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SEC Files Suit Against WorldCom for Defrauding Investors

HeadlineJun 27, 2002

The Securities and Exchange Commission Wednesday filed suit against WorldCom, charging the corporation defrauded investors. The suit charges improper accounting for nearly $4 billion in expenses made the nation’s second-largest long distance phone company appear more profitable than it really was. The Washington Post is reporting as recently as a week before WorldCom revealed the scandal, it was still trying to influence politicians in town. The company contributed $100,000 to last week’s Republican fundraising gala featuring President Bush and was listed on the program as vice chair of the event. In the last year-and-a-half alone, WorldCom contributed more than $1 million to candidates, about half to Republicans, half to Democrats. The corporation once gave $1 million to the University of Mississippi’s Trent Lott Leadership Institute. The donations could complicate the Justice Department’s probe of WorldCom’s misstatement of earnings. Shortly before becoming Attorney General, John Ashcroft received $10,000 from the company for his Senate campaign. And if WorldCom goes down, who will be the biggest losers? Well, in one state alone, for example, New York state, the New York State Pension Fund is among big WorldCom’s losers, out at least $300 million.

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