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How to Aggressively Create Money!!!

How to Aggressively Create Money!!!. Gene Eller, Brian Finlay, Christine Tilling. The WorldCom Way!!!. What do you do?. Stock prices are dropping. There is a lot of competition in the Telcom industry today. You have $3.8 billion in daily operating expenses.

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How to Aggressively Create Money!!!

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  1. How to Aggressively Create Money!!! Gene Eller, Brian Finlay, Christine Tilling The WorldCom Way!!!

  2. What do you do? • Stock prices are dropping. • There is a lot of competition in the Telcom industry today. • You have $3.8 billion in daily operating expenses. • ($3,853,000,000 to be exact as possible) • You have a massive need to CUT costs.

  3. Creative (illegal) Accounting 101 • Take that $3.8 billion you have been spending on local carriers, to use their lines and equipment, and move it from the expense of doing business to capital expenditures!!! • WIN WIN!!! • By doing this we create an appearance on the balance sheet that we are building infrastructure and creating assets. • Treated the same as buying network hardware, installing fiber, or real-estate!

  4. Bernard EbbersWorldCom The "Telecom Cowboy “

  5. Background • Born in Edmonton, Alberta, August 27, 1941 • Father was a Traveling Salesman • Worked as a milkman and a bouncer while in college

  6. Education • Bachelor in Physical Education, minor in Secondary Education • Honorary Doctor of Law from Mississippi College • Honorary doctorate from Tougaloo College

  7. Timeline 1983 • Ebbers is a founding Member of Long Distance Discount Service (LDDS) 1988-1994 • LLDS purchases six communications companies including IDB WorldCom. 1995 • LDDS changes its name to WorldCom Inc and makes Bernard Ebbers CEO.

  8. Timeline Continued 1997 • WorldCom and MCI merge • Merger worth $37 billion, by June of 1999 stock is worth $64.50 a share Early 1999 • Bernie Ebbers is worth and estimated 1.4 billion in personal holdings 2000-Q1 2002 (15 month period) • WorldCom uses “creative accounting” to make the company look healthier than it was.

  9. WorldCom’s Death • Bernie Ebbers resigns as CEO on April 29, 2002. • In June of 2002 WorldCom announces it will lay off 17,000 Employees and the stock drops below $1 a share. • Also that month WorldCom admits to the $3.8 billion Inflation of the companies records.

  10. WorldCom's Death • In June and July of 2002 the SEC files fraud charges against WorldCom and WorldCom then files for bankruptcy to a tune of $30 billion.

  11. Indictments and Sentences • Among others, Bernie Ebbers was indicted on one count of securities fraud, one count of conspiracy, and seven counts of regulatory filings. • His defense was that he had no idea about the accounting discrepancies. • The prosecutor, Assistant US Attorney William F Johnson coined this as the “Aw Shucks” defense. • Started his sentence on September 26, 2006

  12. Ethical Dilemma Q&A • Taking out approximately $400 million in loans from his own company. • Do you believe that Ebbers really knew nothing about the “creative accounting”? • Whistle Blower (Cynthia Cooper) • Working with Arthur Anderson ever? (remember they were with Enron too) • How does cooperate America restore the peoples faith?

  13. Recourses • Wikipedia www.wikipedia.com • Lexus Nexus • The Associated Press • CNN • USA Today • NASDAQ: WCOM

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