldCom Fraud Case
The former controller of WorldCom Inc. pleaded guilty to securities fraud charges Thursday, saying he was instructed by “senior management” to falsify records.
It was the first admission of guilt in the multibillion-dollar scandal.
David Myers, 44, entered the plea in U.S. District Court in Manhattan after telling Judge Richard Casey that he wanted to waive his right to be indicted on the charges.
“I was instructed on a quarterly basis by senior management to ensure that entries were made to falsify WorldCom’s books to reduce WorldCom’s reported actual costs and therefore to increase WorldCom’s reported earnings,” Myers told the judge.
“I combined with others ... to assist in the commission of fraud,” the former executive said.
Casey asked the defendant whether he had committed the three crimes spelled out in court papers: conspiracy, securities fraud and making false filings to the Securities and Exchange Commission.
“Yes, sir, I did,” Myers answered.
Outside court, Myers’ attorney, N. Richard Janis, called his client “a reluctant participant” who had “expressed his discomfort and displeasure with the actions being undertaken by WorldCom.”
WorldCom, which owns MCI Group, the nation’s No. 2 long-distance telephone company, filed for bankruptcy protection July 21.
In June, Myers told WorldCom accountants that the company “could not continue with the cost structure at the current levels and that if the cost structure did not change, the company ‘might as well shut the doors,’ ” prosecutors said.
Myers and Scott D. Sullivan, WorldCom’s former chief financial officer, were arrested in August.
Prosecutors say they directed employees to falsify balance sheets to hide more than $3.8 billion in expenses, enabling WorldCom to report a profit when it actually was losing money.
Myers is cooperating with authorities in the case against his former bosses and also has agreed to plead guilty in Mississippi as early as next week to a single charge stemming from the same corporate swindle, Janis said.
His client also was negotiating with the SEC to resolve civil charges filed Thursday, Janis said.
The SEC alleged that Myers “participated in a massive fraud that inflated the company’s earnings at the direction and with the knowledge of WorldCom’s senior management.”
The agency is seeking a permanent injunction against Myers as well as civil money penalties, repayment of allegedly ill-gotten gains and an order barring him from serving as an officer or director of a publicly traded company.
The cooperation of Myers and others increases the pressure on Sullivan to strike a deal with prosecutors and tell them what, if anything, former WorldCom Chief Executive Bernard J. Ebbers knew about the accounting practices.
