WorldCom fraud

2002NotableContested

Telecom giant WorldCom admits it booked billions in ordinary costs as capital investments, then files the largest US bankruptcy to that date. Coming months after Enron, it seals passage of the Sarbanes-Oxley Act.

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Contested history

Consensus: WorldCom overstated its income by roughly $11 billion between 1999 and 2002; its CFO pleaded guilty and CEO Bernard Ebbers was convicted in 2005.

Top executives directed the fraudEstablished

The CFO pleaded guilty and testified, and a jury convicted Ebbers, who died in 2020.

The CEO did not know about the accountingUnsupported

Ebbers argued this at trial and the jury rejected it.

Internal auditors exposed itEstablished

Cynthia Cooper's internal audit team found the improper entries in 2002 and reported them to the board's audit committee.