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Former WorldCom Inc chief executive Bernad J Ebbers has been indicted on Federal criminal fraud charges in New York for his alleged role in the nation's largest accounting scandal, after his former finance chief, Scott D Sullivan, agreed to plead guilty and cooperate with prosecutors.
In an indictment unsealed on Tuesday, a Manhattan Federal Grand Jury charged Ebbers, 62, and Sullivan, 42, with conspiracy, securities fraud and filing a false document with the Securities and Exchange Commission.
Sullivan pleaded guilty to all three counts. He told US District Judge Barbara S Jones that he and WorldCom's "management at the highest level" tampered with the company's accounting to inflate revenue and reduce expenses.
"I understood it was wrong," said Sullivan. "I deeply regret my actions."
Sullivan is regarded key to tying Ebbers to what the prosecutors say was an accounting fraud. Sullivan faces a maximum sentence of 25 years but, usually, when someone indicted cooperates, a lighter sentence is given.
Sullivan also promised to use the estimated $13 million in proceeds from selling his mansion, which is being built in Boca Raton, Florida, to repay shareholders.
Ebbers, a small-town entrepreneur, founded WorldCom in 1983. Originally the company specialised in providing long distance service to motels, but over the years it grew aggressively. Worldcom entered Chapter 11 bankruptcy protection in July 2002 after admitting it had overstated revenue by billions of dollars.