The Oklahoma attorney general yesterday charged MCI, its former chief executive Bernie Ebbers and five others with violating state securities laws by knowingly giving false information to investors.
These are the first criminal charges filed against Ebbers and the telephone company, that became the largest bankruptcy in history last year amid an accounting scandal that has ballooned to $11bn (£7bn).
Other former executives, including the former chief financial officer Scott Sullivan, were previously charged by federal prosecutors. Sullivan also was named in the Oklahoma complaint.
The 15-count complaint in Oklahoma contends that the company, the legal name of which is WorldCom, and the former executives used deceptive measures to defraud investors, lied about the company's financial health and ran a business that operated as a fraud.
Oklahoma state pension funds lost $64m in MCI's implosion, and state residents may have lost even more in their individual investments, the Attorney General Drew Edmondson said. MCI has 2,000 employees in Oklahoma, and 55,000 workers worldwide.
"We allege the company and these six employees executed a scheme to artificially inflate bond and stock prices by intentionally filing false information with the Securities and Exchange Commission," Mr Edmondson said.
Reid Weingarten, a lawyer for Mr Ebbers, said the Oklahoma complaint, which came on Mr Ebbers' 62nd birthday, contained no specific evidence of wrongdoing by the former chief executive. He said he expects that Mr Ebbers will be fully exonerated. A lawyer for Mr Sullivan was unavailable for comment. Mr Sullivan has pleaded not guilty to federal criminal charges including securities fraud and conspiracy.
MCI, the number two long-distance carrier, said it would cooperate fully with the Oklahoma attorney general, and said it does not believe the Oklahoma charges will affect its planned emergence from bankruptcy later this year.Reuse content