Bernard J. Ebbers, who was sent to prison in 2006 after his conviction in one of the biggest American frauds of the 20th century, has died less than two months after his early release from prison due to health problems. He was 78.
The former chief of WorldCom died Sunday in Brookhaven, Mississippi, surrounded by family members, according to a statement.
In December, he was granted a compassionate release from prison by a federal judge in New York after serving a little more than half his sentence.
What happened
WorldCom Inc. collapsed and went into bankruptcy in 2002, following revelations of an $11 billion accounting fraud that included pressure by top executives on subordinates to inflate numbers to make the company seem more profitable. The collapse caused losses to stockholders, including those who had invested through retirement plans.
Ebbers, who also went by Bernie, was convicted in New York in 2005 on securities fraud and other charges and received a 25-year sentence. A federal appeals court judge who upheld Ebbers’ conviction in 2006 wrote that WorldCom’s fraudulent accounting practices were “specifically intended to create a false picture of profitability even for professional analysts that, in Ebbers’ case, was motivated by his personal financial circumstances.”
Rise and fall
The former telecommunications executive was born in Canada.
Before establishing himself in telecommunications, Ebbers had a diverse career that started in sports. He received a basketball scholarship at Mississippi College, where he majored in physical education. After graduating, he coached high school teams for a year before investing in a hotel; he eventually amassed a chain of Best Westerns in Mississippi and Texas, as well as a car dealership in Columbia, Mississippi.
Following the advice of friends and knowing little about the phone business, he invested in a small long-distance company, LDDS, in 1983. He eventually took over the day-to-day operations and bought up competitors, transforming LDDS — which was later renamed WorldCom, based in Clinton, Mississippi — into the fourth-largest long-distance company by 1996.
Credit: DENNIS COOK
Credit: DENNIS COOK
He was considered to be a “no-nonsense” man with a brash attitude who preferred jeans to a suit. One analyst cited in an early profile in the late 1990s said Ebbers was “the telephone equivalent of Bill Gates.”
By the time of its collapse over its accounting fraud scandal in 2002, WorldCom was the nation’s second-largest long-distance business. Ebbers left that year and following his conviction was imprisoned from September 2006 until Dec. 21, when he was released from the custody of the Bureau of Prisons.
Meantime, WorldCom reemerged as MCI, taken over by Verizon, and relocated to Ashburn, Virginia.
Appeals for early release
In July, one of Ebbers’ daughters submitted a request that her father receive compassionate release from a federal prison medical facility in Fort Worth, Texas. Court papers say a Bureau of Prisons official denied that request in August.
In another court filing in late October, his daughter, Joy Ebbers Bourne, said her father was “experiencing full-blown dementia.”
“In my recent phone calls and visits, he is unable to carry on a conversation,” she wrote.
The family statement said the Bureau of Prisons “had no diagnosis or treatment plan in place” and Ebbers experienced a “rapid decline” in October, followed by multiple hospitalizations in November and December.
While prosecutors agreed that Ebbers' health had deteriorated in prison, they opposed an early release. Assistant U.S. Attorney Jason Cowley told the judge that such a move would send “a terrible message to the rule of law” because it would cut Ebbers’ sentence in half.
Judge shows mercy
U.S. District Judge Valerie E. Caproni said late last year that it fell within her discretion to order the early release of Ebbers after a lawyer cited severe medical problems and said Ebbers had experienced severe weight loss. At more than 6 feet tall, he had dropped in weight from above 200 pounds to 147 pounds. Attorney Graham Carner told the judge it was possible his client might not live another 18 months.
Among other ailments, Ebbers had heart disease, Carner said. Ebbers was not in court when Caproni announced her ruling Dec. 18; his lawyers said he was hospitalized.
“While Mr. Ebbers is physically alive ... his quality of life is gone,” Carner said in December. “If he was released today, Mr. Ebbers is not going to be playing tennis or running a business.”
Attacked in prison
In court papers in September, lawyers said Ebbers unintentionally bumped into another prisoner while walking in the facility in September 2017, only to have the prisoner go to Ebbers’ open cell later in the day and physically attack him.
The papers said the attack fractured the bones around Ebbers’ eyes and caused blunt head trauma and other injuries. They also said Ebbers was put into solitary confinement because his “severely limited eyesight” made him unable to identify the attacker.
Family acknowledges victims
The family statement acknowledged resistance to Ebbers’ early release from victims of WorldCom's collapse, but said many victims also expressed their support.
“Many stockholders and employees lost their investments in the fall of WorldCom. Many of our friends — and many in our family — did too,” the statement read. “Thankfully, Judge Caproni agreed with us — keeping Dad in prison, especially in his unexplained and undiagnosed deteriorated condition, would not bring back anyone's investments.”
The family said they would pray for the victims. The statement, which repeatedly praised Caproni, said family members plan to eventually advocate for others “who are deserving of compassionate release to their families.”
— This story contains reporting by Mallika Sen of The Associated Press and Emily Flitter of The New York Times. Compiled by ArLuther Lee for The Atlanta Journal-Constitution.
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