Essay on Worldcom Fraud

1354 Words 6 Pages
Abstract
On March 15, 2005 former CEO of WorldCom, Bernard Ebbers sat in a federal courtroom waiting for the verdict. As the former CEO of WorldCom, Ebbers was accused of being personally responsible for the financial destruction of the communications giant. An internal investigation had uncovered $11 billion dollars in fraudulent accounting practices. Later a second report in 2003 found that during Ebber’s 2001 tenure as CEO, the company had over-reported earnings and understated expenses by an astonishing $74.5 billion dollars (Martin, 2005, para 3). This report included the mismanagement of funds, unethical lending practices among its top executives, and false bookkeeping which led to loss of tens of thousands of its employees.
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(Farrell, 2005, para 1). Unfortunately for Ebbers, the grand jury wasn’t ignorant to the facts of the case and found Ebbers guilty on nine counts of fraud. He was sentenced to 25 years in prison. Many critics felt that the sentence was too harsh and others not harsh enough. The sentencing of Ebbers did not change the situation of the shareholders and employees who lost more than $100 billion in stock value, 17,000 jobs and their entire retirement savings. Ebbers was allowed to keep one of his homes, $50,000 in cash and a retirement account (Ernst & Young, 2005, para 6). Many supporters of Ebbers still questioned how much of a role he actually played in masterminding the WorldCom scandal. The question still remains if greed was his motive, why didn’t Mr. Ebbers sell more stock? One explanation could be utilitarian based reasoning. Utilitarianism, the consequentiality theory most widely accepted, and put forward by Jeremy Bentham and, later, John Stuart Mill suggests that an action is right if it maximizes happiness for the greatest number of people over the long term, given that everyone’s happiness is of equal value (Gold, 2008, para 8). Some say as WorldCom grew at a rapid pace, Mr. Ebbers set expectations high. This led

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