Remarks of Attorney General John Ashcroft
WorldCom Press Conference
August 1, 2002
(Note: The Attorney General Often Deviates from Prepared Remarks)
Good afternoon. Today, in the Southern District of New York, WorldCom Incorporated executives Scott D. Sullivan and David F. Myers were charged with seven counts of securities fraud, conspiracy to commit securities fraud, and filing false statements with the Securities and Exchange Commission. Earlier today, Mr. Sullivan and Mr. Myers surrendered to authorities in Manhattan. If indicted and convicted of these charges, both men could receive up to 65 years in prison.
Today's charges are the latest in a sustained series of law enforcement actions aimed at prosecuting corporate law-breakers and protecting the savings and pensions of Americans. With each arrest, indictment and prosecution, we send this clear, unmistakable message: corrupt corporate executives are no better than common thieves when they betray their employees and steal from their investors. Corporate executives who cheat investors, steal savings, and squander pensions will meet the judgement they fear and the punishment they deserve.
In the past weeks and months, the Justice Department has moved decisively against alleged fraud and malfeasance at major corporations such as Adelphia Communications, ImClone Systems, Republic Securities Corporation, Rite Aid Corporation, Allfirst Bank and Enron Corporation, a matter from which I am recused. In March, the Department obtained an indictment against Enron's auditor, Arthur Andersen LLP. And on June 15, a federal jury in Houston convicted Arthur Andersen of obstruction of justice.
The charges filed today are the result of an extensive investigation of WorldCom Incorporated. Until June 25, Scott D. Sullivan served as WorldCom's Chief Financial Officer, Treasurer and Secretary. David F. Myers was WorldCom's Senior Vice President and Controller. The charges allege that Sullivan and Myers illegally transferred billions of dollars of WorldCom's current expenses from debits on the company's income statement to credits on its balance sheet. In total, 3.8 billion in operating expense is alleged to have been transferred to the company's capital expenditure accounts, concealing from the investing public net WorldCom losses in 2001 and the first quarter of 2002.
I thank the agents, investigators and prosecutors of the Southern District of New York, led by U.S. Attorney James Comey, for their dedication to justice in this case. Steve Cutler, Chief of Enforcement at the Securities and Exchange Commission, is also here today. In investigating this case, we received outstanding cooperation from the SEC, which made a substantial contribution to our effort. I thank Director Robert Mueller and all of the agents of the Federal Bureau of Investigation who dedicated themselves to justice in this case. I am grateful for the work of Assistant Attorney General Michael Chertoff and the men and women of the Criminal Division. And I commend the work of the Corporate Fraud Task Force, which is leading our campaign to investigate, prosecute and punish corporate corruption.
The vast majority of corporate executives are honest, hard-working people. The Department of Justice acts today both out of conviction and necessity against the few who have betrayed the investing public. The survival of the free market depends on a marketplace of integrity - a marketplace that operates on information of integrity. The vast majority of American companies are businesses of integrity. The reliable, truthful information they provide is the invisible hand that directs the economy. But when financial transactions are fraudulent and balance sheets are falsified, the invisible hand that guides our markets is replaced by a greased palm. Information is corrupted. Trust is abused. And the state of the market dissolves into a state of nature, where the ruthless and corrupt profit at the expense of the truthful and law-abiding.
Thanks to the leadership of the President and the quick action of Congress, law enforcement has new tools with which to restore America's marketplace of integrity. We will use these tools. We will enforce that law. We will do all we can within the law and under the Constitution to protect and secure the savings of every-day Americans.
Thank you. Now I would like to ask Deputy Attorney General Larry Thompson, who chairs the corporate fraud task force, to provide more details about this case.