Mark P. Abide, Scott D. Sullivan, Buford Yates, Jr., Betty Vinson and Troy M. Normand, and David F. Myers
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19776 / July 27, 2006
Accounting and Auditing Enforcement Release No. 2467 / July 27, 2006
SEC v. Mark P. Abide, Civil Action No. 06 Civ. 5660 (S.D.N.Y.)
SEC v. Scott D. Sullivan, Civil Action No. 04 Civ. 1706 (S.D.N.Y.)
SEC v. Buford Yates, Jr., Civil Action No. 02 Civ. 7958 (S.D.N.Y.)
SEC v. Betty Vinson and Troy M. Normand, Civil Action No. 02 Civ. 8083 (S.D.N.Y.)
SEC v. David F. Myers, Civil Action No. 02 Civ. 7749 (S.D.N.Y.)
SEC Files Civil Fraud Action Against Mark P. Abide, Former WorldCom Director of Property Accounting; Abide Consents to Fraud Injunction and Agrees to Pay Disgorgement, Prejudgment Interest and Civil Money Penalties
SEC Settles Actions Against Former WorldCom Chief Financial Officer Scott Sullivan and Former WorldCom Accountants David Myers, Buford Yates, Jr., Betty Vinson and Troy Normand With Respect to Monetary Relief
Today the Securities and Exchange Commission filed a civil fraud action in the United States District Court for the Southern District of New York against Mark P. Abide, the former Director of Property Accounting for WorldCom, Inc., for his role in the WorldCom fraud and for illegally selling WorldCom stock in January and February 2002 based on information he possessed about the fraud and the company's true financial condition. Abide has agreed to settle the matter by consenting, without admitting or denying the allegations in the Commission's complaint, to the entry of a final judgment enjoining him from violating the anti-fraud and other provisions of the federal securities laws, requiring him to pay $57,947 in disgorgement, prejudgment interest of $12,912 and an insider trading civil money penalty of $57,947.
Abide also has agreed to be suspended from practicing before the Commission as an accountant with the right to request his reinstatement after five years.
The Commission's action against Abide is its seventh civil action related to the WorldCom fraud. The complaint filed today alleges from the first quarter of 2001 through the first quarter of 2002, Abide made, and directed others to make, improper accounting entries into WorldCom's depreciable asset accounts in order to conceal improperly capitalized expenses. In January and February 2002, while the fraud was being carried out by Abide and others, Abide sold 6,728 shares of WorldCom stock (99% of the WorldCom stock he owned), avoiding losses of nearly $58,000.
If the settlement is approved by the Court, Abide would be enjoined from future violations of the antifraud, reporting, books and records and internal controls provisions of the federal securities laws-Section 17(a) of the Securities Act of 1933 and Sections 10(b), 13(a), 13(b)(2) and 13(b)(5) of the Securities Exchange Act of 1934 and Rules 10b-5, 12b-20, 13a-1, 13a-13, and 13b2-1 thereunder.
The Commission also announced that it filed today Consents and proposed Final Judgments As to Monetary Relief in the Commission's civil actions in the United States District Court for the Southern District of New York against former WorldCom Chief Financial Officer Scott Sullivan and former WorldCom accountants Buford Yates, Jr., Betty Vinson and Troy Normand.
Sullivan consented to the entry of a final judgment holding him liable for $10 million in disgorgement, representing a retention bonus Sullivan received in 2000, and $3,591,889 in prejudgment interest. If approved by the Court, the proposed Final Judgment As to Monetary Relief, however, would waive payment of the disgorgement and prejudgment interest and would not impose a civil penalty based on Sullivan's demonstrated inability to pay. In 2005, Sullivan settled the WorldCom Securities Class Action Litigation by, among other things, surrendering the proceeds from the sale of his Boca Raton, Florida home, and his WorldCom 401(k) account. In United States v. Scott D. Sullivan, 02 Cr 1144 (BSJ) (S.D.N.Y.), a parallel criminal action filed by the United States Attorney for the Southern District of New York, Sullivan received a five year prison sentence, but was not ordered to pay restitution or a fine.
Previously, the Court issued judgments of permanent injunction against Sullivan, imposing the full injunctive relief sought by the Commission and prohibiting him from acting as an officer or director of any public company. (Litigation Release No. 18605.) Sullivan consented to the entry of the initial judgment as well, without admitting or denying any of the allegations of the Commission's complaint against him. In addition, in separate administrative proceedings, Sullivan agreed to be suspended from practicing before the Commission as an accountant. (In the Matter of Scott D. Sullivan, Rel. 33-8402, AAE Rel. 1977, File No. 3-11435.)
Yates consented to the entry of a final judgment holding him liable for $263,809 in disgorgement, representing a retention bonus and other payments Yates received in 2000, and $94,757 in prejudgment interest. If approved by the Court, the proposed Final Judgment As to Monetary Relief, however, would waive payment of the disgorgement and prejudgment interest and would not impose a civil penalty based on Yates' demonstrated inability to pay.
The proposed Final Judgments As to Monetary Relief against Betty Vinson and Troy Normand, if approved by the Court, would not find Vinson or Normand liable for disgorgement since neither defendant received ill-gotten gains from their participation in the fraud. In addition, the proposed Final Judgments would not impose civil money penalties against Vinson or Normand based on their demonstrated inability to pay.
Previously, the Court issued judgments of permanent injunction against Yates, Vinson and Normand, imposing the full injunctive relief sought by the Commission and, with respect to Yates, prohibiting him from acting as an officer or director of any public company. (Litigation Release Nos. 17842 and 17883.) The three defendants consented to the entry of the initial judgments as well, without admitting or denying any of the allegations of the Commission's complaints against them. In addition, in separate administrative proceedings, Yates and Vinson agreed to be suspended from practicing before the Commission as accountants. (In the Matter of Buford Yates, Jr., Rel. 33-8156, AAE Rel. 1684, File No. 3-10964; and In the Matter of Betty Vinson, CPA, Rel. 33-8158, AAE Rel. 1686, File No. 3-10963.)
On July 26, 2005, the U.S. District Court for the Southern District of New York issued a Final Judgment As to Monetary Relief in the Commission's civil action against David F. Myers, former controller of WorldCom, Inc., in which the Court found Myers liable for approximately $1 million in disgorgement, representing bonuses Myers received during the pendency of the fraud. The Court, however, waived payment of the disgorgement due to Myers's demonstrated inability to pay, and did not impose a civil penalty. Myers consented to the entry of the judgment against him.
The Court issued a judgment of permanent injunction against Myers on November 14, 2002, imposing the full injunctive relief sought by the Commission and prohibiting Myers from acting as an officer or director of any public company. Myers consented to the entry of this initial judgment as well, without admitting or denying any of the allegations of the Commission's complaint. (Litigation Release No. 17842.) In addition, in a separate administrative proceeding filed in November 2002, Myers agreed to be suspended from practicing before the Commission as an accountant. (In the Matter of David F. Myers, Rel. 33-8157, AAE Rel. 1685, File No. 3-10965.)
The Commission's complaints filed against Abide, Sullivan, Myers, Yates, Vinson, Normand and former WorldCom Chief Executive Officer, Bernard J. Ebbers (Litigation Release No. 19301), allege that the seven former WorldCom officers and accountants caused numerous fraudulent adjustments and entries in WorldCom's books and records, often in the hundreds of millions of dollars, in furtherance of a scheme to make the Company's publicly reported financial results appear to meet Wall Street's expectations.
The Commission acknowledges the assistance and cooperation of the U.S. Attorney's Office for the Southern District of New York and the Federal Bureau of Investigation.
The Commission's investigation into matters related to the WorldCom financial fraud is continuing.
