Bernard J. Ebbers, the former chairman of WorldCom, was sentenced yesterday to 25 years in prison for a record $11 billion fraud that toppled the telecommunications company he founded, the New York Times reports. U.S. District Judge Barbara Jones said the penalty – the stiffest in a corporate fraud case in recent memory – was appropriate given the size and scope of the damages. Prosecutors said he masterminded the fraud to artificially inflate the company’s earnings and stock price. Ebbers turns 64 next month; he must serve at least until he is 85. He is appealing his conviction.
The long prison term is part of a string of penalties against corporate executives who defrauded investors in recent years. The government expects that the severity of these punishments will discourage other executives from cheating investors. The severe penalties could signal what is in store for L. Dennis Kozlowski, former chief executive of Tyco International, who was convicted of fraud, conspiracy and grand larceny in June and is awaiting sentencing.