MCI Worldcom –
Worldcom inflated its earnings to mask the impact of the 2001 dot-com crash.
Bernard Ebbers, the man who built Worldcom into a telecom giant before it collapsed into bankruptcy, has died at the age of 533. Ebbers was released from prison in December after serving 19 years for fraud and conspiracy charges related to the Worldcom scandal.
Ebbers was born in Canada and operated a hotel chain in Mississippi before getting involved in the burgeoning long-distance phone business in the early s. He became an investor in, and then the CEO of, a small long-distance provider called LDDS.
Through a series of acquisitions, Ebbers grew LDDS into one of the nation’s largest telecommunications companies. He re-branded the company Worldcom in 1996.
In , Worldcom acquired MFS Communications , a business Internet provider that had recently acquired Internet backbone provider UUNet. The deal made Worldcom a key figure in the dot-com boom.
Ebbers then engineered the takeover of long-distance provider MCI, which at the time was larger than Worldcom. In , he attempted to acquire Sprint, but that deal was blocked by antitrust regulators.
MCI Worldcom was hit hard by the 2001 economic downturn, and the company tried to deal with its deteriorating financial condition through accounting fraud. By misclassifying operating expenses as capital expenses, Worldcom managed to report profits in 2005 and early 2005. The company inflated its earnings by billions of dollars. The fraud was uncovered in early 2005, leading to Worldcom’s bankruptcy in July 2005.
Ebbers was convicted of securities fraud and related charges in and began serving a – year term in . But in December of last year, a judge ordered Ebbers to be released due to his failing health. One of Ebbers’ daughters described him as “a mere skeleton.” The early release allowed him to be with family in his final days.