WorldCom and The Mississippi Scheme Scandals

WorldCom and The Mississippi Scheme are both large financial scandals that have occurred. WorldCom was a telecommunication company that overstated their cash flow by reporting $7.6 billion in operating expenses as capital expenses. WorldCom is the largest accounting scandal in US history as of March 2002. The Mississippi Scheme was a business scheme that destroyed the economy of France during the 1700’s. The scheme involved the loss of paper money’s purchasing power as a result of asset inflation. Both WorldCom and The Mississippi Scheme were frauds involving manipulation to create higher stock prices and dubious practices within the organizations to keep the public unaware.

Bernie Ebbers was the founder and CEO of WorldCom. He took a small telecommunications firm and transformed it into an industry giant before it collapsed into bankruptcy in 2002. The stock prices of WorldCom began to fall in 2000 and in order to prevent the price from falling further WorldCom made mass loans to Ebbers to stop him from selling his stock. He initiated the fraud and false reporting. He did not give accounting details as to how the false reporting should occur but he did repeatedly say it was important to “make the numbers.”

Scott Sullivan was the CFO and on the board of directors of WorldCom. He oversaw the conspiracy to hide operating expenses in order to improve reported profits of the company. He advised Bernie Ebbers to inform the public of the WorldCom’s deteriorating situation but Sullivan’s advice was not taken. Ebbers had instructed Sullivan to adjust the accounting numbers.

David Myers was the controller of WorldCom. He instructed the accounting department to make billions of dollars in adjustments to financial state...

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...t themselves. The Duke de Bourbon and the Prince de Conti were members of the council of the regency. They abused their positions and their influence to see that measures were taken to get the shares to rise while in their hands in order to make huge profits. This is similar to Ebbers and Sullivan selling shares of stock in 2000 when they had inside information that the stock price would be falling. Ebbers was offered a loan instead of selling his shares, though.

WorldCom and the Mississippi Scheme were both major financial scandals of their time. These scandals have similarities and differences. WorldCom was the second largest phone company in the United States as of 1998. The Mississippi Scheme was a plan that affected every household in France during the 1700’s. Both scandals would never have occurred if the people in charge would not have been fraudulent.