Litigation Release No. 17783 / October 10, 2002
Accounting and Auditing Enforcement Release No. 1650 / October 10, 2002
SEC Charges Two Former WorldCom Accountants, Betty Vinson and Troy Normand, with Participating in Multi-Billion Dollar Financial Fraud
Securities and Exchange Commission v. Betty L. Vinson and Troy M. Normand, Civil Action No. 02 CV 8083 (JSR)
The Securities and Exchange Commission today filed a civil enforcement action against Betty L. Vinson and Troy M. Normand, former accountants in the General Accounting Department of WorldCom, Inc. The Commission charges that Vinson and Normand participated in a massive fraud that inflated the company's earnings at the direction and with the knowledge of WorldCom's senior management. WorldCom has admitted that from at least as early as 1999 through the first quarter of 2002, as a result of undisclosed and improper accounting, it materially overstated the income it reported in its financial statements by approximately $7.2 billion.
Also today, in connection with the same conduct, Vinson and Normand pleaded guilty to criminal charges filed by the U.S. Attorney's Office for the Southern District of New York.
Vinson and Normand are charged by the Commission with violating the antifraud, books and records, and internal controls provisions of the federal securities laws (Section 17(a) of the Securities Act of 1933 ("Securities Act") and Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 ("Exchange Act") and Rules 10b-5 and 13b2-1 thereunder). They are also charged with aiding and abetting WorldCom's violations of the periodic reporting, books and records, and internal controls provisions (Exchange Act Sections 13(a) and 13(b)(2)(A) & (B) and Rules 12b-20, 13a-1 and 13a-13 thereunder). The Commission seeks against Vinson and Normand permanent injunctions, disgorgement of all ill-gotten gains, and civil money penalties.
The Commission's action against Vinson and Normand is its fourth civil enforcement action related to the WorldCom fraud. The first was filed against WorldCom, Inc. on June 27 of this year. (Litigation Release No. 17588.) The Commission sought, among other things, the appointment of a corporate monitor, and on July 3, U.S. District Court Judge Jed S. Rakoff appointed former Commission Chairman Richard Breeden to that position. The Commission's second enforcement action was filed against former WorldCom Controller David F. Myers on September 26. (Litigation Release No. 17753.) The Commission's third enforcement action was filed against Vinson and Normand's supervisor, former WorldCom Director of General Accounting Buford "Buddy" Yates, Jr., on October 7. (Litigation Release No. 17771.)
The Commission acknowledges the assistance and cooperation of the U.S. Attorneys' Offices for the Southern District of New York and Southern District of Mississippi, and the Federal Bureau of Investigation.
The Commission's investigation into matters related to WorldCom's financial fraud is continuing.
