Bernard Ebbers

Bernard Ebbers
Ebbersc.2000
Born	(1941-08-27)August 27, 1941 Edmonton,Alberta, Canada
Died	February 2, 2020(2020-02-02)(aged 78) Brookhaven, Mississippi,U.S.
Criminal status	Deceased
Spouses	Linda Pigott ​ ​ (m.1968;div.1997)​ Kristie Webb ​ ​ (m.1999;div.2008)​
Criminal charge	Securities fraud,conspiracy
Penalty	25-yearimprisonment
Imprisoned at	Federal Correctional Institution, Fort Worth

Bernard John Ebbers(August 27, 1941 – February 2, 2020) was a Canadian businessman and the co-founder and CEO ofWorldCom.Under his management, WorldCom grew rapidly but collapsed in 2002 amidrevelations of accounting irregularities,making it at the time one of the largestaccounting scandalsin the United States. Ebbers blamed his subordinates but was convicted offraudandconspiracy.In December 2019, Ebbers was released fromFederal Medical Center, Fort Worth,due to declining health, having served 13 years of his 25-year sentence, and he died just over a month later.

In 2013,PortfolioandCNBCnamed Ebbers as the 5th-worst CEO in American history.In 2009,Timenamed him the 10th-most corrupt CEO of all time.

Dubbed the "Telecom Cowboy," Ebbers often wore boots and blue jeans instead of the typical corporate uniform of a suit and tie. He also lived on a farm and loved to drive a tractor.

Early life and education

Ebbers was born inEdmonton,Alberta, the second of five children of Kathleen and John Ebbers, a traveling salesman.His family were devoutChristians.

When Ebbers was young, the family moved toCaliforniaand later lived for a while on amissionpost on aNavajo NationIndian reservationinNew Mexicobefore moving back to Canada when Ebbers was a teenager.

After high school, Ebbers briefly attended theUniversity of AlbertaandCalvin Collegebefore enrolling atMississippi Collegeon abasketballscholarship. Between schools, he worked as amilkmanandbouncer.An injury before his senior season prevented him from playing his final year and he was instead assigned to coach thejunior varsity team.In 1967, he received aBachelor's degreeinphysical education,with anacademic minorinsecondary education,fromMississippi College.

Career

Ebbers began his business career operating a chain of motels in Mississippi.

In 1983, in a coffee shop inHattiesburg, Mississippi,he and 3 other investors formed Long Distance Discount Services, Inc. and in 1985, he was namedchief executive officer.The company acquired over 60 telecommunications firms and in 1995, it changed its name to WorldCom.

In 1996, WorldCom acquired MFS Communications (originallyMetropolitan Fiber Systems)and in September 1998, it acquiredMCI Communications.In July 2000, it abandoned its planned $115 billion acquisition ofSprint Corporationafter U.S. andEuropean Unionantitrustregulators raised objections.

Between September 2000 and April 2002, theboard of directorsof Worldcom authorized several loans and loan guarantees to Ebbers so that he would not have to sell his Worldcom shares to meetmargin callsas the share price plummeted during the bursting of thedot-com bubble.By April 2002, Ebbers had lost substantial support on the board due to these loans. Additionally, a number of directors believed Ebbers had not charted a way forward after the Sprint merger collapsed. On April 26, Worldcom's board voted unanimously to demand that Ebbers resign, which he formally did on April 30, 2002. As part of his departure, his loans were consolidated into a single $408.2 millionpromissory note.In 2003, Ebbers defaulted on the note and Worldcom foreclosed on many of his assets.

Awards and accolades

• Mississippi Business Hall of Fame (May 1995)
• Member ofWired25 (November 1998)
• 25 most powerful people in networking byNetwork World(January 4, 1999)
• TimeDigital 50 (1999)
• HonoraryDoctor of Laws,Mississippi College(1992)
• Honorarydoctorate,Tougaloo College(1998)

Fraud

On June 25, 2002, WorldCom admitted to nearly $3.9 billion in accounting misstatements and on July 22, 2002, it filed forbankruptcy.

The figure eventually grew to $11 billion. This initiated a series of investigations and legal proceedings, which focused on Ebbers, WorldCom's former CEO.

Ebbers blamed theaccounting scandalon his subordinates, including WorldCom CFOScott Sullivan.

Congressional hearing

In response to asubpoena,Ebbers appeared before theU.S. House Committee on Financial Serviceson 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."

After making this statement, Ebbers asserted his right againstself-incriminationper theFifth Amendment to the United States Constitution.Ebbers's statement constituted testimony that could not undergocross-examinationand Ebbers was threatened withContempt of Congresscharges, although no charges were filed.

Criminal charges and verdict

On August 27, 2003,Attorney General of OklahomaDrew Edmondsonfiled a 15-countindictmentagainst Ebbers.The indictment charged that he violated securities laws by defrauding investors on multiple occasions between January 2001 and March 2002.On November 20, 2003, the charges by Oklahoma were dropped, with the right to refile retained, to defer to federal charges.On March 2, 2004, federal authorities indicted Ebbers on securities fraud and conspiracy charges.On May 25, 2004, federal prosecutors increased the list of charges to 9felonies:1 count each of conspiracy and securities fraud, and 7 counts of filing false statements with securities regulators. On March 15, 2005, Ebbers was found guilty of all charges.On March 30, 2005, an agreement to extend thestatute of limitationson the charges from Oklahoma was signed, allowing Oklahoma prosecutors time to see the results of federal sentencing.

Sentencing and jail time

On July 13, 2005, federal judgeBarbara S. Jones,of theUnited States District Court for the Southern District of New York,sentenced Ebbers to 25 years in a federal prison inLouisiana.Ebbers was allowed to remain free for another year while his appeal was being considered. His conviction was upheld in theU.S. Court of Appeals for the Second Circuitin July 2006.On September 6, 2006, the presiding judge ordered him to report to jail on September 26 to start serving his 25-year sentence. Ebbers reported toOakdale Federal Correctional InstitutioninOakdale, Louisiana,on September 26, 2006, driving himself to the prison in hisMercedes-Benzvehicle.Ebbers served in the low-security portion of the complex, which typically houses non-violent offenders and is built like a school dormitory. He was granted early release after serving 12 years in December 2019, due to health problems.

Civil suits

On October 11, 2002, WorldCom investors brought aclass actioncivil lawsuit against Ebbers and other defendants, alleging injuries as a result of Ebbers's securities fraud violations. JudgeDenise Coteof theUnited States District Court for the Southern District of New Yorkordered the parties in the lawsuit to negotiate. 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. Ebbers agreed to relinquish almost all of his assets, including a 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. After the settlement, Ebbers's wife was left with an estimated $50,000 in known assets. On September 21, 2005, Judge Cote approved the settlement and dismissed the lawsuit against Ebbers.

Personal life

Marriages

In 1968, Ebbers married Linda Pigott and the couple raised three daughters. Ebbers filed for divorce in July 1997 and married his second wife, Kristie Webb, in the spring of 1999. She filed for divorce on April 16, 2008, less than two years after he entered prison.

Personal holdings

At his peak in early 1999, Ebbers was worth an estimated $1.4 billion and listed as 174th on theForbes 400.His personal holdings included:

• Douglas LakeCanada's biggest ranch – 500,000 acres (2,000 km²) inBritish Columbia.General partner/president. Acquired in 1998 for about $65 million. Sold on May 30, 2003, by MCI toE. Stanley Kroenke.
• Angelina Plantation– 21,000 acres (85 km²) farm inMonterey, 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.LLCformed in 1997.
• Columbus Lumber– High-tech lumber mill inBrookhaven, Mississippi.Majority owner since at least 1996.
• Yachts– BCT Holdings, owner of Intermarine, a yacht building and repair company inGeorgia.Primary owner. Intermarine acquired in 1998 for about $14 million.
• Hotels– Nine hotels inMississippiandTennessee: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. Was at one point led by K. William Grothe, who was an executive atWorldCom.
• Sports– Mississippi Indoor Sports/Jackson Bandits,a minor league hockey team. 50% owner. Acquired in 1999. Sold stake in September 2003.

Other activities

From 1993 through 1995, Ebbers served as chairman of theboard of directorsof the Competitive Telecommunications Association, where he pleaded with theUnited States Congressto improve competition with the incumbent telecommunications companies.

In 1997, he became the chair for Mississippi College's New Dawn Campaign, a $100 million fundraising campaign to improve campus facilities.

In July 2001, Ebbers was proposed byGeorge W. Bushas the chair for thePresident's National Security Telecommunications Advisory Committee.

Religious faith

While CEO of WorldCom, Ebbers was a member of the Easthaven Baptist Church inBrookhaven, Mississippi.As a high-profile member of the congregation, Ebbers regularly taughtSunday schooland attended the morningchurch servicewith his family. His faith was overt, and he often started corporate meetings with prayer.

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."

Death

Ebbers died at his home inBrookhaven, Mississippi,on February 2, 2020, at the age of 78, just over a month after being grantedcompassionate releasefrom prison due to his ill health. His lawyers said that he was, by the time of his death,legally blindand suffering fromdementia,anemiaand significant weight loss.

Further reading

• Cooper, Cynthia (2008).Extraordinary Circumstances: The Journey of a Corporate Whistleblower.Wiley.ISBN978-0-470-12429-1.- A book by the former chief audit executive of Worldcom on the demise of the company.