Founded in 1983, WorldCom was an American telecom company that was later found to have engaged in one of the largest accounting scandals in American history.
To gain market share, WorldCom aggressively acquired rival companies. During the dot-com bubble, its market capitalization reached $175 billion.
Executives wanted to show that the company was capable of handling acquisitions and had sufficient capital to do so. So the company inflated profits and concealed financial losses in its books.
Several auditors disclosed the fraud, including Cynthia Cooper, vice president of WorldCom’s internal audit department, who later became Time magazine’s Person of the Year. In 2002, the company filed for bankruptcy and was later acquired by Verizon.
In 2005, co-founder and CEO Bernard Ebbers was sentenced to 25 years in prison for securities fraud. After serving 14 years of his sentence, Ebbers was released early for health reasons in 2019. He died a year later. CFO Scott Sullivan was sentenced to five years after pleading guilty and testifying against Ebbers.