Bernie Ebbers graduated from Mississippi College in 1967 with a bachelor’s degree in physical education. He then went on to manage a chain of motels in Mississippi. In 1983, he and several others invested in Long Distance Discount Services, Inc. He was later named Chief Executive of this company and grew it through acquisitions over the years. It ultimately became WorldCom – a telecommunications firm. Through this growth, the company became well known as an industry leader, until its demise in 2002.
In 2002, WorldCom admitted to several billion dollars in accounting misstatements. The final amount reached $11 billion. This was the largest instance of accounting fraud to date. In 2006, he was sentenced to 25 years in a low security prison for one count each of conspiracy, fraud, and filing false statements. Bernie Ebbers will be in jail until he is 87 years old.
There were several others indicted in the WorldCom scandal, including the CFO and the Controller. However, each of these people were sentenced to five or fewer years in prison. Several were granted leniency because they cooperated with the legal system and helped convict Ebbers. While I believe that all of these people deserve some punishment, I think this distribution of sentencing is grossly unfair. As CEO, Ebbers is seen as the “ringleader”, however, the CFO and others who worked directly with the accounting deserve a great deal of blame as well. Certainly Ebbers was not the only person who knew about this and had a hand in executing the fraud.