Ex-WorldCom exec Scott Sullivan out of prison

August 3, 2009 by admin  
Filed under Featured, Local News

Back so soon?

Former WorldCom Chief Financial Officer Scott Sullivan quietly has returned to suburban Boca Raton after serving four years of a five-year prison sentence for his part in one of the nation’s biggest financial scandals.

scott-sulivan

Former CFO Scott Sullivan in custody

But Sullivan, 47, isn’t living in the $15 million dream house he was building in the exclusive Le Lac enclave west of the city. Instead, he’s back at the modest Woodbury neighborhood home he bought for $170,000 in 1990, just before WorldCom began its rapid growth and eventual explosion into an $11 billion securities fraud.

During the 1990s, the whiz-kid Sullivan, together with Worldcom Chief Executive Bernard Ebbers, transformed WorldCom from a small Mississippi long-distance reseller into the nation’s second-largest long-distance company. (The company also had an office in Boca Raton.) WorldCom’s earnings ballooned, allowing CFO Sullivan to take home $45 million in stock options and bonuses from 1999 to 2001.

As WorldCom’s fortunes rose, Sullivan and his wife started building the ostentatious Le Lac mansion. Sullivan’s 24,000-square-foot villa, complete with Greek-style columns, arched windows, 10 bedrooms, seven fireplaces, a six-car garage and brick wine cellar, came to symbolize the excesses of the day.

Then came July 2002, when WorldCom was revealed as the poster child of accounting fraud: Internal auditors found the company had improperly classified billions of dollars in operating expenses as capital expenditures. The accounting shenanigans led to the company’s bankruptcy, the loss of more than 20,000 jobs and Sullivan’s indictment on fraud charges.

Sullivan repeatedly denied wrongdoing but had a change of heart just before his 2004 trial and switched to a guilty plea for securities fraud. Facing a 25-year sentence if convicted, he then did what Bernard Madoff thus far has refused to do: He squealed to the feds.

Sullivan became the star witness at Ebbers’ trial, leading to Ebbers’ conviction and 25-year federal prison sentence.

For his part, Sullivan received a sentence of just five years in prison, despite being dubbed “the architect” of the WorldCom fraud by a federal judge. It was a prime example of how cooperating with prosecutors can pay.

The bulk of Sullivan’s sentence was served at a medium-security federal corrections facility in Jesup, Ga., according to a spokeswoman at the Federal Bureau of Prisons in Washington. But in January, Sullivan was permitted to serve the last of his federal sentence under “home confinement,” the spokeswoman said.

Sullivan’s sentence officially ended May 18, one year early, records show. (Federal prisoners can receive a portion off their sentence for good behavior.) Sullivan now is on supervised release for three years, according to Michael J. Fitzpatrick, Chief U.S. Probation Officer for the Southern District of New York, where Sullivan was adjudicated.

Alas, Sullivan never was able to live in his Le Lac palace. When WorldCom’s accounting fraud was revealed in 2002, the home’s three-year construction job was halted. The property, once listed for sale for $22.5 million, was sold for $9.7 million in 2005 to a local family after Sullivan gave up the rights to the sale’s proceeds.

Now that he’s a free man, Sullivan’s next move is unclear.

Last week, no one answered the door at his home in suburban Boca Raton, and he did not respond to a request for comment. Fitzpatrick said Sullivan must keep his parole officer informed of his financial activities.

Meanwhile, Ebbers, 65, remains locked up at the Federal Correctional Institution in Oakdale, La. He is set for release in 2028.

Source: ThePalmBeachPost.com

By Alexandra Clough / Palm Beach Post Staff Writer

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