Bernie Ebbers, convicted ex-CEO of WorldCom, dies

The former chief of WorldCom, convicted in one of the largest corporate accounting scandals in U.S. history, died just over a month after his early release from prison. Bernard Ebbers was 78.

The Canadian-born former telecommunications executive died Sunday in Brookhaven, Mississippi, surrounded by his family, according to a family statement.

WorldCom Inc. collapsed and went into bankruptcy in 2002, following revelations of an $11 billion accounting fraud that included pressure by top executives on subordinates to inflate numbers to make the company seem more profitable. The collapse caused losses to stockholders, including those who had invested through retirement plans.

Ebbers was convicted in New York in 2005 on securities fraud and other charges and received a 25-year sentence. A federal appeals court judge who upheld Ebbers’ conviction in 2006 wrote that WorldCom’s fraudulent accounting practices were “specifically intended to create a false picture of profitability even for professional analysts that, in Ebbers’ case, was motivated by his personal financial circumstances.”

Before establishing himself in telecommunications, Ebbers had a diverse career that started in sports. He received a basketball scholarship at Mississippi College, where he majored in physical education. After graduating, he coached high school teams for a year before investing in a hotel; he eventually amassed a chain of Best Westerns in Mississippi and Texas, as well as a car dealership in Columbia, Mississippi.

Following the advice of friends and knowing little about the phone business, he invested in a small long-distance company, LDDS, in 1983. He eventually took over the day-to-day operations and bought up competitors, transforming LDDS – which was later renamed WorldCom, based in Clinton, Mississippi – into the fourth-largest long-distance company by 1996.

He was considered to be a “no-nonsense” man with a brash attitude who preferred jeans to a suit. One analyst cited in an early profile in the late 1990s said Bernie Ebbers was “the telephone equivalent of Bill Gates.”

By the time of its collapse over its accounting fraud scandal in 2002, WorldCom was the nation’s second-largest long-distance business. Ebbers left that year and, following his conviction, was imprisoned from September 2006 until Dec. 21, when he was released from the custody of the Bureau of Prisons.

In the meantime, WorldCom reemerged as MCI, taken over by Verizon, and relocated to Ashburn, Virginia.