'Bernard John "Bernie" Ebbers' (born
August 27,
1941 in
Edmonton,
Alberta), is a
Canadian-born
businessman. He co-founded the
telecommunications
company WorldCom and is a former
chief executive officer of that company.
In 2005, he was convicted of
fraud and
conspiracy in the largest (to date) accounting scandal in
United States history, as a result of WorldCom's false financial reporting, and subsequent
$180-billion loss to investors. He is currently serving a 25-year prison term at a
federal prison in
Louisiana.
Early life
Born to the family of a traveling salesman, Bernard Ebbers was the second of five children. He was born in
Edmonton and his family also lived in
California and
New Mexico, while he was growing up, before returning to Edmonton.
After high school, Ebbers briefly attended the
University of Alberta and
Calvin College before enrolling at
Mississippi College. During the time between schools he worked as a milkman and bouncer. While attending Mississippi College, Ebbers earned a
basketball scholarship. An injury before his senior season prevented him from playing his final year. Instead of playing, he was assigned to coach the junior varsity team.
In 1968 Ebbers married Linda Pigott, and the two of them raised three daughters. Ebbers filed for
divorce in July 1997 and married his second wife, Kristie Webb, in the spring of 1999.
Education and degrees
★ Bachelor in physical education, minor in secondary education.
Mississippi College (1967)
★ Honorary Doctor of Laws.
Mississippi College (1992)
★ Honorary doctorate.
Tougaloo College (1998)
Business achievements
Ebbers began his business career operating a chain of
motels in Mississippi. He joined with several other people in 1983 as investors in the newly formed Long Distance Discount Services, Inc (LDDS). Two years later he was named chief executive of the corporation. The company acquired over 60 other independent telecommunications firms, changing its name to WorldCom in 1995. In 1996, WorldCom acquired MFS Communications, Inc., which itself had recently acquired
UUNet and its
Internet backbone. At the time, this $12 billion transaction was one of the largest corporate acquisitions in U.S. history, although it would soon be eclipsed by much larger deals, including WorldCom's proposed $40 billion acquisition of MCI.
Ebbers gained public notice on
October 1,
1997 when he announced that WorldCom was making an unsolicited bid for
MCI Communications. The successful acquisition of MCI was completed in September 1998. The fame from this accomplishment caused Ebbers to receive a number of accolades from the press, including:
★ Mississippi Business Hall of Fame (May 1995)
[1]
★ Member of Wired 25 (November 1998)
[2]
★ Being named to The 25 most powerful people in networking by Network World (January 4, 1999)
[3]
★ Listing in the TIME Digital 50 (September 27, 1999)
[4]
In 1999, Ebbers announced that
MCI WorldCom would acquire its rival
Sprint Communications for over $115 billion. This transaction, however, was abandoned after U.S. and
European antitrust regulators raised objections. This combined with a general downturn in the telecom market resulted in a downturn in WorldCom
stock price.
Much of Ebbers' personal holdings were purchased with loans that had been backed by his WorldCom stock holdings. As the stock price declined he received a number of
margin calls to provide additional
collateral for these loans. In an effort to prevent Ebbers from having to sell his shares, the WorldCom
board of directors authorized a series of loans and loan guarantees between September 2000 and April 2002.
WorldCom announced the resignation of Bernie Ebbers on
April 30,
2002. As part of his departure, Ebbers' loans were consolidated into a single $408.2 million promissory note.
Personal holdings
At his peak in early 1999, Ebbers was worth an estimated $1.4 billion and listed at number 174 on the
Forbes 400. His personal holdings included:
[5]
★ 'Douglas Lake -'
Canada's biggest ranch, 500,000 acres (2,000 km²) in
British Columbia. General partner/president. Acquired in 1998 for about $65 million. Sold on
30 May,
2003 by MCI to
E. Stanley Kroenke[6]
★ 'Angelina Plantation -' 21,000 acre (85 km²) farm in
Monterey, Louisiana. Co-owner with brother, John Ebbers. Acquired in 1998.
★ 'Joshua Holdings -' which combined with Joshua Timberlands and Joshua Timber totals 540,000 acres (2,200 km²) of timberlands in Mississippi, Tennessee, Louisiana and Alabama. Majority owner. Acquired properties in 1999 for about $600 million
★ 'Pine Ridge Farm -' Livestock and crop farm in Mississippi. Owner. Limited-liability company formed in 1997
★ 'Columbus Lumber -' High-tech lumber mill in Mississippi. Majority owner since at least 1996
★ 'Yachts -' BCT Holdings, owner of Intermarine a yacht building and repair company in
Georgia. Primary owner. Intermarine acquired in 1998 for about $14 million
★ 'Hotels -' Nine hotels in
Mississippi and
Tennessee: Co-owner or owner. Acquired over many years
★ 'Trucking -' KLLM, a trucking firm in Mississippi. Director. Acquired with partner in 2000 for about $30 million. Its present President is K. William Grothe, who served as Senior Vice President of Corporate Development for
WorldCom, where he headed the company’s merger and acquisition activities
★ 'Sports -' Mississippi Indoor Sports/
Jackson Bandits, a minor league hockey team. 50% owner. Acquired in 1999. Sold stake in September 2003
Other activities
Bernard Ebbers served as Chairman of the Board of Directors of the Competitive Telecommunications Association from 1993 through 1995. In 1997 he then became the chair for Mississippi College's New Dawn Campaign, a fund raising effort initially intended to provide $80 million that raised its goal to $100 million. In July 2001, Ebbers was proposed as the chair for the
President's National Security Telecommunications Advisory Committee.
[7]
Personality
Dubbed the ''Telecom Cowboy'',
[8] Ebbers was known for his unorthodox style. Instead of the typical corporate uniform he often wore boots and blue jeans. His direct style of speech, typified by such comments as:
★ following the announcement of WorldCom's unsolicited bid for MCI when he joked that then MCI CEO Bert C. Roberts Jr. should be in the office "a little bit earlier."
★ during his trial "I know what I don't know." and "I don't know technology and engineering. I don't know accounting."
Ebbers' personal faith was another important factor in his personality.
While CEO of WorldCom, he was a member of the Easthaven Baptist Church in
Brookhaven,
Mississippi. As a high-profile member of the congregation, Ebbers regularly taught Sunday School and attended the morning Worship service with his family. His Christian faith was overt, and he often started corporate meetings with prayer.
[ Ebbers indicted, ex-CFO pleads guilty ]
When the allegations of conspiracy and fraud were first brought to light in 2002, Ebbers addressed the congregation and insisted on his innocence. "I just want you to know you aren't going to church with a crook," he said, "No one will find me to have knowingly committed fraud."
[9][10]
Post-WorldCom
The
June 25,
2002 announcement by WorldCom of $3.85 billion, a figure that would grow to $11 billion, in accounting misstatements caused a series of investigations and legal proceedings to commence. Ebbers, being the CEO of WorldCom during the time the inflated earnings occurred, was a major figure in these investigations and legal proceedings.
Congressional hearing
In response to a
subpoena, Ebbers appeared before the
U.S. House Committee on Financial Services on
July 8,
2002. At these hearings Ebbers stated "I do not believe I have anything to hide, I believe that no one will conclude that I engaged in any criminal or fraudulent conduct."
[11] After making this statement Ebbers asserted his
Fifth Amendment right against self-incrimination.
Following his actions, Ebbers was threatened with
Contempt of Congress charges.
[12] The basis of the allegation was that Ebbers' statement constituted
testimony that could not be
cross-examined. No charge of contempt was ever filed.
Criminal charges
On
August 27,
2003,
Oklahoma Attorney General
Drew Edmondson filed a 15-count
indictment against Ebbers.
[13] The indictment charged that he violated the state's securities laws by defrauding investors on multiple occasions between January 2001 and March 2002.
[14] These charges were dropped, with the right to refile retained, on
November 20,
2003.
[15] An agreement to extend the statute of limitations on these charges, allowing Oklahoma prosecutors time to see the results of federal sentencing, was signed on
March 30,
2005.
[16]
Federal authorities indicted Ebbers with security fraud and conspiracy charges on
March 2,
2004.
An amendment to the indictment on
May 25,
2004 increased the list of charges to nine
felonies: one count each of conspiracy and securities fraud, and seven counts of filing false statements with securities regulators.
Ebbers was found guilty of all charges on
March 15,
2005.
On
July 13,
2005, federal judge Barbara Jones, of the U.S. District Court, Southern District of New York in Manhattan, sentenced Ebbers to twenty-five years in a federal prison in Louisiana, the toughest sentence yet among other recent
corporate accounting scandals.
Ebbers was allowed to remain free for another year while his appeal was being considered, however, his conviction was upheld in a federal circuit court on July 28, 2006.
[ Appeals court upholds Ebbers conviction ] On
6 September 2006, the presiding judge ordered him to report to jail
[18] on
26 September to start serving his 25-year sentence. Ebbers self-reported to
Oakdale Federal Correctional Institution in
Oakdale, Louisiana on September 26, 2006, driving himself to the prison in his Mercedes.
[19] He is serving his sentence in the low-security portion of the complex, which typically houses non-violent offenders and is built more like a school dormitory. The earliest date he can be considered for parole is 2028 when he will be over 85.
[ Reports to the medium-security Federal Correctional Institution in Oakdale, Louisiana ]
Civil suits
On
11 October 2002, WorldCom investors brought a
class action civil lawsuit against Ebbers and other defendants, alleging injuries as a result of Ebbers' securities fraud violations.
[ KEY DEVELOPMENTS ] Judge Denise Cote of the U.S. District Court for the Southern District of New York ordered the parties in the lawsuit to participate in settlement negotiations. On
12 September 2005, Judge Cote approved the settlement reached by the parties, and dismissed the lawsuit against Ebbers.
The parties agreed that Ebbers and his codefendants would distribute over $6.13 billion, plus interest, to over 830,000 individuals and institutions that had held stocks and bonds in WorldCom at the time of its collapse. Under the terms of the settlement, Ebbers agreed to relinquish a significant portion of his assets, including a lavish home in Mississippi, and his interests in a lumber company, a marina, a golf course, a hotel, and thousands of acres of forested real estate. It is believed that Ebbers was left with around $50,000 in assets after settlement.
See also
★
List of corporate executives charged with crimes
References
★
Disconnected: Deceit and Betrayal at WorldCom, Lynne W. Jeter, , , Wiley, 2003, ISBN 0-471-42997-X
Notes
1. Finance Conference 2000: The New Economy
2. Bernie Ebbers Wants To Reach Out And Touch Everyone
3. BERNARD EBBERS CEO, MCI WORLDCOM
4. 26. Bernie Ebbers
5. http://www.usatoday.com/money/industries/telecom/2002-12-11-ebberscov_x.htm
6. http://global.mci.com/ca/news/ca_archive03.xml
7. President Bush Plans to Appoint WorldCom’s Ebbers to NSTAC
8. Photo of President and CEO of WorldCom Inc. Bernard J. Ebbers By Phillip Gould
9. Ebbers tells church members he's no crook Scott Waller
10. Cheap Grace': Are Churches Giving Corporate Execs Free Moral Ride? William Bole
11. Former WorldCom execs invoke Fifth Robert Schoenberger
12. Ebbers threatened with contempt Robert Schoenberger
13. Judgment Day Coming Sooner for Ebbers Scott Moritz
14. Ebbers indictment
15. Oklahoma 'drops' Ebbers charges
16. Former WorldCom chief signs agreement over fraud charges
17. U.S. CHARGES EX-WORLDCOM CEO BERNARD EBBERS; FORMER WORLDCOM CFO SCOTT SULLIVAN PLEADS GUILTY
18. http://1010wins.com/pages/79899.php?contentType=4&contentId=201667
19. Ebbers receives prison order Nell Luter Floyd
External links
★
Douglas Lake his former ranch
★
The New World Order
★
Bernie Ebbers, a 19th century-style tech tycoon?
★
National Communications System (
July 16,
2001). ''
President Bush Plans to Appoint WorldCom’s Ebbers to NSTAC''. Press Release.
★
Opensecrets.Com (
April 25,
2002). ''
Bernard J Ebbers' Political Contribution to John Kerry''. FEC Filing.
★
''First Interim Report of Dick Thornburgh, Bankruptcy Court Examiner'',
United States Bankruptcy Court for the Southern District of New York, ''In re WorldCom, Inc.'', Case No. 02-15533 (AJG) (
November 4,
2002)
★
PBS transcript
★
Mug shot at The Smoking Gun
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