Ex-CEO of WorldCom Essay
Ex-CEO of WorldCom
On March 15 2005, Bernard Ebbers, Ex-CEO of WorldCom was convicted on one count of conspiracy, one count of securities fraud and seven counts of false regulatory filings (Associated Press, 2005). The charges are because he repeatedly ordered the falsification of accounting records, the then finance Chief Scott Sullivan, who masterminded the fraud also pled guilty to fraud claimed that he was ordered to adjust the records to meet Wall Street expectations.
The move was to benefit him (Ebbers), as he was obsessed with keeping the company’s stock price high (which would benefit the company) as he was liable for personal loans of up to $400 million, which were secured with his shares in the company.
In 2004, Reliant Energy Services Inc, and some of its officers were charged with conspiracy to commit wire fraud, commodities manipulation and attempted manipulation of the price of a commodity in interstate commerce (Department of Justice, 2004). According to the charges, in June 2000,the company artificially inflated the the prices of elecricity by shutting off its power generation to create the false appearance of a shortage.
Once the defendants accomplished the artificial inflation of prices, Reliant Energy Services proceeded to turn certain of the company’s plants back on in order to sell its power to California’s grid manager, the ISO, for as much as $750 per megawatt hour; also the defendants also proceeded to sell the company’s previously losing financial position in the term market, which had become profitable because of Reliant’s manipulative scheme (Department of Justice, 2004). Crime is the breach of rules which are enforced with penalty by a governing authority.
In the reviewed cases above, the acts of the upper echelon of the company’s administration are clearly criminal in nature as is seen in th case of Reliance Energy Inc whose actions are in violation of 18 U. S. C. § 371, 18 U. S. C. § 134, 7 U. S. C. § 13(a) (2) which prohibit wire fraud and commodity price manipulation. Also under the doctrine of respondeat superior, a corporation can be held accountable for the actions of its personnel as long as the acts were within the span of such an employee’s duties and are meant to benefit the corporation wholly or partially (Department of Justice, 2003).
Using these criteria, the actions of WorldCom i. e. Ebbers constitute a crime as his actions were to represent the company as being financially stable when it was not and therefore benefit the company and Him by an increase in the company’s stock price. Under the United States Code 18 U. S. C. § 3559, a felony is defined as a serious crime punishable with death or imprisonment for more than a year while a misdemeanor is an offence that is punishable with imprisonment for one year or less (U. S. Code,n. d. ). In light of this fact, the actions of the companies in the reviewed cases above constitute felonious crimes.
In the Ebber’s case, the company can be charged with securities fraud, which carries a maximum sentence of 20 years imprisonment/probation, which makes it a class C felony while the conspiracy count carries a maximum sentence of 5 years making it a class D felony. In the case of Reliance Energy Inc, the corporation was charged with wire fraud, a class C felony that carries a maximum term of 20 years imprisonment/probation and commodities manipulation, a class D felony that carries a maximum term of 5 years imprisonment/probation (U. S. Code, n. d. )
Bibliography Associated Press. (2004). Retrieved May 2010, from SmartPros: http://accounting. smartpros. com/x47410. xm Department of Justice. (2004, April 8). Retrieved May 2010, from Fbi. gov: http://www. fbi. gov/dojpressrel/pressrel04/energy040804. htm Department of Justice. (2003, January 20). Federal Prosecution of Business Organizations. Retrieved May 2010, from http://www. justice. gov/dag/cftf/corporate_guidelines. htm U. S. Code. (n. d. ). Retrieved May 2010, from Legal Information Institute: http://www. law. cornell. edu/uscode/18/3559. html