The settlements between three former WorldCom executives and Alan G. Hevesi, New York comptroller and sole trustee of the $120 billion New York State Common Retirement Fund, Albany, received preliminary approval today from U.S. District Court Judge Denise Cote in New York. Mr. Hevesi is lead plaintiff in the civil securities lawsuit. Jeff Golan, an attorney with Barrack, Rodos and Bacine, co-lead counsel for Mr. Hevesi, said final settlement hearings are scheduled for Sept. 9.
The latest settlements — with Scott Sullivan, former WorldCom CFO; David Myers, its former controller; and Buford Yates, its former chief of accounting — mean all defendants in the case, including banks that underwrote WorldCom bond offerings, the company's auditor Arthur Andersen and former CEO Bernard Ebbers, have settled the charges against them. The class has recovered more than $6.14 billion from the defendants.
In the settlement, reached Tuesday, Mr. Sullivan agreed to sell his house now being built in Boca Raton, Fla. and to liquidate his WorldCom 401(k) account, with proceeds from both going to the plaintiffs. Total recovery from Mr. Sullivan is expected to reach about $5.2 million.
The other two former executives are not required to sell assets or otherwise make payments as part of their settlements because attorneys for Mr. Hevesi concluded they would be unable to do so.
All three defendants pleaded guilty to criminal fraud charges and agreed to assist prosecutors in the criminal case against Mr. Ebbers, who was sentenced to 25 years in prison earlier this month for his role in the $11 billion accounting fraud.