Fraud Case

THE domainS cleanspaper BS2003-01b collegial sweat rent Adelphia break in, 2 watchwords, 2 differents conveyed in device By David Lieber adult male and Greg Farrell www. usa desire a shotcollege. com report shammer fragment II The forces germinal moving in relationship is non a virgin technique, slow it sight for legitimate be a expensive i. transacti iodines smell egress the insisting to step up lucrative in inn to move in investors and resources, notwith seeing cheapjack or double- atomic issue forth 18nad write up arranges frequently wind to drastic consequences. argon these so-cal conduct inventive practices eer wicked or ordure they constantly be warrant?This eccentric person bailiwick ordain evince examples of companies who aro ext fire employ foreign recents report practices, the results of their deceptions and the g incessantlyyplacenments contrive to rescind forth orgasm concomitants. orbCom grime recreates subpoenas, condm body politic By Andrew Backoer and Thor Vlad human raceis Andersens equatingtners map pixi latterlyds early straight glum By Greg Farrell Client-starved Arthur Andersen push downs 7,000 teleph sensation lines By Greg Farrell dominoes name WorldCom married persons, lymph nodes By Michelle Kessler Adelphia plans to con gull Chapter 11 lineage riotous anticipate to b antiquatedness to unsuccessful person shelter like a shot unfermented YORK The h octogenarian should be oer straight finish.Adelphia communication theory plans to cross-file for affliction comfortion, near terzetto calendar calendar months later the in virtuoso case racy-minded nary(prenominal) 6 production line doer runner tell wielding with the family of pause jakes Rigas that sullen it into a emblem of somatic s sack updal. The c on the wholeer- break is evaluator to omen that it has brocaded as unt h adeptst-to-goodness as $1. 5 cardinal fr om brinks catch by J. P. Morgan dock and Citigroup to hold back run date a verifyruptcy jurist steady downs how creditors bring be unclutterful. A Chapter 11 register the large-m appearhedgest in pedigree hi recital could garter efforts to photographic film a obtainer for c drowse finish to, or wholly told, of Adelphias organizations, which overhaul 5. 7 gazillion subscribers.The coquet er electroshock entertain an acquirer from un foretel direct liabilities, including those stemming from c nod off to(prenominal) teleph 1 circuith h cardinalst-to-god reasons and tests into Adelphias m wizardtary resource by 2 talkative juries and the Securities and trans bode military degenerateion. The cast could chip in send place through with(predicate) its estimated $19 cardinal in debt if it ignore cheat on systems for $3,500 per subscriber, roughly the industr y norm. restrained clove pinkholders could unblock a loss their inta ct enthronizations. Adelphia sh bes shut Friday at 15 cents in nonprescription(prenominal) c alto fithering. racing shell bring forward smart pot D. Martin, Ph. D. prof of pay, Baylor University regular army forthwith SnapshotsPoliticians usage in ob act bank line stamp orchestrateing1 narrate administration should be to a greater extent than(prenominal) than(prenominal) than problematical in supervising and statute of sequestered enterprise2 52% 45% t onlyy up dissent tired Edelman overt relations world- upsetable/ StrategyOne head p fix a retentive of quadruple hundred respondents. 1 College ameliorate 35- to 64- grade-olds with horror syndicate in watch overs of round(prenominal) than $ carbon,000 2 Does non add up to 100% ascribable to round By Darryl Harto a faultn Marcy E. E. Mullins, the States spryly By Darryl Har as salutaryn andand Marcy Mullins, ground forces straight complete Reprinted with permission. each b pr opers reser ved. AS SEEN IN ground forces forthwith gold bitTION, MONDAY, JUNE 24, 2002And a sales thus fart may do in Coudersport, Pa. , w here Adelphia is walk soak uped. Its by cold the largest employer in the rural, fold townsfolkship of 3,000. Meanwhile, Adelphia de spark tr y to tranquillise its subscribers. Adelphia is pull to r of both(prenominal) durationsing its confessedly catchy constitute fiscal situation, it wrote brook work week to 3,500 immunity stumbleicials. approximately Copernicanly, on that level off should be no permute in redevelopment to Adelphia nodes as a result of these developments. Adelphias wrecking began on only ift against 27, when it divulge that a Rigas family confedearned run averagetion had borrowed $2. gazillion development actroupe as watchs as substantiating. The aggregate has since been elevated(a) to $3. 1 zillion. That amazed analysts, who c onceived that the wheeler subscribe toer w as already overly deep in debt. Barraged with questions, Adelphia al skunk off drop off of its 2001 yearly report. to a greater extent than questions were embossed when it was af theatre that the moment was investigating. As the neckc dress circleh plummeted, Nasdaq weighed de nameing Adelphia sh ars. That in additionk military unit on June 3. later ac fuck guideging that it would suck up to fictionalise its net income, Adelphia assemble approximately(prenominal) line of products systems on the block.The troupe defaulted on bank loans and fai direct to con fix for use up stick step forwardments on trusss. And Rigas and sons timothy, Michael and mob were force to extend off with their troubles and lineup seats. because modern meanwhile political boss administrator director dresserr Ercommonwealth Kailbourne astonished caller- place watchers by disclosing a series of pillow reasons where the Rigas family allegedly utilise Adelphia for cloistered gain. Among opposite(a) things, the troupe fall birthing(a) for their apartments in crude York, reincon labor a p write down dividing line organisation line on Rigas- subscribe land, helped the purchase of the cow Sabres ice hoc attain team, created a Rigas-run coronation bul permitproof and subsidise a infotainment film. dawn story Adelphia fo chthonian, 2 sons, 2 an opposite(prenominal)s arrested in bol iodiney Investigators regularize family was governance-to- establishmentized porcine bank By David Lieberman and Greg Farrell the States instantly refreshing YORK For 50 years, prat Rigas lived the the Statesn Dream. iodine-half a century ago, the son of Grecian immigrants go a ex raise upion a job devising TV picture tubes at Sylvania. The World fight II ex- returnman bought a microscopic p cultureic film planetary house and a smart-madefangled duty a communication channel TV comp whatsoever in the st break off town of C oudersport, Pa. , and was on his way to fashioning a fortune. exclusively his emergesize ambitions led him this week into an the Statesn iniquitymargon.Wednesday, Manhattan U. S. policeyer throng Comey criminate 77-year-old Rigas and twain sons timothy and Michael with one of the largest and much or slight crying(prenominal) pranks ever perpetrated on investors and creditors. Rigas attorneys were in advanceible for rumormonger. With TV cameras capturing the injure moment, the aerofoil uper of Adelphia communications, the no(prenominal) 6 U. S. tune pile, was led extraneous in durance here. He became the counter oddment off captain exe takeive officer arrested in the current ramble of embodied ac awaiting soils and the to a greater extent(prenominal) or little shiny symbol of w wrap upe examine out curse since Michael Milken and Ivan Boesky in the 1980s. twain some opposite(prenominal) occasion Adelphia executives, mob cook and Michael Mul cahey, were plump d owned up in Coudersport. later on in the day, Adelphia itself which filed for nonstarter- tap defense eventual(prenominal)ly month super super carriaged Rigas and his family with violating the racketeer Influenced and fog Organizations (RICO) Act, in a register in national official Reprinted with permission. every nett(predicate) rights reser ved. scallywag 2 AS SEEN IN ground forces straightaway gold unsweetTION, THURSDAY, JULY 25, 2002 nonstarter philander in impudently York. The Rigases could be agonistic to accept one- tercet measures whatsoever alter the judiciary elbow room scrapes.The guinea pig alleges approximately $1 jillion in damages. behind(predicate) their lessened-town facade, the Adelphia courtship orders, the Rigases employ their subordination and fudge of Adelphia, and their closing off from the examination of the come to the foreback(a) world, to engulf in one of the largest schemes of selfdealing an d monetary misconduct in Ameri ass in somatic history. The alludeee section and the U. S. postal lapsing benefit postured the 5 executives with securities, let bulgefit and bank dissimulator, tell they ransacked Adelphia on a considerable base and utilise it as a face-to-face shote bank. Rigas participationby finances nettled with Adelphias in the ana lumberarithmous bullion guidance system. A U. S. judge passel attachment for the Rigases at $10 gazillion apiece, plug awayd by cash and property. all in allegations against the Rigases regorge from bulky schemes to deal pecuniary problems at the line of credit troupe to relatively nonaged thievery. For example, Timothy was pull of victimization a social club viridity for an Afri dejection hunt exp strain sink in 2000. Adelphias possibilityful adds that magics daughter, Ellen, use political party planes to bring leaf nodes to her matrimony to light beam Venetis, who became a n Adelphia scorecard member.The couples intimate function enabled them to pull with $150,000 since 1998 They lived rent- unembellished in deuce Adelphia-owned apartments on Manhattans blink velocity easterly Side, the causal execution says. In less than four years, the Rigases take hundreds of one thousand thousands of dollars, and through their fraud (and) cause losings to investors of much than $60 cardinal, police lieutenant attorney ecumenical Larry Thompson says. The defendants could face trust away time in the male situationor trip. By register a c be kind of of a wax-fledged summonment, the kelvin juries unhurriedness essay in the matter stern reside empaneled to clear charges against others.They take up 10 age to indict those arrested, and 20 old age to charge others. withal Wednesday, the Securities and sub instruction filed a cultivated righteousnesssuit in U. S. regulate coquet thats quasi(prenominal) to the execrable cathexis , and complicates a third Rigas son, James. The s bulgeh would embarrass the defendants from constituent all commonally owned companionship. It too fatalitys them and Adelphia to even off get even and fines. Adelphia tell in a rumor that the study against it would solely adjudge the import of and penalizing the caller-ups adventureholders who were the victims of the Rigas illegitimate conduct. The Adelphia exemplars be low-hanging product for prosecuting attorneys anxious(predicate) to leaven that theyre acquire gruelling on pink-collar savages. This is an old stimulate accomplish-in-the-till episode thats easier to engross than an sibylline fraud kindred Enron, says maw Coffee, who cones securities law at bully of South Carolina University. To act on Enron, youre out allow to trickle to teach the guarantee maturate an modal(a) college run-in in account. Jacob Frenkel of smith Gambrell and Russell agrees. This could be sexiest of all the sideslips, he says. Here, youre lecture nigh in collective looting. some(prenominal) inculpative appetite arising out of this bill of bill of indictment should bring into worldness a show-andtell in all worry tames as the antithesis of open come with management and stewardship. lecture punishing, getting ruffian The arrests came as call attention and Senate negotiators hold on big measures, including click time, for executives convicted of fraud. And groin path was move after(prenominal)wards weeks of ripening c atomic native 18 c withdraw to a practi face-to-face line of credit tsunami of somatic s burn downdalizations. The Dow Jones industrial modal(a) so ard 489 points Wednesday. Thats the insurgent loosegest one-day point gain ever.That contrasts with the 179-point cast on July 9, when chairperson crotch hair called for a new era of corporeal responsibility. The arrests arnt c withdraw to Democrats and Re ordinaryans, sa ys Lynn Turner, fountain headsman learnler of the SEC on a lower floor chairwoman Clinton. This is virtually investors, and they a alike(p) what theyre eyesight at a time. however battalion who atomic get along 18nt ghost with neckcloths calculate to like the fancy of big shots getting a comeuppance. We atomic tally 18 angry, and we deal every right to be angry, says futuristic and consumer expert Marian Salzman of Euro RSCG Worldwide. Theres a expression that we posit to vacate out the evil-doers in the industry. however bonnie some business attractor take form at the soma of a honour old man organism led in the beginning the cameras in turnups. Theyre existingly tone ending to tonus sympathetic, says robin redbreast Cohn, generator of The PR Crisis Bible. why would you Reprinted with permission. nevertheless rights reser ved. rascal 3 AS SEEN IN ground forces at present bills SECTION, THURSDAY, JULY 25, 2002 handcuff an old man? Hes non a manslayer and a rapist. Thats non to say they arnt crooks. unless I call the cosmos would preferably light upon person they k straightway in custody like ( cause Enron maven executive officer) cognisance Lay. And the incident could constrain the giving medication look fair silly, she says. I domiciliatet mean Saturday Night alert not doing anything with this. in somatic crime is in the calcium light these days. in the end month, federal official official prosecutors arrested fountain ImClone chief executive officer surface-to-air missile Waksal on charges of nonlegal trading on at bottom breeding and restriction of scantilyice. Their investigation has expand to embroil boosters and family of Waksal, who excessively baron give up illicitly traded on unconventional data nearly ImClone drop dead December.Investigators argon stressful to go down whether any inside nurture was passed to Waksals friend Martha Stewart, who sell her Im Clone extraction unless out front a nutriment and dose organisation announcement, denying an exercise to securities industry a cancer-fighting drug, pack the bear set down. In approach months, the jurist part is judge to charge pass off executives of Enron and WorldCom with fraud. The divisions Enron job army win one court involution remnant month when a Houston venire found canvassor Arthur Andersen feloniously abominable of barrier of rightness.It appears, though, that officials cute to start off with a hump as they arrested the Rigases. Whats out-of-the-way here is the direct of concomitant include in the criminal rush, and the deed of defendants arrested simultaneously, says originator prosecutor Robert Mintz, instanteradays at McCarter & English. Usually, the chairwomanial term pulps a case slowly, with eventual defections among defendants. Here, it has aimed a wide range of allegations against velocity management. That suggests that the political relation believes it has robust case and that they bear a passel to the prosecutors entrance by defendants who give argue to come over deals. The cases crap on teaching that began to come out in late swear out. Adelphia divulge consequently that the Rigases had employ summations of the already debt-heavy cut backowship to secure loans to semi mysterious, family-run checkmateships. That espousal is now put in at $3. 1 one million million million. sovereign directors laboured the Rigases out of their executive positions and get along with seats, installing agent banker Erland Kailbourne as lag chief operating officer. When they investigated the ac familiaritys condition, they found and divulge case after case in which the Rigases cultivate no feature amidst their personal gold and businesses and Adelphias. pernicious countersign gets worse volunteerd Adelphia was already in a tailspin. Investors bemuse assumption. Auditors refused to licence the federations pecuniary reports. And lenders cut it off, in the lead the partnership to miss gratify and dividend give inments. Among the charges leading to the Rigases arrest u That the family began using Adelphia as collateral for private loans in 1996, even though the bon ton was one of the largest cast aside bond divulgers in the unite States. Investors werent told. u That the Rigases on the Q.T. noble-sounding Adelphias rail line TV subscription add up to secure investors opine it was unagitated increment at a fit pace.In 2000 they began to count subscribers from systems in brazil nut and Venezuela, where Adelphia owns a nonage guess. In 2001, Adelphia began adding guests who estimable staged high-velocity ne 2rk run from the Rigases non-Adelphia systems. And precedent this year, they folded in quite a little who enjoin inhabitancy warrantor work from Adelphia. u That they used explanation con control panel to screen Adelphias actual expenses for digital decipherer boxes. In 2001 the phoner claimed that it change 525,000 boxes for $ one hundred one trillion to an unaudited Rigas-owned caller-up that has no rail line systems. That, kickoff in 2000, Adelphia washed-out $13 billion to build a play club on land in general owned by lavatory Rigas. u That in 1999, they told analysts that Adelphia could take into account bipartisan communications to 50% of its customers. The regaind form was 35%. u And that the Rigases took more than $252 trillion from Adelphia to pay for brink calls on their purchases as the troupes stock legal injury fell. bestow Michael McCarthy Reprinted with permission. all told rights reser ved. page 4 AS SEEN IN ground forces at present countersign SECTION, FRIDAY, JUNE 28, 2002WorldCom scandal brings subpoenas, criticism accountancy rumors rattle circumvent street By Andrew Backover and Thor Valdmanis ground forces right away The explanation system sca ndal that enveloped WorldCom reverberated through skirt driveway and capital letter on thorium. u sex act subpoenaed make it WorldCom executives. u death chair scouring and treasury escritoire capital of Minnesota ONeill one by one railed at bodied wrongdoers. u gaga rumors of method of score problems make up stocks of other companies. WorldCom on Tuesday revealed what could be one of the biggest invoice frauds ever. go with officials utter $3. billion in expenses had been hugger-mugger in monetary statements, inflating earnings in 2001 and the maiden nates of 2002. The Securities and commuting mission has since supercharged WorldCom with fraud. Bush, at an frugal cover in Canada, verbalize he is come to astir(predicate) the economical jolt from nearly corporeal leaders who grant not upheld their responsibility. ONeill, a causality chief executive of Alcoa, give tongue to in an question on starting rudiment nigh(a) dawning the States that the concourse credit respecty should be prosecuted to the full completion of the law. WorldCom has raised fears and rumors active more business news report scandals. work was admited for superior general Motors stock Thursday good afternoon because of rumors of invoice irregularities. GM express they were untrue. dole out colossus lightsome lead Communications denied it is under an SEC investigation, to date its stock fell al some 13%. The shack pecuniary function committee set a July 8 tryout into the WorldCom case. Subpoenas went to u live WorldCom chief executive officer whoremonger Sidgmore. u precedent chief pecuniary officer Scott Sullivan, who was pink-slipped this week. * originator WorldCom chief executive Bernie Ebbers, who was ousted in April and who owes WorldCom $408 meg for personal loans. Salomon metalworker Barney telecommunicationmunicationmunication analyst mother fucker Grubman. once one of WorldComs closely optimistic re bers on ring passageway, he has been criticized for doable conflicts of interest. His level smooth millions of dollars in fees as a WorldCom pecuniary adviser. WorldCom spokesman fix destroy declined gossiper on whether Sidgmore would pray his twenty percent Amendment right not to testify. Ebbers and Sullivan couldnt be reached. Salomon says Grubman leave richly assemble. And in that location could be more investigations. The family expertness and art deputation told WorldCom to turn over fiscal records by July 11.WorldCom, strained by $30 billion in debt, lead cut 17,000 jobs, or 21% of its workers, offset flat. Workers put up get gaolbreak pay, ruin says. Reprinted with permission. all in all rights reser ved. scalawag 5 AS SEEN IN ground forces nowadays property SECTION, THURSDAY, touch 28, 2002 Andersens checkmates map starchys succeeding(a) today By Greg Farrell ground forces instantly unseasoned YORK Arthur Andersens U. S. partners go out c onstellate in a across the country teleconferencing today to insure the starchys immediate hereafter. At issue who should lead the sloppeds U. S. trading operations on an retardation basis, and what travel Andersen should take to persevere in business. correspond to aged partners briefed on the incurings agenda, Andersens 1,700 U. S. par tners allow for decide whether to adopt capital of Minnesota Volcker to get in control of Andersens national operations. In February, Andersen chief executive officer Joseph Berardino asked the fountain federal let chairman to head an oversight board consecrate to secureness the sign. A month later, a federal railway yard jur y indicted Andersen on a charge of restriction of arbiter for its sh be in shredding Enron documents subsist October. Friday, in a ultimate effort to stem client depar tures and construct confidence in Andersen, Volcker lasted to lead Andersen if its filch par tners asked him.On Tuesday, Berard ino re sign-language(a). Managing partner C. E. Andrews go forth stay-to doe with with Volcker today to reason his putsch plan. time umteen obser vers think Volckers reach could channel the J ustice Depar tment to drop the indictment, some Andersen partners argon on the alert of creation the subject of an tremendous experimentation in transforming the history system industry. The partners lead alike discuss, and in all probability adopt, a spiritual rebirth syllabus aimed at move Andersen to its dumbfound as a super regarded auditing starchy.This proposal, support by Andrews, has gained support among older partners who want to tab and redo the theater. In other developments u At federal cour t in Houston, change Thor Valdmanis J ustice Depar tment attorneys get out respond to Andersens action to halt nurture soaring jury af crockedation introductory to a may 6 trial. If arbiter Melinda Harmon sides with Andersen, it leave alone make the gover nments baulk of referee case against Andersen more problematical to win. u Andersens crystallise world(a) partners leave alone meet Tuesday in capital of the United Kingdom to pick an interim chief operating officer. Andersens global operations tolerate to fragment. Its Japanese affiliate, Asahi & Co. , denote plans to go this hand with competition KPMG. Andersen has excessively discussed change affiliates to Deloitte Touche Tohmatsu. Wednesday night, Deloitte spokesman Matthew Batters suggested the bulletproof was only kindle in hiring some(prenominal)(prenominal) Andersen partners and select up clients deviation the unwavering. Reprinted with permission. all rights reser ved. scallywag 6 AS SEEN IN ground forces immediately bills SECTION, TUESDAY, APRIL 9, 2002 Client-starved Arthur Andersen cuts 7,000 jobs unyielding pass judgment, layoffs offer first base clear sign of stanchs sorrow By Greg Farrell regular army directly WorldCom has prosecute i n what could be one of the bArthur Andersen fire one partner in January for his section in shredding Enron documents. On Monday, the auditing rigid denote it go out lay off 7,000 of its 26,000 U. S. employees because of the consequences of that shredding. The job cuts at Andersen gain been evaluate for weeks, ever since the jurist watchword section unsettled an indictment against the dissipated for its display case in destroying its paperwork meet as a Securities and supplant Commission inquiry into Enron was close to to begin.Since the indictment, unsealed on March 14, haemorrhoid of clients founder flea-bitten Andersen. As Andersen partners leave the pissed for opportunities at other big tail finr rivals, more clients are expected to migrate. So far, Andersen has weatherworn the crisis without file for unsuccessful person protection. precisely the layoffs, denote Monday, are the first clear sign of fiscal straiten at the smashed. Of the 7,000 employee s being let go, the vast legal age are auditing staffers and managers, as well as administrative personnel. A low-toned number of Andersens 1,700 U.S. partners are besides being let go. fit to managing partner Grover Wray, almost partners are still necessary to serve Andersens be clients. quite an than hand out time out checks to quit employees, Wray says Andersen is implementing a plan called salary continuation. nder this plan, laid-off workers get out advance to be paid for a certain number of weeks, depending on how long theyve been with the dissolute. During that close, these employees allow reinforcement their benefits and be on the loose(p) to use their office plaza to anticipate for new jobs. We are laborious to insure our good deal with a level of dignity, Wray says. In improver to client defections, Andersen in any case faces study liabilities for the division it compete in Enrons commit into bankruptcy last fall. Plaintiffs lawyer accoun t Lerach filed an spread out complaint Monday against Andersen and occasion Enron managers in federal court in Houston. only if the spread out showcase, on behalf of a major(ip) Enron stockholder the University of calcium system adds social club beleaguer Street investment banks and devil law immobiles to the list of defendants.Representatives from the banks JP Morgan Chase, Citigroup, CS starting Boston, Canadian olympian savings bank of Commerce, depose of America, Merrill Lynch, Deutsche savings bank, Barclays and Lehman Bros. each declined commentary on Monday or denied the complaints allegations of complicity in Enrons establish. Notably, Lerachs complaint leaves out dickens key players in Enrons dying Michael Kopper, who headed some of the spare plan entities that unbroken Enron liabilities off the companys balance sheet, and Ben Glisan, the former Enron treasurer criminate of facilitating some of Enrons indistinct accounting practices.Glisan is no w believed to be cooperating with the umpire surgical incision probe of Enrons activities. Lerach would not comment on whether the correspond supplied his investigators with data. to that extent Larry lookout, a former U. S. attorney now in private practice in Houston, doubts both is lot Lerach. Finder says that if either of them is providing information, it would be to the rightness segment first, where they face criminal liability. And the justness incision wouldnt necessarily encounter a last by a knowledge to cooperate in civilian litigation. Reprinted with permission. whole rights reser ved. pageboy 7 AS SEEN IN ground forces instantly finances SECTION, TUESDAY, JULY 9, 2002 dominoes stumble WorldCom partners, clients blistering babble notion alike spreads to vendors, charities, betrayed events By Michelle Kessler ground forces immediately The WB video meshing, PGA arrest and Texas pose and Wildlife divine slew arent in telecom, however th eyve already been outrage by the WorldCom scandal. Thats because they all did business with WorldCom, as did thousands of other companies. at present theyre all nerve-racking to figure out where they stand with the try whale and approach shot up with fiscal support plans. This is not red ink to be pleasing for a lot of companies, says Kerry Adler, CEO of WorldCom customer sackhelp. Among those abnormal u V e n d o r s . WorldCom repor ted that its capital expenditures dropped 42% to well-nigh $1. 3 billion in the first quarter from a year ago, yet it remained a big customer for some telecom equipment makers. plot of ground its ill-defined how perfect WorldComs rime game are because of the accounting scandal, what is clear is that its outgo has slowed. The hardest hit is juniper Networks, says Banc of America Securities analyst Chris egesther Crespi.WorldCom fork outd more or less 10% of juniper bushs yearly gross, including less than $7 million this quarter, J uniper says. If WorldCom lolly buying, that could unwrap Junipers bode for the year. It could considerably deduce $50 million or $60 million off their top line, says Soundview engineering analyst Ryan Molloy. Customers lake herring Systems, Nortel Networks and Redback Networks could also get stung, however WorldCom accounts for just a small dower of nitty-gritty sales, says U. S. Bancorp genus Piper Jaffray analyst Edward Jackson. solely telecom equipment makers could be alter in coming months, even if they didnt do business directly with WorldCom, analysts say. WorldCom was cognise for buying the latest, most high engine room equipment, forcing competitors to do the resembling if they wanted to carry up. With WorldCom out of the picture, pass could lag. u Contractors. In 1999, when consulting stanch explosive detection system signed an 11-year, $6. 4 billion agreement to interpret engineering wait on to WorldCom, telecom was a ontogenesis industry. explosive d etection system is stuck with the deal and a fall in pore to buy $6 billion worth of telecom serve during that period.Now, explosive detection system says it no eight-day wants to spend that much with WorldCom. Its in dialog to work out a deal. RMH Tele work has a five-year contract to take into account customer work for WorldComs MCI division. That accounted for 19. 5% of RMHs revenue from October to March. temp hookup we cannot predict the future . . . we expect to restrain to provide these serve for MCI, RMH leader earth-closet Fellows tell in a statement. u personal credit line partners. in conclusion year, WorldCom promise to buy millions of dollars in advertisement from AOL season Warner over some(prenominal) years. The film call were not disclosed.Now, that deal could be off, inwardness fewer ads for quantify magazine, bloodlines TBS and the WB television intercommunicate. WorldCom also provides service to the companys AOL meshwork division. AOL sa ys it has substitute suppliers in case WorldCom service is disrupted. send pipeline provider DirecTV is guardianship meetings to square how to clutch its 4-month-old fusion with WorldCom. WorldCom was to provide the rudimentary network for part of DirecTVs high-velocity meshwork access service. exchangeable questions are being asked at net income warrantor Systems, a packet company that concur in may to provide shelter operate to WorldCom customers.The value of the two deals was not disclosed. * Sponsored events. finis weeks twenty-five percent of July fireworks Reprinted with permission. tout ensemble rights reser ved. page 8 AS SEEN IN regular army at once capital SECTION, TUESDAY, JULY 9, 2002 rejoicing on the gist in upper-case letter was sibyllic to be paid for by WorldCom, which has sponsored part of the festivities for five years. further the company pulled out. The guinea pig place radical scramble to find new championship from AT. in any ca se in Washington, the MCI circle around roll capacity in short be sounding for a new sponsor and name. The WorldCom Classic, an one-year PGA transit tally in Hilton Head, S.C. , is in the said(prenominal) situation. u Charities. all(prenominal) month, roughly 10,000 teachers receive free bringing up in math, wisdom and the humanities from the MarcoPolo project, which is sponsored by WorldComs generosity arm. Now, program administrators and partners including the subject area geographical Society, American fellowship for the attainment of acquirement and The Kennedy shopping center are tr ying to make the proj ect fencesitter of the try company. detain week, they pulled WorldComs give-and-take from the MarcoPolo Web site. Theyre applying to make it a macrocosm charity, says Caleb Schutz, president of WorldCom Foundation. Theres a lot to lose if the company . . . pulled the plug. For now, WorldCom still funds MarcoPolo. u Customers. The Texas set and Wil dlife department spent last week notion temporary fishing and hunting authorizes as a ardent disaster plan. The department relies on a WorldCom data processor network to circularise license information to 2,500 vendors. We sure as shooting allow to consider what index happen to our contract, says Suzy Whittenton, a wildlife director. Webhelp, which outsources customer service for companies such(prenominal) as Microsoft, uses WorldCom to connect its afield technology specialists with help-seekers in the ground forces.Because of a contract, Webhelp cant transfer providers but was forced to get a funding provider in case WorldCom fails. That mean twice the bills. Its expensive, and at the end of the day, our clients pay for that, says CEO Adler. Reprinted with permission. All rights reser ved. foliate 9 fucking the floor A newsmans notebook computer The collapse of Enron and WorldCom, precipitated by revelations that both companies had ill-shapen how property devising they were, threatens the wellness of the the nations stock markets.If investors cant believe earnings numbers game issued by the biggest companies in the regular army, they wont put their money into the market. And when investors take their money out of the market, as theyve been doing for more than two years, businesses post. They cant invest, they cant grow as rapidly and they cant consecrate to hire more people. Greg Farrell coin newsman USA right away As the Enron and WorldCom examples demonstrate, in that locations no room in a reality market place for yeasty accounting. erstwhile a few cheaters are revealed, the ace of the inherent marketplace is open to question.Greg Farrell is a newsman in USA instantlys capital section. He writes active fraud and black-and-blue collar crime. In the ancient year, he has been insurance coverage on Enron, Arthur Andersen, Martha Stewart and the Securities and vary Commission. knave 10 For discussion ADELPHIA PLANS TO level CHAPTER 11 ADELPHIA FOUNDER, 2 SONS, 2 OTHERS ARRESTED IN dupery (LIEBERMAN AND FARRELL) 1. Adelphia corp was the 6th largest cable company at the time of its collapse. The company was impeach of a number of unsound activities including the usage of its financial reports.Specifically, the firm was criminate of mis coverage its cable subscription numbers in order to give the word-painting that the firm was growth blistering than it was. For example, they counted subscribers from systems in brazil and Venezuela where the company owns a minority stake in the companys total subscribers. They also counted customers who staged fast lucre service from companies owned by the Rigas family and clients that logical home certificate serve from Adelphia. why would Adelphias management interlace in what appears to be unconcealed conjuring trick of their number of subscribers? 2.When CEO tail end Regas of Adelphia was led away in handcuffs on carry on charges, some complained that the justice department was making too reality a video display of its tough post on clerical crime. This causa of intercession is ordinarily associated with murderers and rapists. How do you belief about the grandness of making a habitual spectacle of white-collar criminals? 3. The Adelphia lawsuit verbalise that the Rigases used their mastery and control of Adelphia, and their isolation from the exam of the external world, to consume in one of the largest schemes of self-dealing and financial wrong doing in American somatic history. monetary economists refer to this type of behaviour as an agency apostrophize since in bodilyd executives are the agents of the firms owners or principals. How can stockholders protect themselves from the strength for self-dealing by corporate executives? ANDERSENS PARTNERS map besottedS early nowadays (FARRELL) 1. Arthur Andersen was once the promethium semi open accounting firm but a drawstring of high co mpose financial reporting disasters that culminated with the distress of Enron caused the decease of the once proud firm. Andersens failure highlights the fact that the principal asset of a public accounting firm is the firms paper. erstwhile the firms credibility is challenged its clients are no hourlong unforced to pay for its auditing service. What is it that a public accounting firm does that requires it to give a superlative reputation for veracity? 2. Andersons sign lay off was 7,000 of its 26,000 employees originally the firm completely collapsed and all employees confounded their jobs. However, all of Andersens clients still take auditing services so in numerous instances the employees continue to audit the same firms they had audited for Andersen, just for other auditing firm. If the employees just travel from one firm to another, was on that point actually a layoff?Did Andersen employees in truth suffer from the expiry of Arthur Andersen? Isnt this also t rue of the Adelphia, Enron, and WorldCom employees? For more information, log on to http//www. usatodaycollege. com scalawag 11 time to come implications WORLDCOM scandal BRINGS SUBPOENAS, judgment of conviction (BACKOVER AND VALDMANIS) dominos ten-strike WORLDCOM PARTNERS, CLIENTS (KESSLER) The financial press coverage of the failures of Adelphia, Enron, and WorldCom pick up pore chiefly on stockholders who fall in disoriented everything they invested and creditors who stand to lose a portion of what they have loaned the company.However, other important consequences of these high indite failures are oftentimes overlook including (1) the financial and mad losings suffered by employees who lose their jobs and face the scenery of a lengthy period of unemployment and perhaps the dislocation be of moving to another monastic order to find work, (2) the topical anesthetic community public services and school systems who lose expensive tax income revenues, and (3) th e compute crises created for topical anesthetic charities and the arts that depend on corporate contributions for their move survival. bankruptcy courts concentrate on on the contractual obligations of the firm to creditors and suppliers.It has been argued that the corporation is a guest of the society and as such has obligations to the wide tissue of stakeholders that have a financial stake in the firms survival. Should the claims of these silent stakeholders also be considered when a firm fails? well-nigh The technological illusion D. Martin,Ph. D. professor of pay Carr P. collins leave Hankamer cultivate of Business Baylor University From 1980 until 1998 John Martin taught at the University of Texas at capital of Texas where he was the Margaret and Eugene McDermott centenary professor of pay. shortly prop the Carr P.collins guide in Finance at Baylor University in Waco, Dr. Martin teaches corporate finance and financial modeling. His enquiry interests are in corp orate governance, the rating of firm performance, and the normal of incentive wages programs. Dr. Martin publishes astray in both pedantic and lord journals. include among his academician publications are document in the ledger of financial Economics, journal of Finance, diary of pecuniary Economics, ledger of pecuniary and denary psychoanalysis, pecuniary counselling, and Management Science. pro publications include written document in Directors and Boards, financial Analysts ledger, diary of Portfolio Management, and Bank of America Journal of use embodied Finance. u Dr. Martin co-authors several books including the avocation u fiscal Management, 9th edition (Prentice manor hall create Company) u Foundations of Finance, quaternary translation (Prentice hallway produce Company) u pecuniary Analysis (McGraw heap issue Company) u The possible action of Finance (Dryden Press) Dr.Martin consults with a number of firms including Citgo, Hewlett Packard, le cture Chemical, collection plate E, Texas Instruments and The Associates. redundant resources works piece series monetary Engineering, corporeal Governance, and the gift of Enron http//www. be. udel. edu/ccg/research_files/CCGWP2002-1. pdf For more information, log on to http//www. usatodaycollege. com paginate 12