WorldCom boss jailed as America cracks down on white-collar crime

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The Independent US

Bernie Ebbers, the swashbuckling WorldCom boss whose frauds triggered America's biggest bankruptcy, is preparing to take the final step on his journey from corporate hero to disgraced federal prisoner.

He is scheduled to report to prison today to begin a 25-year sentence for the $11bn-worth (£6bn) of accounting trickery that propped up - if only for a time - the giant phone company he built from scratch.

His imprisonment comes on the same day as one of the masterminds of the fraud at Enron, Andrew Fastow, will be told his jail term for the crimes that brought down the energy giant. The twin scandals of Enron and WorldCom prompted a crisis of public confidence in corporate America that has still to be repaired.

But the sentences handed down in the cases have sparked a renewed debate over the way the US should punish white-collar crime, with some defence lawyers now arguing that jail time is being decided with reference only to the "baying mob".

At 65 and suffering from a heart complaint, Ebbers is likely to spend the rest of his life in prison. He will report today to a correctional facility near WorldCom's one-time home in Mississippi to be fingerprinted, photographed and given standard issue prison garb, before being assigned a bed in what is likely to be a dorm room in a low-security wing.

In due course, he will be assigned a job within the prison, where pay of $5 a month is a far cry from the multimillion-dollar salary he enjoyed in his pomp.

Canadian-born Ebbers built the company through an orgy of deal-making, bolting on more than 60 acquisitions to what was originally just a long-distance phone calls business set up as an offshoot to his Mississippi motels chain.

In the biggest deal of his career, he beat British Telecom to acquire MCI, turning WorldCom into the third-largest phone carrier in the US. In the process he had become a Wall Street star, feted for his buccaneering style, for wearing cowboy boots to the office and for beginning board meetings with a prayer.

He has been free for 18 months since conviction as he exhausted appeals against the conviction and the length of the sentence. Reid Weingarten, Ebbers' lead attorney, said: "The purpose of the sentence was to please and appease the howling mob demanding Ebbers' head, not a worthy goal of the criminal justice system."

The Enron and WorldCom scandals changed the perception of white-collar crime in the US, revealing as they did the financial ruin that can be inflicted on small investors and the employees of the companies involved. Some 20,000 WorldCom employees lost jobs when it went under in 2002.

Andrew Fastow, Enron's former chief financial officer, pleaded guilty to two fraud counts and agreed to testify against his former bosses in return for a maximum 10-year jail term. The victims of Enron's collapse will have a right to speak to the Houston court today, before he is formally sentenced.

Fastow's plea bargain caps his possible sentence at 10 years, but Jeffrey Skilling, Enron's chief executive, who was convicted in part on the basis of his testimony, faces spending more than two decades in prison when he is sentenced next month.

Barry Boss, a Washington defence attorney who has advised the US government on sentencing white-collar crime, says there has been "jail-term inflation" as other non-violent crimes, particularly drug possession and dealing, have attracted tougher sentences too. "No person in Bernie Ebbers' position wants to go to prison for 10 years. There is no incremental deterrence in 25 years. Being 'tough on crime' is a campaign slogan," he said.

"Sentences only get ratcheted up because that's the easy answer to the problem, although it is the solution least likely to make any significant difference. We are a vindictive country."