• United States



by Paul Kerstein

Judge Approves $6.1 Billion in WorldCom Settlements

Sep 22, 20052 mins
CSO and CISOData and Information Security

A U.S. district court judge on Wednesday approved a US$6.1 billionsettlement to investors who lost money in an accounting fraud at theformer WorldCom Inc.

Judge Denise Cote of the U.S. District Court for the Southern Districtof New York approved settlements that parties agreed to earlier thisyear, including $2 billion to J.P. Morgan Securities Inc. and $325million Deutsche Bank Securities Inc., according to a spokesman for NewYork State Comptroller Alan Hevesi, trustee of the New York StateCommon Retirement Fund and the lead plaintiff in the civil case.

In November 2004, Cote approved a $2.58 billion settlement with Citigroup Inc.

The settlement includes payments from former WorldCom directors, aswell as former Chief Executive Officer Bernard Ebbers, who wasconvicted of fraud in March and sentenced to 25 years in prison. Underthe settlement, Ebbers must give up a house in Clinton, Mississippi,and interests in several businesses, including a lumber company, amarina, a golf course and several thousand acres of timberland.Hevesi’s office in June estimated Ebbers’ assets included in thesettlement were worth $25 million to $40 million.

WorldCom, now MCI Inc., filed for bankruptcy in July 2002, about amonth after an internal audit in June 2002 uncovered $3.8 billion inaccounting errors. The accounting misstatements eventually reached atotal of $11 billion. In March 2004, a month before the newly renamedMCI emerged from bankruptcy, the company issued a report reducingpretax income for 2000 and 2001 by $74.4 billion.

By Grant Gross – IDG News Service (Washington Bureau)