Ex-WorldCom CEO Ebbers' conviction affirmed

By Jonathan Stempel

NEW YORK - A federal appeals court in New York on Friday affirmed the

conviction of former WorldCom

Inc. Chief Executive Bernard Ebbers for orchestrating a $11 billion

accounting fraud that led to the largest U.S. bankruptcy.

The ruling by a three-judge panel of the U.S. Second Circuit Court of Appeals

may clear the way for Ebbers to begin serving his 25-year prison sentence.

Ebbers, 64, had been convicted by a jury in March 2005 of nine counts of

conspiracy, securities fraud and other crimes. He had remained free on bail

while pursuing his appeal. His sentence means he could spend the rest of his

life in prison.

"I never thought his appeal was particularly strong," said Jonathan

Turley, a law professor and white-collar crime expert at George Washington

University in Washington, D.C. "There was a mountain of evidence against

Ebbers, a pattern of corruption, so it would have been surprising if his appeal

succeeded."

Attempts to reach Reid Weingarten, a partner with Steptoe & Johnson LLP

who represents Ebbers, by telephone and e-mail were not immediately successful.

A spokeswoman for U.S. Attorney Michael Garcia in New York declined immediate

comment.

The appeals panel rejected Ebbers' contention the trial was

"fundamentally flawed."

"The methods (Ebbers) used were specifically intended to create a false

picture of profitability even for professional analysts that, in Ebbers' case,

was motivated by his personal financial circumstances," Judge Ralph Winter

wrote.

"Given Congress' policy decisions on sentences for fraud, the sentence

is harsh but not unreasonable," the judge added.

Judges Jose Cabranes and Barrington Parker joined Winter's opinion.

EBBERS DEEMED PRIMARILY AT FAULT

Ebbers had argued that trial judge Barbara Jones should have forced the

government to grant immunity to several prospective defense witnesses and

wrongly instructed the jury that it could convict Ebbers on the basis that he

engaged in "conscious avoidance" of the fraud at WorldCom.

He also maintained that his sentence was unreasonably long compared with

those of other defendants.

Former WorldCom chief financial officer Scott Sullivan, who pleaded guilty to

fraud and was the star witness at Ebbers' trial, was sentenced to five years in

prison.

The appeals panel concluded that Ebbers failed to show that the absence of

some testimony "affected the total mix of evidence before the jury."

It also concluded that based on Ebbers' own testimony, "a rational juror

could find he was consciously trying to avoid knowledge that the financial

reports were inaccurate."

As to the sentence, the panel said that "Ebbers, as CEO, had primary

responsibility for the fraud." It also noted that, under federal sentencing

guidelines, Ebbers could have faced even more time in prison.

Professor Turley said Ebbers differed from Kenneth Lay, the former chief

executive of Enron Corp., who was convicted in May of fraud and conspiracy in

that company's downfall. Lay died earlier this month.

"Lay had more of a reason to claim ignorance, because he had very

powerful subordinates who were running the operation," Turley said. "Ebbers

was not of that mode. These allegations fit Ebbers' personality as a

wheeling-and-dealing salesman.

A one-time milkman who became known as an exacting, cost- obsessed boss,

Ebbers transformed WorldCom into a telecommunications powerhouse through a

string of takeovers.

WorldCom filed for bankruptcy in July 2002. It emerged as MCI Inc., which was

later acquired by Verizon Communications Inc. Ebbers agreed last year to forfeit

almost all of his personal wealth in a settlement with WorldCom investors.