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Learn about the 2002 accounting fraud that led to the bankruptcy of WorldCom, the second-largest long-distance telephone company in the USA. Discover how the scheme was uncovered by internal auditors and how it affected the industry and the economy.
- What Was WorldCom?
- Understanding Worldcom
- Cooking The Books
- The Whistleblowers
- Worldcom Bankruptcy
- Fallout and Aftermath
- Who Was to Blame?
- The Bottom Line
- GeneratedCaptionsTabForHeroSec
WorldCom was an American telecom company. At its height, WorldCom was one of the largest long-distance providers in the United States. The company is best known for being embroiled in one of the largest accounting scandals in the country, which came on the heels of the Enron and Tyco frauds. This came after it was revealed the company cooked its bo...
WorldCom is now a byword for accounting fraud and a warning to investors that when things seem too good to be true, they just might be. The company was founded in 1983 as Long Distance Discount Service.It was established after the breakup of AT&T by Murray Waldron, William Rector, early investor Bernard Ebbers, and their business partners. The grou...
There were several factors that pushed WorldCom into a loss. The company pursued acquisitions aggressively, buying up rival companies in an attempt to gain market share. This, coupled with a major drop in revenue and rates, pushed the company into further into the red. Executives needed a way to prove WorldCom was still financially viable to its bo...
Several individuals played a key role in exposing the fraud at WorldCom. These people included Cynthia Cooper, who was vice president of WorldCom's internal auditdepartment, and Gene Morse, another auditor. They became concerned about several inconsistencies in the company's financial records, including: 1. The use of reservesto boost the company's...
The company could no longer keep up once things started to unravel. In fact, WorldCom had to adjust its earningsfor the 10-year period from 1999 to 2002 by $11 billion dollars and the fraud was estimated to be in the neighborhood of $79.5 billion. Bankruptcy was the only option. WorldCom filed for Chapter 11 bankruptcy on July 21, 2002, only a mont...
Some of the key personnel involved in the firm's accounting scandal received harsh punishment for their roles, including: 1. Bernard Ebbers was convicted on one count of securities fraud, one count of conspiracy, and seven counts fraud related to false SEC filings. He was sentenced to 25 years in prison in 2005.Ebbers was granted early release from...
Although no one actually admitted their part in the scandal, there were several players who were at fault—some within the company and others who weren't even employed by WorldCom. Arthur Andersen, an accounting firm that audited WorldCom's 2001 financial statementsand reviewed WorldCom’s books for Q1-2002, was found to have ignored memos from World...
WorldCom was a telecommunications company that prided itself on providing its customers with affordable long-distance services. But an aggressive acquisition strategy and falling revenues led the company to a downward spiral that would ultimately open the door to one of the largest accounting frauds and bankruptcies in the United States. The compan...
WorldCom was a telecom company that collapsed after a massive accounting fraud in 2002. Learn how it rose and fell, who exposed the fraud, and how it was sold to Verizon.
Sep 29, 2021 · Learn how WorldCom, one of the world’s biggest telecommunications companies, committed a massive accounting fraud that led to its bankruptcy and the imprisonment of its executives. Find out how the company manipulated its earnings, concealed its losses and deceived the market and regulators.
Mar 15, 2024 · The story of WorldCom is one of the most infamous chapters in the history of corporate America. Once a telecommunications giant, WorldCom’s meteoric rise to prominence was followed by a catastrophic fall from grace due to one of the largest accounting scandals in history.
Jul 3, 2002 · WorldCom, a telecom firm, revised its financial statements by $3.85 billion in 2002, revealing accounting fraud and mismanagement. Experts from Wharton and elsewhere analyze the causes, consequences and lessons of this corporate scandal and how to restore integrity and accountability.
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Sep 9, 2003 · In a new documentary, CNBC examines how Bernie Ebbers built WorldCom into a telecom giant that had competitors scrambling but ultimately recorded the nation’s biggest accounting fraud.
Jun 15, 2022 · With the US currently tipping into another tech-driven bear market, WorldCom’s $104bn bankruptcy (still the third-largest in US history) contains important warnings.
