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mental invalid

excuse me but have you seen 3.7 billion dollars, i seem to have misplaced it...

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from the NYT.....unfucking believable....but keep in mind that currently 87% of consumer internet use is held on worldcom lines, 50% of business is, and 30% of consumer long distance is....if worldcom goes under it could mean a smaller pool of competition as well as major fucking headaches for everyone....i dont want big governement in my face either but some things should not be deregulated.....






WorldCom Facing Charges of Fraud; Bush Vows Inquiry





he Securities and Exchange Commission filed fraud charges against WorldCom yesterday and President Bush vowed to "hold people accountable" for the bookkeeping scandal at the company, the nation's second-largest long-distance provider and a major carrier of Internet traffic.


As the stock market shuddered yesterday in response to Tuesday night's disclosure that WorldCom had falsely reported profits for the last five quarters, the Nasdaq exchange suspended trading of shares in WorldCom and the tracking stock of its MCI unit. And as the value of WorldCom's corporate bonds plummeted, it became clear that the debt-ridden company would now face tougher negotiations with its bank lenders, making a bankruptcy filing more likely.



Meanwhile, the Justice Department and a House committee opened investigations of the company's accounting methods, and the S.E.C. said it would expand its own investigation, which it began in March.


As the company's work force braced for a wave of pink slips — WorldCom plans to cut 17,000 of its 85,000 employees beginning tomorrow — some consumer and corporate customers of WorldCom's MCI long-distance unit were already looking for alternative carriers.


Few telecommunications companies looked like havens yesterday, though, as WorldCom's bad news helped batter stocks of other carriers in this country and overseas, companies that have already been struggling to emerge from the communications industry's long recession.


"The industry is reeling from this black mark," Jose Collazo, chief executive of Infonet, a WorldCom competitor, said in an interview.


It was as if months of accounting scandals, which have already engulfed Enron, Global Crossing and Adelphia Communications, among others, as well as the auditing firm Arthur Andersen, had finally hit critical mass with the disclosure late Tuesday that WorldCom had masked losses by overstating its financial results by $3.8 billion — one of the largest cases of false corporate bookkeeping yet.


President Bush, speaking yesterday on the opening day of an eight-nation economic meeting in Kananaskis, Alberta, called the WorldCom revelation "outrageous" and vowed, "We will fully investigate and hold people accountable for misleading not only shareholders but employees as well."


In an apparent show of the administration's resolve, a few hours later the chairman of the S.E.C., Harvey L. Pitt, told reporters in Manhattan that the commission had taken the unusual step of filing civil fraud charges against WorldCom. He said part of the aim was to prevent the destruction of documents by WorldCom while the S.E.C. continued its investigation.


In its court filing, the S.E.C. said WorldCom violated antifraud and reporting provisions of federal securities laws by creating an accounting scheme intended to manipulate earnings to meet Wall Street's expectations and to support the company's stock price. Under this scheme, the S.E.C. said, WorldCom improperly booked so-called line costs, or the fees WorldCom paid to other communications companies to use their networks, as capital investments, which had the effect of masking losses.


The accounting strategy, which the S.E.C. said was put in place in early 2001 as the slowing economy resulted in a decline in WorldCom's profits, may have been blessed by executives other than Scott D. Sullivan, the chief financial officer who was fired this week, and David Myers, the controller, who resigned, according to the commission's complaint.


"In a scheme directed and approved by its senior management, WorldCom disguised its true operating performance by using undisclosed and improper accounting that materially overstated its income," the S.E.C. said in its complaint.


It remains to be seen whether the Justice Department will investigate WorldCom with the same intensity it has shown in its investigation of Enron, for which it set up a special task force. Bryan Sierra, a spokesman for the Justice Department, declined to comment yesterday, but people close to the company said that a Justice inquiry was under way.

The House Energy and Commerce Committee, meanwhile, which has looked into business practices at Enron, Global Crossing and ImClone, will now turn its attention to WorldCom, according to its chairman, Billy Tauzin, Republican of Louisiana.

"This was not a simple bookkeeping mistake," Mr. Tauzin said in a statement released yesterday. "Clearly, it was an orchestrated effort to mislead investors and regulators, and I am determined to get to the bottom of it."


John W. Sidgmore, WorldCom's chief executive, who disclosed the WorldCom bookkeeping problem on Tuesday night and announced that Mr. Sullivan had been fired, was not available for comment yesterday. Instead, he put a statement on the company's Web site, saying in part, "This has been a very tough week for WorldCom, there's no doubt about it."


Mr. Sidgmore spent much of the day yesterday in discussions with WorldCom's large customers and some of its employees, but it could not be determined whether he had held further talks with the company's bankers, with whom he had met in New York on Tuesday.


WorldCom's future hinges on negotiating additional loans with its banks, led by Bank of America and including J. P. Morgan Chase and Citigroup. The company had been planning to tap a multibillion-dollar credit line this week. But now that does not seem feasible, because the accounting disclosures indicate that the company was in violation of its financing terms throughout 2001 and the beginning of this year.


Without additional loans, analysts said, WorldCom has about $2.5 billion of available cash, which the company would probably consume within three months.


"We believe WorldCom's lead banks may refuse to honor additional requests to draw down credit lines and that negotiations over new, securitized credit lines are likely to falter," said Dan Reingold, an analyst at Credit Suisse First Boston. "This, of course, means bankruptcy is now a distinct and near-term possibility."


Mr. Sidgmore took over as chief executive in late April after WorldCom's longtime leader, Bernard J. Ebbers, resigned following the company's disclosure that Mr. Ebbers owed WorldCom more than $366 million for loans and loan guarantees the company had granted him. In the wake of the new disclosures, Mr. Sidgmore is now faced with the task of drastically scaling back WorldCom's work force and its expectations.


He is making his base in Washington, the city where MCI had its headquarters before being acquired by WorldCom in 1998, as he maintains distance from WorldCom's official headquarters in Clinton, Miss.


The first of the 17,000 job cuts are scheduled to begin tomorrow at several locations around the world. In addition to Clinton and Washington, WorldCom's large offices in the United States are in Dallas; Ashburn, Va.; Tulsa, Okla.; and Alpharetta, Ga. The dismissals are expected to be distributed fairly evenly among work categories and geographic locations.


WorldCom's disclosure of its accounting problem weighed on the entire telecommunications industry yesterday. Although trading in the company's shares was officially suspended by Nasdaq, in off-exchange electronic trading on Instinet and elsewhere, the stock fell to as low as 9 cents, down from 83 cents at Tuesday's close. The North American Telecom Index, which includes WorldCom and other large service providers, fell more than 10 percent yesterday.


Shares in Qwest Communications, another large company whose accounting practices are under investigation by the S.E.C., plunged $2.40, to $1.79. Companies that sell equipment to WorldCom and its competitors also fell, with the shares of Lucent Technologies down 39 cents, to close at $1.58, and Nortel Networks down 14 cents, closing at $1.47.


Even shares in WorldCom competitors like AT&T and Sprint, which stand to gain from customer defections, fell yesterday. AT&T's stock reached a 10-year low, falling 33 cents, to end the day at $9.62.


"I am deeply concerned by the WorldCom developments, and the impact it could have on consumers and other providers in the industry," Michael K. Powell, chairman of the Federal Communications Commission, said in a statement yesterday. "We are closely monitoring the situation and are doing everything possible to ensure and protect both the stability of the telecommunications network and the quality of service to consumers."


Mr. Powell said he would travel to New York tomorrow to meet with telephone industry officials, analysts and debt-rating agencies to discuss the crisis in the telecommunications industry.


Several consumer groups called yesterday for greater regulation of the industry, fearful that a bankruptcy filing by WorldCom would limit the competitive choices that have steadily lowered the cost of long distance in recent years.


The Telecommunications Research and Action Center, a nonprofit group in Washington, asked the F.C.C. to reinstate full regulatory oversight of the long-distance industry to assure that consumers did not end up paying more for WorldCom's accounting scandal. Another group, Consumers Union, urged Congress to approve a corporate-accounting reform bill sponsored by Senator Paul Sarbanes, Democrat of Maryland and chairman of the Senate Banking Committee.


Whatever regulatory remedies may be applied, analysts said, the telecommunications industry is likely to be left reeling, as WorldCom's collapse works its way through a system that has already had $2 trillion of shareholder value in its member companies erased in the last two years.


Scott Cleland, chief executive of the Precursor Group, a consulting firm based in Washington, warned, "Investors are in denial, just like they were with WorldCom, on how much worse it can get."

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Guest Dusty Lipschitz

yo mental-

you left it in a sock at the girls parents place...

we couldnt figure who had left almost 4 billy, but now we got it figured out. ill get it back to you soon, minus the $26 i spent on sushi downstairs....


shit is scary. was enron just one in a house of cards about to fall?

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dood i was soooo hungover i couldnt figure it....dam....cause i coulda used it to pay that fucking $55 parking ticket!! glad the dog didnt bury it in the park....just send it regular mail, and take a little for you and the lady....



about four months ago, there was a financial insider who would not disclose names, but said after the enron debacle that there was about 10 major companies looking at the same fate.....well now you got nine to go.....

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Guest wintersouls

aww thats great man , go world cum

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Guest sneak

i dont actually get what happened? did sum fool lose billions of dollars? how?

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to be honest sneak, from what i hear the basic principles in accounting taught in 101 were completely ignored....the major one seems to be how they expensed things....the example i heard was that if you own a building an the roof blows off and you decide to replace it then you incur that "expense" of $100, however if you decide that you are gonna take the opportunity to add to an air filtration system to help benefit the warehouse and you are gonna spend $175, then 100 of that is expensed and 75 is a capital expense....


well they basically took everything an wrote it in as capital expense which makes it look like they are adding value....really its straight fucking fraud......


maybe this article will make more sense, from the NYT:



The Latest Corporate Scandal Is Stunning, Vast and Simple




The first inklings of the debacle that has consumed WorldCom emerged last week, when an internal company auditor stumbled across something curious.


Expenses the company had incurred in 2001 for its telecommunications network did not appear where they should have in its internal books. Instead, those costs — to the tune of billions of dollars — had been systematically sprinkled across a series of accounts for capital expenditures.


According to people who work with the company, the internal auditor quickly recognized the shift in expenses for what they were: a huge, and potentially fraudulent, misreporting of WorldCom's financial performance, in a way that deceived investors.


That moment set off a scramble for the accountants, executives and board members of WorldCom, as they struggled to understand what had been done at the once-highflying company. The chief financial officer, Scott D. Sullivan, tried to explain what had happened, but to no avail, according to a person briefed on the situation. By Tuesday, Mr. Sullivan, and the company's controller, David Myers, were both out the door, and WorldCom was pushed to the brink of bankruptcy.


Coming in the wake of a seemingly endless series of corporate scandals — from Enron to Tyco, Adelphia to Dynegy — WorldCom might seem just one more carcass on the pile — and one that had already been picked at for months because of questions about its accounting. But experts on accounting say this case is extraordinary because of the amount of money involved and because of the relative simplicity of the accounting maneuvers used to disguise the truth.


"The magnitude of this is just mind-boggling," said John Fahy, a certified public accountant and former prosecutor. "Auditors cannot miss something like this. It is just inexcusable."


At its foundation is one fact: not all corporate expenses are the same, and for good reason. The costs of a company's operations — salaries, materials and the like — are treated on a company's books as expenses in the year they are incurred. But the purchase price for certain long-lasting, big-ticket items — like buildings or heavy machinery — are treated differently. Rather than forcing companies to recognize such large expenses all in one year, accounting rules effectively allow them to recognize a portion of the cost over the many years in which the items will be used.


Such accounting allows companies to make large investments known as capital expenses without incurring huge hits to profits. So large expenses can appear small, emerging a little bit at a time as each new annual report is issued.


That is what has made the capital expense section of a company's books such an attractive area in the past for profit manipulation. By treating, say, $100 of operating expenses as a capital cost, a company only has to recognize a small percentage of that expense in any single year. Reported costs are driven down, pushing reported profits up.


But intentionally mislabeling costs in such a way is illegal because it misrepresents the true nature of a company's financial performance.


Indeed, the distinction between a capital investment, a portion of which can be deferred, and routine expenses is one of the most basic and most discussed issues auditors face, said Roman Weil, a professor of accounting at the University of Chicago Graduate School of Business.


When the auditor discovered the troubling data at WorldCom, phone calls quickly went out to the audit committee formed by members of WorldCom's board, including Max E. Bobbitt, who serves as the committee's chairman, according to people who work with the company. They in turn, summoned WorldCom's new accountants from KPMG to examine the books closely to determine how much damage had been wrought.


KPMG quickly discovered a series of disturbing records. Documents known as journal entries showed that, at the end of each of the last five quarters, Mr. Sullivan had shifted certain telecommunication system expenses across an array of what are called property accounts, which are capital expenditures. No single account received the bulk of the expenses; rather, they were spread out in what appeared to be an effort to keep them from being more easily detected, said a person briefed on the situation.


Armed with the information, on Friday, the KPMG accountants struggling through the records at WorldCom's offices in Clinton, Miss., telephoned the company's former auditor, Arthur Andersen, which just days before had been convicted of obstruction of justice in the investigation of Enron, another of its former clients.


Had anyone at Andersen, the KPMG auditors asked, been told about the shifts of expenses for the telecommunication system into the property accounts?


The Andersen team was stunned. No one from its engagement team on WorldCom had ever been asked about such a shift, they told KPMG, and the firm would never have approved it, according to the person briefed on the situation. Moreover, Andersen reported, the auditors asked at the end of each year to review the journal entries for all nonrecurring expenses. Such a request should have resulted in the documents detailing the expense shifts being turned over to the accountants, but Andersen said that no such data was ever given to them.


Confronted with the evidence of what had happened, Mr. Sullivan was asked to write an explanation of his accounting decisions, both for the audit committee and for KPMG. Last weekend, Mr. Sullivan prepared the document, explaining his rationale.


Mr. Sullivan explained that what he had done, according to a person who has been briefed on Mr. Sullivan's explanation, was make a judgment call. He believed that the expenses were an investment in telecommunication line capacity, which would provide increasing revenue in future quarters. Therefore, he reasoned, it was appropriate to defer expenses to future quarters.


This does not follow generally accepted accounting principles, according to accounting experts. However, it was a procedure that was used by telecommunications companies before the deregulation of the industry. Under that system, public utility commissions allowed for the creation of models through which expenses of underutilized assets could be deferred in this way. Such rules, however, are not permitted under the current deregulated system, and are not accepted under accounting rules.


As the weekend ended, the WorldCom board and KPMG engaged in a series of meetings and conference calls.


By Tuesday morning, they had their answer: About $3.7 billion in expenses had been accounted for improperly. Mr. Sullivan was formally dismissed by the board, and Mr. Myers was allowed to resign. That afternoon, the company contacted the Securities and Exchange Commission, informing it of the scope of what had been discovered.


Mr. Sullivan could not be reached for comment.


John Sidgmore, who took over as WorldCom's chief executive in late April, went from Washington to New York later that day to inform the company's bankers of the problem and to try to persuade them to keep open the possibility of extending new loans. But instead, the banking world was quickly swirling with talk of a new corporate scandal, on a far greater scale than any of the recent ones.


Mr. Sidgmore's efforts failed to win any quick support. Tuesday evening, the company announced its findings. The name of WorldCom, once a darling of Wall Street, had now become the latest shorthand for corporate scandal.

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and that right there is why i dont give a fuck about ripping off my credit card companyies for 16grand...

if i had enough money to steal millions, i could label it an oversight, but since i dont, its some sort of capital offence? suck my capital offence...


fuck america and fuck capitalism.

give amtrak its money and kill yourself bush.

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i like that bush wants companies to be accountable for fraud...


isn't that sort of like the pot calling the kettle...


or the teacher punishing the students for applying examples?




the USA is a fuckin' mess.

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Guest sneak

im shit at maths type things but ill pretend i get


thanks mental.....:cool:

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i suck at math too, but i can read atleast?!! just kidding....its all there in that article....really just no that ot was such a blatant disregard for accounting rules, that only one day after the SCC has brought fraud charges against them......

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