Ebbers pleads not guilty of fraud

NEW YORK: Former WorldCom Inc. Chief Executive Bernard Ebbers pleaded not guilty to charges that he orchestrated the largest accounting fraud in U.S. history.

Appearing before the same judge who 24 hours earlier accepted a guilty plea from the government's star witness against him, Ebbers entered pleas of innocence to charges of fraud, conspiracy and making false statements in connection with the $11 billion bookkeeping scandal that fueled WorldCom's collapse.

U.S. District Judge Barbara Jones, set a trial date of Nov. 9 and said Ebbers could remain free on $10 million bail, secured in part by his $2.5 million house in Mississippi. Ebbers was forced to surrender his passport, and his travel within the United States was restricted to New York City, Washington, D.C., Mississippi and Louisiana.

Ebbers did not comment outside the courthouse following the arraignment, but his attorney, Reid Weingarten, said his client had committed no crime.

"We don't believe Bernie Ebbers ever sought to mislead investors," Weingarten told reporters. "He never wanted to hurt the company he built."

Asked about Scott Sullivan, WorldCom's former chief financial officer and Ebbers' one-time top lieutenant, who has agreed to assist in the government's prosecution of Ebbers, Weingarten said, "we feel very bad for Scott Sullivan. He was in a very fragile family situation under enormous pressure. Plenty of people will do a lot of things to protect their families."

Weingarten said he did not know what Sullivan had told the government.

SYMBOLIC IMPORTANCE

Ebbers is the biggest figure yet to be charged in the wave of corporate scandals that has roiled the U.S. business world and cost investors billions of dollars.

The charges against him were unveiled in New York on Tuesday by U.S. Attorney General John Ashcroft, underlining the case's importance as a symbol of the self-enrichment that pervaded corporate boardrooms in the boom years of the late 1990s.

The attorney general's unusual move of personally announcing the charges came as the Bush administration faces election-year criticisms from Democrats of pandering to big business.

A stoic-looking Ebbers, wearing a blue blazer and pale blue tie, with his trademark shock of white hair cut short, turned himself in early on Wednesday at the New York offices of the FBI. About two hours later he was taken in handcuffs by federal marshals to the U.S. courthouse half a block away for his arraignment.

Ebbers, a former high school basketball coach who became a telecommunications tycoon, built WorldCom from a Mississippi upstart into the nation's No. 2 long-distance phone company, amassing a huge personal fortune along the way before the company collapsed in 2002. At one point he owned a cattle ranch in Canada billed as the world's largest.

His indictment follows government charges brought last month against Jeffrey Skilling, former chief executive of energy company Enron Corp., which also fell into bankruptcy in a massive bookkeeping scandal. The top figure at Enron, former Chairman Kenneth Lay, has not been charged.

The government said Ebbers, who resigned from WorldCom in 2002 as its problems began to emerge, demanded that the company's financial results match Wall Street expectations. He could be convicted solely on the testimony of Sullivan, legal experts say.

© Reuters