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May 19, 2003


The opinion of the court was delivered by: Denise Cote, District Judge


WorldCom, Inc. ("WorldCom"), once a giant of the telecommunications industry, is now the subject of colossal litigation. On July 21, 2002, WorldCom filed the largest bankruptcy in United States history. WorldCom executives have pleaded guilty to violating the securities laws; WorldCom's stock and bondholders, including numerous state and private pension funds, have lost hundreds of millions of dollars in investments; state and federal governments have conducted investigations into WorldCom's ascent and collapse; and those associated with the company have been sued in venues across the country. This Opinion addresses the motions to dismiss the consolidated class action complaint filed in the multi-district securities litigation.

Plaintiffs contend that WorldCom officers, directors, auditors, underwriting syndicates, and its most influential outside analyst disseminated materially false and misleading information. The false information appeared in analyst reports, press releases, public statements, and filings with the Securities and Exchange Commission ("SEC") from April 1999 through May 2002, including registration statements issued in conjunction with WorldCom's May 2000 note offering ("2000 Offering") and May 2001 note offering ("2001 Offering," together the "Offerings"). Plaintiffs allege that as WorldCom faced growing pressure to satisfy increasingly unrealistic earnings expectations, the company engaged in a series of illegitimate accounting strategies in order to hide losses and inflate reported earnings. By concealing losses to exaggerate reported earnings, plaintiffs argue, WorldCom affected the price of its securities and misled investors regarding the true value of the company.*fn1

On April 30, 2002, the first securities class action in connection with these events was filed in this district. At least twenty related class actions had been filed here by the end of the summer. By Order dated August 15, 2002, the actions were consolidated under the caption In re WorldCom, Inc. Securities Litigation ("Securities Litigation"). The New York State Common Retirement Fund ("NYSCRF") was appointed lead plaintiff, and filed a Consolidated Amended Complaint on October 11 ("Complaint") adding three more named plaintiffs. Plaintiffs filed suit on their own behalf and as a class action on behalf of all persons and entities who purchased or acquired publicly traded WorldCom securities between April 29, 1999 and June 25, 2002, including those who acquired shares of common stock in the secondary market or in exchange for shares of acquired companies pursuant to a registration statement, and those who acquired WorldCom debt securities in the secondary market or pursuant to a registration statement. Plaintiffs allege violations of Sections 11, 12 and 15 of the Securities Act of 1933 ("Securities Act") and of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 promulgated thereunder.

Drawing from the allegations in the Complaint, Part I of this Opinion identifies the parties and Part II describes the alleged fraud. Part III describes the legal standards that apply to the motions to dismiss. Part IV addresses the merits of each defendant's motion.*fn2 The defendants' motions are addressed in the following order: (1) Bernard J. Ebbers; (2) directors; (3) underwriters; (4) Jack Grubman, Salomon Smith Barney, and Citigroup, Inc.

The Complaint is lengthy and detailed. The descriptions that follow summarize the allegations that are most relevant to the motions addressed in this Opinion.

I. The Parties

A. Plaintiffs

Lead Plaintiff

NYSCRF invests the assets of the New York State and Local Employees' Retirement System and the New York State and Local Police and Fire Retirement System and is the second largest public pension fund in the United States. During the class period, NYSCRF purchased WorldCom stock and WorldCom MCI tracking stock, and lost over $300 million in its investments.

Additional Named Plaintiffs

Three entities have joined the action as named plaintiffs. The Fresno County Employees Retirement Association ("FCERA"), a California entity, purchased WorldCom stock and debt, including at least $3 million of notes offered in WorldCom's 2001 Offering. The County of Fresno, California ("Fresno") purchased over $6 million of notes in WorldCom's 2000 Offering. HGK Asset Management ("HGK") is a registered investment advisor and acts on the behalf of union-sponsored pension and benefit plan clients pursuant to ERISA, 29 U.S.C. § 1001 et seq. During the relevant period, HGK purchased nearly $130 million of WorldCom debt securities, including approximately $43 million of notes in the 2000 Offering and over $29 million of notes in the 2001 Offering.

B. Defendants

WorldCom Executives

Four of WorldCom's former executive officers are named as defendants. Bernard J. Ebbers ("Ebbers") was the President, Chief Executive Officer and a WorldCom Director during the class period. He resigned from the company under pressure on April 29, 2002. Ebbers has not been indicted on criminal charges relating to WorldCom. The Complaint pleads claims under Sections 11, 15, 10(b), and 20(a) against Ebbers (Counts I, II, VI, and VII). Ebbers moves to dismiss all claims against him.

Scott D. Sullivan ("Sullivan") was WorldCom's Chief Financial Officer and a Director during the class period. After Ebbers's resignation, Sullivan served as Executive Vice President from April 30, 2002 until June 25, 2002, when WorldCom terminated his employment. In a criminal complaint dated July 31, 2002, Sullivan was charged with felonies in connection with his activities at WorldCom, including securities fraud, conspiracy to commit securities fraud and making false filings with the SEC. He was arrested on August 1, and indicted on August 28, 2002. The Complaint pleads Sections 11, 15, 10(b), and 20(a) claims against Sullivan.*fn3

David F. Myers ("Myers") was WorldCom's Controller and a Senior Vice President. He resigned from the company on June 25, 2002. On September 26, 2002, Myers pleaded guilty to charges of conspiracy, securities fraud, and the filing of false documents with the SEC. The Complaint pleads Sections 15, 10(b), and 20(a) claims against Myers.*fn4

Buford Yates, Jr. ("Yates") was WorldCom's Director of General Accounting. On October 7, 2002, Yates pleaded guilty to securities fraud and conspiracy to commit securities fraud. The Complaint pleads Sections 15, 10(b), and 20(a) claims against Yates.*fn5

WorldCom Directors

The WorldCom Directors consist of Clifford Alexander, Jr., James C. Allen, Judith Areen, Carl J. Aycock, Max E. Bobbitt, Francesco Galesi, Stiles A. Kellett, Jr., Gordon S. Macklin, John A. Porter, Bert C. Roberts, Jr., John W. Sidgmore, and Lawrence C. Tucker ("Director Defendants").*fn6 The Complaint pleads Sections 11, 15, and 20(a) claims against all Director Defendants. All Director Defendants move to dismiss the Sections 15 and 20(a) claims (Counts II and VII); none have moved to dismiss the Section 11 claim (Count I).

Director Defendants Allen, Areen, and Galesi were members of the Audit Committee of the Board, and Bobbitt its Chair, during the class period ("Audit Committee Defendants"). Count VI pleads a Section 10(b) claim against the Audit Committee Defendants. They move to dismiss the claim.

Director Defendant Kellett was the Chairman of the Compensation Committee of WorldCom's Board. Count VI pleads a Section 10(b) claim against Kellett. He moves to dismiss this claim.

Accountants and Auditors

The Complaint pleads claims against WorldCom's outside auditors and accountants, Arthur Andersen LLP, Andersen UK, Andersen Worldwide SC, and Andersen partners Mark Schoppet and Melvin Dick ("Andersen Defendants"). Plaintiffs claim that the Andersen Defendants are liable for violations of Sections 11 and 10(b) (Counts III and XIII).


The Complaint pleads Sections 11 and 12(a)(2) claims against underwriters consisting of Salomon Smith Barney, Inc. ("SSB"), J.P. Morgan Chase & Co., Banc of America Securities LLC, Deutsche Bank Securities Inc., now known as Deutsche Bank Alex. Brown Inc., Chase Securities Inc., Lehman Brothers Inc., Blaylock & Partners L.P., Credit Suisse First Boston Corp., Goldman, Sachs & Co., UBS Warburg LLC, ABN/AMNRO Inc., Utendahl Capital, Tokyo-Mitsubishi International plc, Westdeutsche Landesbank Girozentrale, BNP Paribas Securities Corp., Caboto Holding SIM S.p.A., Fleet Securities, Inc., and Mizuho International plc ("Underwriter Defendants"). The Underwriter Defendants move to dismiss both claims against them (Counts IV and V).

The allegations against the Underwriter Defendants arise from two bond offerings made by WorldCom: the 2000 and 2001 Offerings. SSB and J.P. Morgan served as lead managers of the 2000 Offering. Banc of America, Chase, Deutsche Bank, Lehman Brothers, Blaylock, Credit Suisse, Goldman Sachs, and UBS Warburg joined in underwriting the $5 billion 2000 Offering. The registration statements and prospectus documents filed in connection with the offering ("2000 Registration Statement") are alleged to have included WorldCom's materially false financial statements for 1999 and to have incorporated by reference other SEC filings for WorldCom that contained materially false information.

SSB was the lead underwriter for the 2001 Offering. Together with J.P. Morgan, Banc of America, Deutsche Bank, Blaylock, Mitsubishi, Westdeutsche, BNP Paribas, Blaylock, Caboto, Mitzuho, ABN/AMNRO Inc., Utendahl and Fleet Securities, Inc. they underwrote the $11.8 billion 2001 Offering. The documents alleged to have constituted the May 2001 registration statement ("2001 Registration Statement," together with the 2000 Registration Statement, "Registration Statements") contained false and misleading financial information for WorldCom for the years 1999 and 2000, and incorporated by reference other SEC filings with false information about WorldCom's finances.

Citigroup, Inc. SSB, and Jack Grubman

The Complaint pleads claims against Citigroup, Inc. ("Citigroup"), a financial services company; SSB, a Citigroup subsidiary; and Jack Grubman ("Grubman"), the high-profile SSB telecommunications analyst (together "SSB Defendants"). In addition to the two claims in Counts IV and V against SSB as one of the Underwriter Defendants, the Complaint alleges that SSB and Grubman violated Section 10(b) in connection with the 2000 and 2001 Offerings (Count IX), and, in a separate Count, in connection with Grubman's analyst reports (Count X). The Complaint also pleads a controlling person claim pursuant to Section 20(a) against SSB and Citigroup for Grubman's analyst reports (Count XI). Citigroup, SSB and Grubman move to dismiss all counts against them.

II. The Fraud

For many years, WorldCom grew by acquisitions. By 1998, it had acquired more than sixty companies in transactions valued at over $70 billion. Its largest acquisition was of MCI on September 14, 1998, a transaction valued at $40 billion. In early 2000, however, its attempt to acquire Sprint collapsed. During this period of acquisition-driven expansion, WorldCom had used accounting devices to inflate its reported earnings. Senior WorldCom management instructed personnel in the company's controller's office on a quarterly basis to falsify WorldCom's books to reduce WorldCom's reported costs and thereby to increase its reported earnings. When the pace of acquisitions slowed, it added new strategies to disguise a decline in its revenues. In 2002, however, the scheme collapsed.

On June 25, 2002, WorldCom announced that it had improperly treated more than $3.8 billion in ordinary costs as capital expenditures in violation of generally accepted accounting principles ("GAAP") and would have to restate its publicly-reported financial results for 2001 and the first quarter of 2002. WorldCom later announced that its reported earnings for 1999 through the first quarter of 2002 had been affected by manipulation of various reserves and had overstated earnings by $3.3 billion. WorldCom also announced that it would likely write off goodwill of $50 billion. The impact of those disclosures on the price of WorldCom shares and the value of its notes was catastrophic. Its common stock dropped from a high of $65 per share to pennies.

A. Accounting Irregularities

WorldCom manipulated its books in two main areas: (1) its charges to income and classification of assets in connection with acquisitions, and (2) its accounting for "line" costs. In each of these areas, WorldCom failed to follow GAAP, and instead freely reworked its numbers in order to meet marketplace earnings projections.

1. Acquisitions

Part of the acquisition process involves identifying costs incurred in connection with each merger and taking corresponding charges to income. WorldCom improperly recorded expenses at the time of the acquisition that should not have been included. The effect was to inflate earnings in later periods when the expenses were actually incurred and should have been recorded.

In addition, at the time of acquisitions, WorldCom took overly large and unjustified charges to income, creating inflated merger reserves that it would later tap into when it needed to do so to boost reported earnings. Enormous charges were typical of the mergers and acquisitions in the 1990s and "WorldCom and its senior officers knew that Wall Street would not be concerned with the size of the charges."

WorldCom used the acquisition of MCI in particular to manipulate its earnings statements by improperly classifying the assets it obtained. WorldCom understated the book value of MCI's property, plant and equipment assets and overstated the value of the goodwill acquired. By classifying MCI's value in terms of a slowly depreciating asset like goodwill rather than hard assets, which depreciate in one-tenth of the time, WorldCom improperly inflated its earnings during the years immediately following the MCI acquisition.

2. Line Costs

With a decline in its revenue, and further prompted by the failure of its attempt to acquire Sprint, WorldCom began a new accounting fraud, no later than 2000, in connection with its single largest operating expense: line costs. WorldCom had entered into long-term lease agreements with other telecommunications companies for the use of their networks. Pursuant to these leases, WorldCom was obligated to make fixed monthly payments for the use of the networks, or lines, regardless of whether WorldCom or its customers in fact used the leased lines. When demand did not grow as WorldCom had hoped, the company found itself with substantial fixed line costs for networks that were not generating any income.

Under GAAP, line costs must be reported as an expense. In October 2000, and without any justification in fact or under GAAP, Sullivan instructed Yates, Myers and others in WorldCom's accounting department to make journal entries crediting WorldCom's line cost expense accounts, and instructed Myers and others to make corresponding reductions in various reserve accounts so that the general ledger would balance.

In 2001, WorldCom changed its method for disguising the impact of line costs on its revenues. Sullivan directed that line costs simply be reclassified as capital expenditures that could be depreciated over time. The effect of the reclassification was to inflate WorldCom's reported earnings.

B. The Defendants

Bernard J. Ebbers

Ebbers's position in the company, his statements, his close relationship with Sullivan, his reputation for acting as a "hands on" manager, the size of the fraud, and certain decisions he made regarding WorldCom's internal audit department provide evidence that Ebbers was aware of WorldCom's fraudulent accounting practices. Key allegations include the following.

WorldCom's General Counsel has admitted that Sullivan informed Ebbers that hundreds of millions of dollars had been transferred into capital expenditure accounts. In 2000, Ebbers assured the assembled senior staff that the company "won't have to worry about earnings for years" because it could use cash reserves to boost revenue if necessary. As reflected in e-mail correspondence, at a dinner attended by Ebbers, Sullivan, and WorldCom employees Ron Beaumont and Tom Bosley, Bosley agreed to do whatever was necessary to get WorldCom's "margins back in line" before the financial results for the fourth quarter of 2000 were disclosed. In March 2002, Ebbers sought to curtail the work of WorldCom's internal auditors by cutting the department's budget in half. Ebbers repeatedly represented to the public that he was familiar with WorldCom's accounting policies and practices, that they were reliable, and that they complied with SEC requirements. On February 7, 2002, only a month before the SEC began its investigation of WorldCom, Ebbers stated in an earnings conference call with analysts that "we stand by our accounting."

Ebbers's personal financial situation provided a strong motive for materially misstating WorldCom's earnings. Ebbers had significant personal loans secured by WorldCom stock. In the fall of 2000, as WorldCom's stock price fell, Ebbers faced margin calls on those loans. That fall, after government regulators blocked WorldCom's proposed merger with Sprint, Ebbers sold about $70 million worth of WorldCom stock. The sale was structured as a forward sales contract in which Ebbers received a guaranteed price of approximately $70 million for stock that was to be exchanged in April 2002. By selling through the forward contract, Ebbers disguised the obvious implications of the sale of a substantial amount of WorldCom stock by its CEO, but received approximately $13 million less than he would have had he sold the stock at that time. Ebbers had planned to sell more of his WorldCom holdings earlier that fall in order to cover margin calls but, fearing that a stock sale by the CEO would adversely affect the company's share price, WorldCom loaned Ebbers sufficient funds to cover the calls. This pattern repeated itself in November and December 2000. WorldCom also loaned Ebbers funds to repay certain personal debt. Ultimately, over the course of 2000 and 2001, WorldCom loaned Ebbers approximately $400 million to cover margin calls on personal loans secured by WorldCom stock. During the class period, Ebbers had approximately $900 million in personal loans secured by WorldCom stock. WorldCom's board and senior management were aware that Ebbers faced continuous pressure from margin calls on loans secured by WorldCom stock. Further allegations regarding Ebbers are discussed below in connection with the SSB Defendants.

Director Defendants

All or most of the Director Defendants signed each of the following documents filed by WorldCom with the SEC: the 1999, 2000, and 2001 Forms 10-K, May 2000 and May 2001 Registration Statements, and the registration statements filed in connection with WorldCom's acquisition of SkyTel Communications, Inc. in 1999 and of Intermedia Communications, Inc. in 2001.*fn7

The Complaint alleges that the Director Defendants participated directly and indirectly in the preparation or issuance of public statements in violation of Section 10(b). By virtue of their positions on the WorldCom Board of Directors and, in some instances, its Audit and Compensation Committees, the Director Defendants were able to and did control the false public statements that constitute the substance of the allegations, are presumed to have had the power to control the transactions that gave rise to the violations, and did have the power to direct the management and activities of WorldCom and its employees, including the power to cause WorldCom to engage in the violations.

Audit committees play a critical role in monitoring corporate management and a corporation's auditor.*fn8 WorldCom's SEC filings represented that the WorldCom Audit Committee reviewed its financial statements, communicated with WorldCom's independent accountants, and reviewed internal accounting controls. Despite these representations, WorldCom's accounting controls were "virtually non-existent." The size of WorldCom's restatement alone demonstrates that the Audit Committee Defendants either knew of the accounting irregularities or recklessly disregarded information which would have led them to discover the fraud. The Audit Committee had direct notice that WorldCom's internal controls were deficient. Fraudulent billing practices discovered in a Pentagon City, Virginia WorldCom office in June 2001, resulted in the overpayment of almost $1 million in sales commissions.

The Complaint includes allegations that are specific to individual Director Defendants. On January 30, 2002, two weeks before WorldCom took a massive write-off of goodwill, Galesi sold 63% of his WorldCom holdings in return for $27 million. As Chair of the Compensation Committee, Kellett played a key role in securing the Company's $400 million in loans for Ebbers. In exchange, the Complaint alleges that WorldCom leased a jet to Kellett for one dollar per month. Kellett also received from SSB 31,550 shares in "hot" initial public offerings ("IPOs"). In November 2000, Kellett entered a forward sale of sixty-seven percent of his WorldCom holdings in exchange for $53 million to be paid in November 2003. While this sale was for less than the shares were worth on the open market, this contract was a hedge against the impending collapse in the share price and avoided the negative market reaction to an insider's sale of this magnitude. Kellett sold fifty-percent of his remaining WorldCom holdings in December 2001, for $11.9 million.

Underwriter Defendants

As underwriters of the 2000 and 2001 Offerings the Underwriter Defendants were responsible for the contents and dissemination of the Registration Statements, which contained material misrepresentations and upon which plaintiffs relied in purchasing WorldCom securities. Although the Underwriter Defendants were aware that the value of the goodwill identified in WorldCom's books was impaired, they did not reflect that fact in the Registration Statements. In order to assess WorldCom's anticipated sources of revenue in preparation for the Offerings, the Underwriter Defendants should have examined WorldCom's infrastructure; had they done so, they would have discovered WorldCom's improper capitalization of line costs. By comparing WorldCom's budgeted capital expenditures to its actual capital expenditures or its revenues to its revenue producing capital assets, and by investigating the authorization — or lack thereof — for the capital accounting, the Underwriter Defendants also could have discovered the accounting fraud. Numerous other "red flags" should have alerted the Underwriter Defendants to WorldCom's fraudulent accounting practices and should have been investigated by them, including WorldCom's interest in using unusually aggressive accounting practices, commitment to aggressive and unrealistic forecasts, lack of effective Board oversight over WorldCom executives, inadequate monitoring of significant controls, failure to make certain corrections in a timely manner, market saturation and declining margins, and tendency to base material amounts of assets, liabilities, revenues, and expenses on estimates involving unusually subjective judgments or uncertainties. Given SSB's significant and unusual relationship with WorldCom and its executives, the remaining Underwriter Defendants should have been particularly alert in conducting their own due diligence prior to the Offerings.

SSB, Grubman, and Citigroup

In addition to WorldCom's own fraudulent representations, investors were misled by material misrepresentations and omissions by Jack Grubman and SSB in SSB's analyst reports and by SSB in WorldCom's Registration Statements. The SSB Defendants' analyst reports and the Registration Statements issued in connection with the 2000 and 2001 Offerings were false and misleading not only because they misrepresented WorldCom's financial condition, but also because they failed to disclose key information regarding the nature and extent of an illicit quid pro quo arrangement that existed between the SSB Defendants and WorldCom.*fn9 Had that self-serving arrangement been adequately disclosed, it would have been apparent that Grubman's positive reports about WorldCom and recommendations to buy WorldCom were not reliable advice from an independent analyst and trustworthy brokerage house. The illegal quid pro quo arrangement was that the SSB Defendants would issue positive analyst reports about WorldCom, provide WorldCom senior executives with valuable IPO shares, and loan Ebbers hundreds of millions of dollars, in exchange for WorldCom's investment banking business and the substantial revenue and personal compensation that that business generated for the SSB Defendants.

Throughout the class period, SSB issued analyst reports authored by Grubman that touted WorldCom's value and that vigorously encouraged investors to buy the purportedly undervalued stock. These reports were issued despite the knowledge of SSB's management that the integrity and objectivity of its research department was compromised by the department's decision to serve the needs of the firm's investment bankers at the expense of providing investors with independent analysis. In February 2001, the global head of SSB's retail stock selling division told the head of SSB's Global Equity Research Management that SSB's "research was basically worthless."

Far from being an independent analyst, Grubman's compensation was directly tied to SSB's investment banking business. In 2001 alone, Grubman claimed compensation for his involvement in ninety-seven investment banking transactions which together generated $166 million in revenues. Grubman even attended two WorldCom board meetings, meetings concerning the acquisition of MCI and of Sprint. When he attended Ebbers's wedding, Grubman charged the trip to the investment banking department. Grubman's importance to SSB is reflected in his compensation. Between 1998 and 2002, Grubman made about $20 million each year. When Grubman resigned from SSB in August 2002, he received a severance package of $32 million plus forgiveness of a $19 million loan.

There are several examples of how Grubman's research reports were compromised by his close ties to the investment banking department. Grubman has admitted that he had refrained from downgrading his ratings of certain stocks due to pressure from his firm's investment bankers, and gave several telecommunications companies higher ratings than he believed the companies deserved. Grubman's reports on WorldCom itself are evidence that he wrote them in bad faith. Grubman repeatedly issued positive reports and "buy" ratings in connection with announcements by WorldCom that were expected to cause its stock price to fall. Grubman maintained a "buy" rating until April 21, 2002, by which time WorldCom stock was trading at only $4 per share. Just before the 2000 Offering for which SSB served as the co-lead underwriter, Grubman began to use a new "cash earnings" model for evaluating WorldCom. Until early 2000, Grubman had assessed WorldCom and other telecommunications companies using a "discounted free cash flow" model. When use of that model threatened to expose WorldCom's financial deterioration, Grubman adopted a new model designed to omit the influence of capital expenditures — a key element of WorldCom's accounting fraud. Over the next two years, Grubman did not apply the cash earnings model to any of the other telecommunications companies on which he reported.

Grubman, Ebbers, SSB and WorldCom thrived through their symbiotic relationship. During this same time, Grubman was SSB's top telecommunications analyst and one of the most powerful men on Wall Street. It was said that he could make or break any telecommunications stock. Grubman's positive research reports played a significant role in assuring that the SSB Defendants would retain WorldCom's lucrative investment banking business. WorldCom was an extremely desirable client because it engaged in so many acquisitions, generating significant banking business. Since premier investment banks charge similar underwriting fees, Grubman's positive analyst reports succeeded in giving SSB's investment bankers an advantage over their competitors. WorldCom selected SSB to serve as its lead investment bank in every major acquisition and debt offering between 1997 and 2001, twenty-three deals in all. In compensation, SSB received $107 million. The deals included WorldCom's $40 billion merger with MCI, the failed $129 billion Sprint merger, and, as lead or co-lead underwriter, the 2000 and 2001 Offerings.

On WorldCom's side, Ebbers, Sullivan and Kellett received valuable allocations of shares in various "hot" IPOs from SSB. SSB gave significant percentages of its total available retail allocation from "hot" IPOs to Ebbers on multiple occasions. Ebbers alone received allocations in at least twenty-one hot IPOs, from which he derived profits of $11.5 million. In a letter to the United States House of Representatives Committee on Financial Services, SSB admitted that "some allocations to corporate officers and directors . . . were sufficiently large as to raise questions about the appearance of conflicts."

Ebbers also received hundreds of millions of dollars in loans from The Travelers Insurance Company ("Travelers"), a Citigroup subsidiary and a former parent of SSB. These loans were never publicly disclosed. They were effectively concealed because they were made to Joshua Timberlands LLC, an entity controlled by Ebbers, but held by another entity whose connection with Ebbers was also obscured. The loans were secured in part by WorldCom stock, a ...

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