Bernard John "Bernie" Ebbers (born August 27, 1941) is a
CanadianCanada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
-born
businessmanA businessperson is someone involved in a particular undertaking of activities for the purpose of generating revenue from a combination of human, financial, or physical capital. An entrepreneur is an example of a business person...
. He co-founded the
telecommunicationTelecommunication is the transmission of information over significant distances to communicate. In earlier times, telecommunications involved the use of visual signals, such as beacons, smoke signals, semaphore telegraphs, signal flags, and optical heliographs, or audio messages via coded...
s company
WorldComMCI, Inc. is an American telecommunications subsidiary of Verizon Communications that is headquartered in Ashburn, Virginia...
and is a former
chief executive officerA chief executive officer , managing director , Executive Director for non-profit organizations, or chief executive is the highest-ranking corporate officer or administrator in charge of total management of an organization...
of that company.
In 2005, he was convicted of
fraudIn criminal law, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation...
and
conspiracyIn the criminal law, a conspiracy is an agreement between two or more persons to break the law at some time in the future, and, in some cases, with at least one overt act in furtherance of that agreement...
as a result of WorldCom's false financial reporting, and subsequent loss of US$100-billion to investors. The WorldCom scandal was, until the
MadoffThe Madoff investment scandal broke in December 2008 when former NASDAQ chairman Bernard Madoff admitted that the wealth management arm of his business was an elaborate Ponzi scheme....
schemes came to light in 2008, the largest accounting scandal in
United StatesThe United States of America is a federal constitutional republic comprising fifty states and a federal district...
history. He is currently serving a 25-year prison term at
Oakdale Federal Correctional ComplexThe Federal Correctional Complex, Oakdale is a complex with two United States federal prisons located near Oakdale, Louisiana. Oakdale has a Federal Detention Center and a Federal Correctional Institution.-Notable inmates:-External links:*...
in
LouisianaLouisiana is a state located in the southern region of the United States of America. Its capital is Baton Rouge and largest city is New Orleans. Louisiana is the only state in the U.S. with political subdivisions termed parishes, which are local governments equivalent to counties...
. Portfolio.com and
CNBCCNBC is a satellite and cable television business news channel in the U.S., owned and operated by NBCUniversal. The network and its international spinoffs cover business headlines and provide live coverage of financial markets. The combined reach of CNBC and its siblings is 390 million viewers...
named Ebbers as the fifth-worst CEO in American history;
Time magazineTime is an American news magazine. A European edition is published from London. Time Europe covers the Middle East, Africa and, since 2003, Latin America. An Asian edition is based in Hong Kong...
named him the tenth most corrupt CEO of all time.
Early life
Born to the family of a traveling salesman, Bernard Ebbers was the second of five children. He was born in
EdmontonEdmonton is the capital of the Canadian province of Alberta and is the province's second-largest city. Edmonton is located on the North Saskatchewan River and is the centre of the Edmonton Capital Region, which is surrounded by the central region of the province.The city and its census...
and his family also lived in
CaliforniaCalifornia is a state located on the West Coast of the United States. It is by far the most populous U.S. state, and the third-largest by land area...
and
New MexicoNew Mexico is a state located in the southwest and western regions of the United States. New Mexico is also usually considered one of the Mountain States. With a population density of 16 per square mile, New Mexico is the sixth-most sparsely inhabited U.S...
, while he was growing up, before returning to Edmonton. After high school, Ebbers briefly attended the
University of AlbertaThe University of Alberta is a public research university located in Edmonton, Alberta, Canada. Founded in 1908 by Alexander Cameron Rutherford, the first premier of Alberta and Henry Marshall Tory, its first president, it is widely recognized as one of the best universities in Canada...
and
Calvin CollegeCalvin College is a comprehensive liberal arts college located in Grand Rapids, Michigan. Founded in 1876, Calvin College is an educational institution of the Christian Reformed Church and stands in the Reformed tradition of Protestantism...
before enrolling at
Mississippi CollegeMississippi College, also known as MC, is a private, Christian university located in Clinton, Mississippi. Mississippi College comprises the main campus in Clinton, as well as satellite campuses in Brandon and Madison, Mississippi, and the Mississippi College School of Law in Jackson...
. During the time between schools he worked as a milkman and bouncer. While attending Mississippi College, Ebbers earned a
basketballBasketball is a team sport in which two teams of five players try to score points by throwing or "shooting" a ball through the top of a basketball hoop while following a set of rules...
scholarship. An injury before his senior season prevented him from playing his final year. Instead of playing, he was assigned to coach the junior varsity team.
In 1968 Ebbers married Linda Pigott, and the two of them raised three daughters. Ebbers filed for
divorceDivorce is the final termination of a marital union, canceling the legal duties and responsibilities of marriage and dissolving the bonds of matrimony between the parties...
in July 1997 and married his second wife, Kristie Webb, in the spring of 1999. His second wife filed for divorce from him on April 16, 2008, less than two years after he entered prison.
Education and degrees
- Bachelor in physical education
Physical education or gymnastics is a course taken during primary and secondary education that encourages psychomotor learning in a play or movement exploration setting....
, minor in secondary education, Mississippi CollegeMississippi College, also known as MC, is a private, Christian university located in Clinton, Mississippi. Mississippi College comprises the main campus in Clinton, as well as satellite campuses in Brandon and Madison, Mississippi, and the Mississippi College School of Law in Jackson...
(1967)
- Honorary Doctor of Laws, Mississippi College
Mississippi College, also known as MC, is a private, Christian university located in Clinton, Mississippi. Mississippi College comprises the main campus in Clinton, as well as satellite campuses in Brandon and Madison, Mississippi, and the Mississippi College School of Law in Jackson...
(1992)
- Honorary doctorate
A doctorate is an academic degree or professional degree that in most countries refers to a class of degrees which qualify the holder to teach in a specific field, A doctorate is an academic degree or professional degree that in most countries refers to a class of degrees which qualify the holder...
, Tougaloo CollegeTougaloo College is a private, co-educational, liberal arts institution of higher education founded in 1869, in Madison County, north of Jackson, Mississippi, USA.Academically, Tougaloo College has received high ranks in recent years...
(1998)
Business achievements
Ebbers began his business career operating a chain of
motelA motor hotel, or motel for short, is a hotel designed for motorists, and usually has a parking area for motor vehicles...
s in Mississippi. He joined with several other people in 1983 as investors in the newly formed Long Distance Discount Services, Inc. (LDDS). Two years later he was named chief executive of the corporation. The company acquired over 60 other independent telecommunications firms, changing its name to WorldCom in 1995. In 1996, WorldCom acquired MFS Communications, Inc., which itself had recently acquired
UUNetUUNET founded in 1987, was one of the largest Internet service providers and one of the nine Tier 1 networks. It was based in Northern Virginia and was the first commercial Internet service provider...
and its
InternetThe Internet is a global system of interconnected computer networks that use the standard Internet protocol suite to serve billions of users worldwide...
backboneBackbone may refer to:* Vertebral column, of a vertebrate organism* Backbone chain, in polymer chemistry, the framework of the molecule* Backbone Entertainment, a video game development company* Backbone network, the top level of a hierarchical network...
. At the time, this $12 billion transaction was one of the largest corporate acquisitions in U.S. history, although it would soon be eclipsed by much larger deals, including WorldCom's proposed $40 billion acquisition of MCI.
Ebbers gained public notice on October 1, 1997 when he announced that WorldCom was making an unsolicited bid for
MCI CommunicationsMCI Communications Corp. was an American telecommunications company that was instrumental in legal and regulatory changes that led to the breakup of the AT&T monopoly of American telephony and ushered in the competitive long-distance telephone industry. It was headquartered in Washington,...
. The successful acquisition of MCI was completed in September 1998. The fame from this accomplishment caused Ebbers to receive a number of accolades from the press, including:
- Mississippi Business Hall of Fame (May 1995)
- Member of Wired 25 (November 1998)
- Being named to The 25 most powerful people in networking by Network World (January 4, 1999)
- Listing in the TIME Digital 50 (September 27, 1999)
In 1999, Ebbers announced that MCI WorldCom would acquire its rival Sprint Communications for over $115 billion. This transaction, however, was abandoned after U.S. and
EuropeanThe European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
antitrustThe United States antitrust law is a body of laws that prohibits anti-competitive behavior and unfair business practices. Antitrust laws are intended to encourage competition in the marketplace. These competition laws make illegal certain practices deemed to hurt businesses or consumers or both,...
regulators raised objections. This combined with a general downturn in the telecom market resulted in a downturn in WorldCom
stockThe capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...
price.
Much of Ebbers' personal holdings were purchased with loans that had been backed by his WorldCom stock holdings. As the stock price declined he received a number of margin calls to provide additional
collateralIn lending agreements, collateral is a borrower's pledge of specific property to a lender, to secure repayment of a loan.The collateral serves as protection for a lender against a borrower's default - that is, any borrower failing to pay the principal and interest under the terms of a loan obligation...
for these loans. In an effort to prevent Ebbers from having to sell his shares, the WorldCom
board of directorsA board of directors is a body of elected or appointed members who jointly oversee the activities of a company or organization. Other names include board of governors, board of managers, board of regents, board of trustees, and board of visitors...
authorized a series of loans and loan guarantees between September 2000 and April 2002.
WorldCom announced the resignation of Bernie Ebbers on April 30, 2002. As part of his departure, Ebbers' loans were consolidated into a single $408.2 million promissory note.
Personal holdings
At his peak in early 1999, Ebbers was worth an estimated $1.4 billion and listed at number 174 on the
Forbes 400The Forbes 400 or 400 Richest Americans is a list published by Forbes Magazine magazine of the wealthiest 400 Americans, ranked by net worth. The list is published annually in September, and 2010 marks the 29th issue. The 400 was started by Malcom Forbes in 1982 and treats those in the list like...
. His personal holdings included:
- Douglas Lake Canada's biggest ranch - 500,000 acres (2,000 km²) in British Columbia
British Columbia is the westernmost of Canada's provinces and is known for its natural beauty, as reflected in its Latin motto, Splendor sine occasu . Its name was chosen by Queen Victoria in 1858...
. General partner/president. Acquired in 1998 for about $65 million. Sold on May 30, 2003 by MCI to E. Stanley KroenkeEnos Stanley "Stan" Kroenke is an American business entrepreneur. His wife, Ann Walton Kroenke, is the daughter of Wal-Mart cofounder Bud Walton. Kroenke is also the owner of Kroenke Sports Enterprises, which includes the Denver Nuggets of the NBA, Colorado Rapids of Major League Soccer, Colorado...
- Angelina Plantation - 21,000 acres (85 km²) farm in Monterey
Monterey is an unincorporated community in Concordia Parish, Louisiana, United States. The community is located near the junction of Louisiana Highways 129 and 565 in west central Concordia Parish, southwest of Ferriday...
, LouisianaLouisiana is a state located in the southern region of the United States of America. Its capital is Baton Rouge and largest city is New Orleans. Louisiana is the only state in the U.S. with political subdivisions termed parishes, which are local governments equivalent to counties...
. Co-owner with brother, John Ebbers. Acquired in 1998.
- Joshua Holdings - which combined with Joshua Timberlands and Joshua Timber totals 540,000 acres (2,200 km²) of timberlands in Mississippi, Tennessee, Louisiana and Alabama. Majority owner. Acquired properties in 1999 for about $600 million
- Pine Ridge Farm - Livestock and crop farm in Mississippi. Owner. LLC
A limited liability company is a flexible form of enterprise that blends elements of partnership and corporate structures. It is a legal form of company that provides limited liability to its owners in the vast majority of United States jurisdictions...
formed in 1997
- Columbus Lumber - High-tech lumber mill in Brookhaven, Mississippi
Brookhaven is a small city in Lincoln County, Mississippi, United States. The population was 9,861 at the 2000 census. It is the county seat of Lincoln County...
. Majority owner since at least 1996
- Yachts - BCT Holdings, owner of Intermarine, a yacht building and repair company in Georgia
Georgia is a state located in the southeastern United States. It was established in 1732, the last of the original Thirteen Colonies. The state is named after King George II of Great Britain. Georgia was the fourth state to ratify the United States Constitution, on January 2, 1788...
. Primary owner. Intermarine acquired in 1998 for about $14 million
- Hotels - Nine hotels in Mississippi
Mississippi is a U.S. state located in the Southern United States. Jackson is the state capital and largest city. The name of the state derives from the Mississippi River, which flows along its western boundary, whose name comes from the Ojibwe word misi-ziibi...
and TennesseeTennessee is a U.S. state located in the Southeastern United States. It has a population of 6,346,105, making it the nation's 17th-largest state by population, and covers , making it the 36th-largest by total land area...
: Co-owner or owner. Acquired over many years
- Trucking - KLLM, a trucking firm in Mississippi. Director. Acquired with partner in 2000 for about $30 million. Its present President is K. William Grothe, who served as Senior Vice President of Corporate Development for WorldCom, where he headed the company's merger and acquisition activities
- Sports - Mississippi Indoor Sports/Jackson Bandits
The Jackson Bandits were a minor league professional ice hockey team and member of the East Coast Hockey League . The Bandits played at the Mississippi Coliseum in Jackson, Mississippi between the 1999-2000 and 2002-03 seasons...
, a minor league hockey team. 50% owner. Acquired in 1999. Sold stake in September 2003
Other activities
Bernard Ebbers served as Chairman of the Board of Directors of the Competitive Telecommunications Association from 1993 through 1995. In 1997 he then became the chair for Mississippi College's New Dawn Campaign, a fund raising effort initially intended to provide $80 million that raised its goal to $100 million. In July 2001, Ebbers was proposed as the chair for the
PresidentThe President of the United States of America is the head of state and head of government of the United States. The president leads the executive branch of the federal government and is the commander-in-chief of the United States Armed Forces....
's National Security Telecommunications Advisory Committee.
Personality
Dubbed the "Telecom Cowboy", Ebbers was known for his unorthodox style. Instead of the typical corporate uniform he often wore boots and blue jeans.
While CEO of WorldCom, he was a member of the Easthaven Baptist Church in
Brookhaven, MississippiBrookhaven is a small city in Lincoln County, Mississippi, United States. The population was 9,861 at the 2000 census. It is the county seat of Lincoln County...
. As a high-profile member of the congregation, Ebbers regularly taught Sunday School and attended the morning Worship service with his family. His faith was overt, and he often started corporate meetings with prayer. When the allegations of conspiracy and fraud were first brought to light in 2002, Ebbers addressed the congregation and insisted on his innocence. "I just want you to know you aren't going to church with a crook", he said. "No one will find me to have knowingly committed fraud."
Post-WorldCom
On June 25, 2002, WorldCom admitted to $3.85 billion in accounting misstatements (the figure eventually grew to $11 billion). This initiated a series of investigations and legal proceedings, which naturally focused on Ebbers, WorldCom's then-CEO.
Congressional hearing
In response to a
subpoenaA subpoena is a writ by a government agency, most often a court, that has authority to compel testimony by a witness or production of evidence under a penalty for failure. There are two common types of subpoena:...
, Ebbers appeared before the U.S. House Committee on Financial Services on July 8, 2002. At these hearings Ebbers stated "I do not believe I have anything to hide, I believe that no one will conclude that I engaged in any criminal or fraudulent conduct." After making this statement Ebbers asserted his
Fifth AmendmentThe Fifth Amendment to the United States Constitution, which is part of the Bill of Rights, protects against abuse of government authority in a legal procedure. Its guarantees stem from English common law which traces back to the Magna Carta in 1215...
right against self-incrimination.
Following his actions, Ebbers was threatened with
Contempt of CongressContempt of Congress is the act of obstructing the work of the United States Congress or one of its committees. Historically the bribery of a senator or representative was considered contempt of Congress...
charges. The basis of the allegation was that Ebbers' statement constituted
testimonyIn law and in religion, testimony is a solemn attestation as to the truth of a matter. All testimonies should be well thought out and truthful. It was the custom in Ancient Rome for the men to place their right hand on a Bible when taking an oath...
that could not be
cross-examinedIn law, cross-examination is the interrogation of a witness called by one's opponent. It is preceded by direct examination and may be followed by a redirect .- Variations by Jurisdiction :In...
. No charge of contempt was ever filed.
Criminal charges
On August 27, 2003,
OklahomaOklahoma is a state located in the South Central region of the United States of America. With an estimated 3,751,351 residents as of the 2010 census and a land area of 68,667 square miles , Oklahoma is the 28th most populous and 20th-largest state...
's Attorney General,
Drew EdmondsonWilliam Andrew "Drew" Edmondson , is an American lawyer and politician from Oklahoma. A member of the Democratic Party, Edmondson served as the 16th Attorney General of Oklahoma from 1995 to 2011...
, filed a 15-count
indictmentAn indictment , in the common-law legal system, is a formal accusation that a person has committed a crime. In jurisdictions that maintain the concept of felonies, the serious criminal offence is a felony; jurisdictions that lack the concept of felonies often use that of an indictable offence—an...
against Ebbers. The indictment charged that he violated the state's securities laws by defrauding investors on multiple occasions between January 2001 and March 2002. These charges were dropped, with the right to refile retained, on November 20, 2003. An agreement to extend the statute of limitations on these charges, allowing Oklahoma prosecutors time to see the results of federal sentencing, was signed on March 30, 2005.
Federal authorities indicted Ebbers with security fraud and conspiracy charges on March 2, 2004. An amendment to the indictment on May 25, 2004 increased the list of charges to nine felonies: one count each of conspiracy and securities fraud, and seven counts of filing false statements with securities regulators.
Ebbers was found guilty of all charges on March 15, 2005.
On July 13, 2005, federal judge
Barbara S. JonesBarbara Sue Jones is a United States federal judge for the United States District Court for the Southern District of New York.-Early life and education:Born in Inglewood, California, Jones received a Bachelor of Arts from Mount St...
, of the U.S. District Court, Southern District of New York in Manhattan, sentenced Ebbers to twenty-five years in a federal prison in
LouisianaLouisiana is a state located in the southern region of the United States of America. Its capital is Baton Rouge and largest city is New Orleans. Louisiana is the only state in the U.S. with political subdivisions termed parishes, which are local governments equivalent to counties...
.
Ebbers was allowed to remain free for another year while his appeal was being considered. His conviction, however, was upheld in a federal circuit court on July 28, 2006. On September 6, 2006, the presiding judge ordered him to report to jail on September 26 to start serving his 25-year sentence. Ebbers self-reported to Oakdale Federal Correctional Institution in
Oakdale, LouisianaOakdale is a small city in Allen Parish, Louisiana, United States. The population was 8,137 at the 2000 census.Oakdale was founded as "Dunnsville" by William T. Dunn...
on September 26, 2006, driving himself to the prison in his
MercedesMercedes-Benz is a German manufacturer of automobiles, buses, coaches, and trucks. Mercedes-Benz is a division of its parent company, Daimler AG...
. He is serving his sentence as inmate #56022-054
in the low-security portion of the complex, which typically houses non-violent offenders and is built more like a school dormitory. The earliest date he can be released is in July 2028, at which time he will be 87 years old.
Civil suits
On October 11, 2002, WorldCom investors brought a
class actionIn law, a class action, a class suit, or a representative action is a form of lawsuit in which a large group of people collectively bring a claim to court and/or in which a class of defendants is being sued...
civil lawsuit against Ebbers and other defendants, alleging injuries as a result of Ebbers' securities fraud violations. Judge Denise Cote of the U.S. District Court for the Southern District of New York ordered the parties in the lawsuit to participate in settlement negotiations. On September 12, 2005, Judge Cote approved the settlement reached by the parties, and dismissed the lawsuit against Ebbers. The parties agreed that Ebbers and his codefendants would distribute over $6.13 billion, plus interest, to over 830,000 individuals and institutions that had held stocks and bonds in WorldCom at the time of its collapse. Under the terms of the settlement, Ebbers agreed to relinquish a significant portion of his assets, including a lavish home in Mississippi, and his interests in a lumber company, a marina, a golf course, a hotel, and thousands of acres of forested real estate. It is believed that Ebbers was left with around $50,000 in assets after settlement.
External links
- Douglas Lake his former ranch
- National Communications System
The National Communications System is an office within the United States Department of Homeland Security charged with enabling national security and emergency preparedness communications using the national telecommunications system.-Background and history:The genesis of the NCS began in 1962...
(July 16, 2001). President Bush Plans to Appoint WorldCom’s Ebbers to NSTAC. Press Release.
- Opensecrets.Com (April 25, 2002). http://www.opensecrets.org/indivs/search.asp?NumOfThou=0&txtName=Ebbers&txtState=%28all+states%29&txtZip=&txtEmploy=&txtCand=Kerry&txt2006=Y&txt2004=Y&txt2002=Y&Order=NBernard J Ebbers' Political Contribution to John Kerry
John Forbes Kerry is the senior United States Senator from Massachusetts, the 10th most senior U.S. Senator and chairman of the Senate Foreign Relations Committee. He was the presidential nominee of the Democratic Party in the 2004 presidential election, but lost to former President George W...
]. FEC Filing.
- First Interim Report of Dick Thornburgh, Bankruptcy Court Examiner, United States Bankruptcy Court for the Southern District of New York, In re WorldCom, Inc., Case No. 02-15533 (AJG) (November 4, 2002)
- Mug shot at The Smoking Gun
- Ebbers' current location within the Bureau of Prisons system