Grant Gross
Senior Writer

Judge approves $6.1 billion in WorldCom settlements

news
Sep 21, 20052 mins

Ebbers' assets included in the settlement were worth $25 million to $40 million

A U.S. district court judge on Wednesday approved a $6.1 billion settlement to investors who lost money in an accounting fraud at the former WorldCom.

Judge Denise Cote of the U.S. District Court for the Southern District of New York approved settlements that parties agreed to earlier this year, including $2 billion to J.P. Morgan Securities and $325 million Deutsche Bank Securities, according to a spokesman for New York State Comptroller Alan Hevesi, trustee of the New York State Common Retirement Fund and the lead plaintiff in the civil case.

In November 2004, Cote approved a $2.58 billion settlement with Citigroup.

The settlement includes payments from former WorldCom directors, as well as former Chief Executive Officer Bernard Ebbers, who was convicted of fraud in March and sentenced to 25 years in prison. Under the settlement, Ebbers must give up a house in Clinton, Mississippi, and interests in several businesses, including a lumber company, a marina, a golf course and several thousand acres of timberland. Hevesi’s office in June estimated Ebbers’ assets included in the settlement were worth $25 million to $40 million.

WorldCom, now MCI, filed for bankruptcy in July 2002, about a month after an internal audit in June 2002 uncovered $3.8 billion in accounting errors. The accounting misstatements eventually reached a total of $11 billion. In March 2004, a month before the newly renamed MCI emerged from bankruptcy, the company issued a report reducing pretax income for 2000 and 2001 by $74.4 billion.

Grant Gross

Grant Gross, a senior writer at CIO, is a long-time IT journalist who has focused on AI, enterprise technology, and tech policy. He previously served as Washington, D.C., correspondent and later senior editor at IDG News Service. Earlier in his career, he was managing editor at Linux.com and news editor at tech careers site Techies.com. As a tech policy expert, he has appeared on C-SPAN and the giant NTN24 Spanish-language cable news network. In the distant past, he worked as a reporter and editor at newspapers in Minnesota and the Dakotas. A finalist for Best Range of Work by a Single Author for both the Eddie Awards and the Neal Awards, Grant was recently recognized with an ASBPE Regional Silver award for his article “Agentic AI: Decisive, operational AI arrives in business.”

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