Arthur Andersen Internal Communication Presentation Deck 2022.pdf
WorldCom was a major U.S. provider of long-distance phone services. Between 1999 and 2002, its founder and CEO Bernard Ebbers and other top managers devised a plan to overstate earnings in order to keep WorldCom’s stock price high and fend off possible takeover attempts. They did this by wrongly classifying $3.8 billion in costs as capital investments, which increased their reported profits and cash flow. The fraud was exposed by an internal audit and led to WorldCom declaring bankruptcy in July 2002, the biggest bankruptcy in U.S. history at the time. The SEC sued WorldCom for civil fraud and settled for $2.25 billion. Several managers and the CEO were charged with criminal offenses, such as securities fraud, conspiracy, and filing false documents with regulators. Ebbers was found guilty and sentenced to 25 years in prison, but was released on compassionate grounds in 2020 due to his declining health.
