When WorldCom's stock declined in 2000, the company made massive loans to Ebbers to keep him from selling stock and further depressing its price. A Securities and Exchange Commission investigation into the loans led in 2002 to Ebbers' resignation, and WorldCom admitted that it had inflated earnings by $3.8 billion. Subsequent probes uncovered some $11 billion in fraudulent accounting practices that had fueled WorldCom's rise (and hurt other telecommunications companies by creating the impression that they were much less efficiently run). WorldCom was forced into bankruptcy, and investors lost $180 billion. Convicted in 2005 of securities fraud, conspiracy, and filing false reports, Ebbers was sentenced to 25 years in prison.
The Columbia Electronic Encyclopedia, 6th ed. Copyright © 2012, Columbia University Press. All rights reserved.
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