Bernard Ebbers, former CEO of WorldCom, agreed to pay $5 million in cash and transfer most of his personal assets, which could top $30 million, to settle civil securities charges, according to Alan G. Hevesi, New York comptroller and sole trustee of the $120 billion New York State Common Retirement Fund, Albany. Mr. Hevesi is lead plaintiff in the lawsuit.
Mr. Hevesi said the settlement could reach $33 million for the class and includes the transfer of virtually all of Mr. Ebbers' non-cash assets, including his multimillion-dollar home in Mississippi and his interests in several real estate ventures.
The settlement comes two weeks before Mr. Ebbers is scheduled to be sentenced following his conviction on criminal charges of running an accounting fraud at WorldCom, which went into bankruptcy and emerged as MCI.
Mr. Hevesi said MCI has liens on some of Mr. Ebbers' non-cash interests and as such will receive 25% of the proceeds of any asset sales, with the class receiving 75%.
"Rather than restitution negotiated or ordered by a judge that would go to the U.S. Treasury, the proceeds from the settlement will go to the victims of WorldCom who we represent in the WorldCom civil litigation," Mr. Hevesi said at a news conference announcing the deal. "We think this is unprecedented. It's an important step in conveying a message that the crimes committed by Mr. Ebbers and others in a series of securities scandals will be dealt with forcefully."
The settlement also requires Mr. Ebbers to pay $450,000 to former WorldCom employees who sued him in an ERISA action.
Today's settlement adds to the $6.13 billion in settlements Mr. Hevesi, on behalf of the class, has reached with WorldCom's corporate bond underwriters, former directors and accounting firm Arthur Andersen. It must be approved by U.S. District Court Judge Denise Cote of the Southern District of New York