In a somewhat shocking development to a world conditioned to prolonged white collar criminal prosecutions, the prosecution in the criminal trial of former WorldCom CEO Bernard Ebbers announced yesterday that it will not be calling any further witnesses from the company and that it expects to conclude its case-in-chief either today or tomorrow. The government’s statement came after U.S. District Judge Barbara Jones declined to grant the government’s request to call a former WorldCom employee who lost her entire retirement savings when the company collapsed,
Thus, the importance of former WorldCom CFO Scott Sullivan‘s testimony to the government’s case against Ebbers has come into clear focus. The government used Sullivan as the principal witness to connect Ebbers’ involvement in the accounting fraud at WorldCom, and the cross-examination hammered on Sullivan’s lies and misstatements, including a protracted discussion about whether what Sullivan said in a particular conference call constituted the universally understood concept of “B.S.”
Nevertheless, after three weeks of testimony, the government has essentially conceded that there is no paper trail to link Ebbers directly to the fraud. Sullivan’s testimony is that he falsified WorldCom’s accounts on numerous occasions and repeatedly lied about the company’s trading position because Ebbers urged in private conversations that “We have to hit our numbers.”
On cross-examination of Sullivan, the Ebbers defense promoted the “honest idiot defense” theory that Ebbers was the visionary who delegated the details of the company’s accounts to the more sophisticated and better educated Sullivan. Now, with the prosecution’s case winding down, the Ebbers defense team faces the key strategic decision in the case — whether to put Ebbers on the stand or even whether to put on any witnesses other than character witnesses to attest to Ebbers’ good ol’ boy nature. Inasmuch as juries in white collar cases expect to hear what the defendant has to say, they generally hold not testifying against the defendant even though they are not supposed to do so. However, with the WorldCom prosecution’s case relying heavily on Sullivan’s credibility, the Ebbers defense team may decide that Ebbers’ testimony could only hurt their defense and, thus, it’s worth the risk of not putting him on the stand.
Stay tuned on this one, folks. This case may go to the jury be early next week.