Guilty Pleasures

I don't typically relish the misfortune of others--even if they've brought it upon themselves. But I had to suppress a smile when the cable news channels began broadcasting the guilty verdict against Bernard Ebbers, the former CEO of the former WorldCom (now a much-chagrined, and much smaller MCI). It took the 12 jurors--all of whom declined to speak to the press after the verdict--about 40 hours to convict Mr. Ebbers of securities fraud, conspiracy and seven counts of filing false reports with regulators. Since each count carries a sentence of 5 or 10 years, Ebbers is looking at spending the rest of his life behind bars--assuming his inevitable appeal is unsuccessful.
What makes the verdict even more satisfying is that it comes on the heels of Martha Stewart's release from a 5-month stay in prison. It is only fair that Stewart, whose suspect stock sale cost her a lot more than anyone else, is free while Ebbers, whose fraudulent accounting methods literally cost tens of thousands of employees and investors their jobs and life savings, will probably be spending the rest of his days behind bars for it.
Stewart was convicted of lying to regulators about her sale of 3,928 shares of ImClone Systems stock in 2001--from which she netted about $225,000 (or about 2.8 percent of the $8 million she earned from selling shares of her own company upon her release from prison). But her stock sale was personal--and had no ties to Martha Stewart Living Omnimedia, whose stock price has actually climbed quite a bit since her trial (I wish I'd bought some then)--and no one lost money as a direct result of the ImClone stock sale for which she is still serving a home prison sentence. In fact, ImClone stock has also increased in value since then.
Ebbers's alleged accounting fraud, on the other hand, added up to a $10+ billion, much of which came out of the pockets of tens of thousands of WorldCom workers who lost their jobs and savings when the company filed for bankruptcy in 2002. For them, the verdict might bring some satisfaction even if it doesn't bring them sufficient compensation.
(The company already agreed to a $750 million settlement with federal regulators to repay some of the losses suffered by investors, but that's a small chunk of the tens of billions of dollars lost in the scandal.)
Mr. Ebbers, who is 63, is by far the most prominent executive yet to be convicted in a corporate fraud case, but he is not the only one to be charged with such crimes.
The trial last year of former Tyco executives Dennis Kozlowski and Mark Swartz, who were accused of stealing $600 million from the company they ran, cost an estimated $12 million --and resulted in a mistrial. But Kozlowski is now being retried in New York.
Richard M. Scrushy of HealthSouth, who is also accused of fraud, is on trial now in Birmingham, Ala. And Kenneth L. Lay, the former chairman of Enron, will be tried next January on fraud and other charges, along with his colleagues (or co-conspirators, depending on how you look at it) Jeffrey K. Skilling, Enron's former chief executive, and Richard Causey, the former chief accounting officer.
The guilty verdict against Ebbers has reportedly sent a "chilling message" to other executives facing trial. Let's hope it also sends a message to other executives who may be contemplating cooking their books to boost--artificially--their company's stock price.
It will take more than one conviction--especially as Ebbers's appeal could delay any sentencing for several months--to convince Corporate America that meting out prison terms for white-collar crimes is the norm not the exception. Fortunately--or not--there are plenty more opportunities in the months ahead to prove that is the case.