The verdict is in.
Lacking access to "the chair," investors in bankrupt telecom WorldCom had hoped they could at least seat ex-CFO Scott Sullivan next to ex-CEO Bernie Ebbers in the klink for 25 years. Yet when the sentence came down yesterday, the architect of the fraud that ended in America's biggest bankruptcy got off with a five-year slap on the wrist.
In handing down her ruling, U.S. District Judge Barbara Jones deferred in part to prosecutors who begged for leniency; she called Sullivan "a model cooperator" and "the key factor" in convicting his ex-boss, Ebbers, of the greatest financial fraud ever to plague the country. And as far as that goes, this Fool has no problem with the verdict. It's a well-established rule of the legal game that you often have to let the minnows slip through the net if you're to catch the real sharks. Although the WorldCom (since renamed MCI (NASDAQ:MCIP) and soon to be re-re-named Verizon (NYSE:VZ)) trial was more a case of turning one shark against another, the principle remains the same.
What shocks my conscience is not Sullivan's break but Jones' offhand comment about one reason she was going easy on Sullivan. She noted that Sullivan's wife has diabetes and could not care for the couple's child when undergoing treatment at the hospital.
Now, I don't mean to sound heartless -- my sympathies go out to Mrs. Sullivan and her child, of course. But this ex-prosecutor can't recall ever participating in a trial in which a drunk driver, petty thief, or simple thug got off lightly because "his family needed him."
Seriously, folks. Sullivan wasn't just a good guy in a tight spot. He actively plotted to defraud people. Not just once, but for years on end. Yes, once caught, he helped the government catch a bigger fish -- and for that he got his deal. But in requesting that the court not put him in prison at all because this would be an "extreme burden" on his wife and daughter, he went too far.
I have to ask: What about the "burden" borne by the 20,000 WorldCom employees who lost their jobs when this company imploded? What about the "burden" that Sullivan imposed upon countless investors -- mothers and children among them -- who lost their life's savings when $180 billion worth of WorldCom equity went "poof"?
Sadly, those questions have to remain rhetorical. The verdict is in, and five years from now, Sullivan can put his legal difficulties behind him and begin rebuilding his fortune on the public-speaking circuit. His victims, however, will be dealing with the consequences of his crime for the rest of their financial lives.
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Philip Durell of Motley Fool Inside Value selected MCI back in September 2004 and earned a return of 47.15% before issuing a sell recommendation in February 2005. Click here to see Philip's more recent selections.
Fool contributor Rich Smith , a former county prosecutor, has noticed that whatever crime someone's charged with, pretty much all defendants wear collared shirts on trial day. He does not own shares in any company named above.
