Former high school basketball coach BERNARD J. EBBERS built WorldCom Inc. by acquiring dozens of telecom companies during the 1990s boom. Now he's under scrutiny by Justice Dept. investigators who wonder whether he had any inkling of the massive accounting fraud that WorldCom undertook to bolster its results. The Securities & Exchange Commission estimates the magnitude of the deceit at $9 billion so far. Investigators may also be looking at a $408 million loan that WorldCom made to Ebbers. Several lower-level execs have been indicted and some are cooperating with the government, but former CEO Ebbers has not been charged. His lawyer maintains he is innocent. Ebbers kept most of his personal wealth in company stock and is believed to now have a negative net worth.
JACK GRUBMAN, the former telecom-research star at Citigroup's Salomon Smith Barney (C ), would be banned for life from the securities industry and pay a $15 million fine under a tentative agreement with New York State Attorney General Eliot Spitzer. Grubman, who was being investigated for his ties to now-bankrupt telecom companies, neither admitted nor denied guilt. The deal does not preclude further probes by Spitzer and others.
Global Crossing Ltd. Chairman GARY WINNICK has been questioned by the SEC and Justice Dept. about his company's possibly misleading "swap" transactions of telecom capacity that helped boost its revenue in 2000 and 2001. The company's unsecured creditors have been pressing for his removal as chairman. His lawyer says Winnick is just a witness, not a target of the investigation. (Winnick resigned as chairman on Dec. 31, 2002.)
Home-decorating doyenne MARTHA STEWART has been informed by the SEC's enforcement staff that it intends to recommend filing civil securities-fraud charges against her in connection with her sale of nearly 4,000 shares of ImClone Systems Inc. (IMCL ), the biotech company founded by her friend Samuel D. Waksal. Federal prosecutors in New York also are believed to be weighing possible criminal charges of securities fraud, obstruction of justice, and making false statements about the sale. Stewart has denied any wrongdoing.
ULLICO Inc. CEO ROBERT A. GEORGINE is under criminal investigation by a Washington grand jury, as well as civil inquiries by the Labor Dept. and other agencies. At issue are the millions of dollars he and other labor leaders allegedly made from a secret deal to buy stock in the union-owned company just before shares were repriced to reflect the soaring value of an early investment in Global Crossing. The union officers serve as directors of ULLICO, the parent of Union Labor Life Insurance Co. Georgine has declined to comment.
SANJAY KUMAR, the chairman and CEO of Computer Associates International Inc. (CA ), must guide his company through investigations by the SEC and Justice Dept. into alleged accounting irregularities that occurred while he was the right-hand man to CA founder and former Chairman Charles B. Wang, who left in November. Kumar denies that CA has done anything illegal.
DAVID COLBURN, ousted in August as president of business development at AOL Time Warner Inc. (AOL ), is under investigation by federal prosecutors and the SEC, according to The Washington Post, on suspicion of having improperly boosted online advertising revenues. His lawyer declined to comment.