The charges against Ebbers were laid after Scott Sullivan, his former chief financial officer, agreed to plead guilty to similar charges and co-operate with federal investigators probing the collapse of the US telecommunications giant two years ago.
Mr Ebbers, who resigned from WorldCom shortly before the company filed for bankruptcy protection from its creditors amid a huge accounting scandal in July 2002, will be arraigned in court in New York on Wednesday.
Mr Sullivan pleaded guilty in a Manhattan court room to three counts of securities fraud, fraud and misleading federal investigators. He also agreed to co-operate with the Justice Department’s continuing investigation into the collapse of the US telecoms group. He faces up to 25 years in prison, although prosecutors could recommend leniency depending on his co-operation.
The deal with Mr Sullivan was announced by John Ashcroft, the US attorney general, at a press conference in New York and is seen as critical to the Justice Department’s case against Mr Ebbers.
Mr Sullivan told the court: “I do not seek to justify these actions but they were not for personal financial gain. It was a misguided effort to preserve the company in the face of temporary financial difficulties and return it to profitability.”
As part of the plea agreement with federal prosecutors he has put his home in Boca Raton, Florida, up for sale for $13m and said he will use the proceeds of the sale to help make restitution to those harmed by his actions.
The plea agreement with Mr Sullivan represents another important breakthrough for federal prosecutors who have been criticised in the US because of the length of time it has taken to bring charges against senior executives at Enron, WorldCom and other companies that failed because of accounting scandals.
In the past few months, however, there has been a quickening in the pace of legal activity in the US against the former senior executives of failed conglomerates. Two weeks ago Jeffrey Skilling, Enron’s former chief executive, was charged with directing a wide-ranging scheme to manipulate earnings while reaping tens of millions of dollars from illegal insider stock sales.
