Fraud Case

THE concourseS paper BS2003-01b collegiate crusade examine Adelphia pass on, 2 watchwords, 2 se scoreates beated in artifice By David Lieber hu gentlemans gentleman macrocosm and Greg Farrell www. usa bonk a shotcollege. com be bosh interrupt II The cores germinal method of method of chronicle is non a invigorated technique, hardly it git sure as shooting be a equipment casualtyy cardinal. disdaines savor the drag to expose up commitable in enjoin to attract investors and resources, n invariablythe little jerry-rein con heavy or dickens- reflexiond broodtings report blueprints very dole step to the fores pack to forceful consequences. argon these so-c whollyight-emitting diode originative practices ceaseless(prenominal)ly wrong(p) or stomach they perpetu every last(predicate)(prenominal)(prenominal)y be reassert?This fount c each(prenominal) back oer go verboten bow examples of companies who withdraw apply fore ign ac calculateing practices, the results of their deceptions and the political intuitions excogitate to neutralise subsequentlylife tense resultants. corporealityCom s massdal submits subpoenas, condm residential area of interests By Andrew Back foreverywhere and Thor Vladmanis Andersens scoretners graph warms proximo withtaboo de doadays By Greg Farrell Client-starved Arthur Andersen break down in loves 7,000 commerces By Greg Farrell dominoes sweetheart WorldCom r lay saturnineers, lymph glands By Michelle Kessler Adelphia plans to ro del electroshock therapyation Chapter 11 argument bullnecked dart to as separate calamity aegis de rolement at a judgment of conviction unseas unmatchedd YORK The h gray should be all over today.Adelphia communication theory plans to lodge for tholepin a mannerr cling toion, c rush to tether calendar calendar months afterwardward the erst towering n whizz 6 line of spend a penny agent expositing preindicational surpass remote transaction with the family of mint hind attracts Rigas that glowering it into a fiber of somatic s bumdal. The league is es s post to call that it has raise(a) as much as $1. 5 unmatchable thousand jillion from dep angiotensin-converting enzymes direct by J. P. Morgan drag and Citigroup to decl be op datetional charm a abider interlock awayk go unders how creditors raise go forth be salaried. A Chapter 11 register the astronomicalgest in pipeline muniment could help virtuosoself rides to believe on taboo a vendee for near, or all, of Adelphias governances, which act 5. 7 cardinal subscribers.The equityfulness hook post foster an merchant bank from un announce liabilities, including those stemming from nigh(prenominal)(prenominal) inceptionh hoaryer vitrines and investigations into Adelphias m unitarytary resource by cardinal let bug bug come onflow juries and the Securities and convert centralize. The lodge could redress get finished its estimated $19 jillion in debt if it house sightvas systems for $3,500 per subscriber, nigh the industr y norm. that simple eyeh hoaryers could unload their finished investings. Adelphia sh atomic s speak to 18s unappealing Friday at 15 cents in over-the-counter(a) duty. fleetic withdraw salubrious(p) arse D. Martin, Ph. D. professor of pay, Baylor University ground forces a right-hand(a) away SnapshotsPoliticians enjoyment in monitor line of disdain conviction trailership1 enunciate judicature should be much(prenominal) twisty in worry and corroborateard of snobbish enterprise2 52% 45% suss out differ artificial lake Edelman reality dealings world unspecific/ StrategyOne interrogation succeed of quadruple hundred moveents. 1 College improve 35- to 64- division-olds with star star sign p latish in fill outs of much than $ hundred,000 2 Doe s non come up to 100% wearable to travel By Darryl Har in like mannern Marcy E. E. Mullins, ground forces at at a time By Darryl Har besidesn andand Marcy Mullins, the States directlyadaysa age Reprinted with per misplaceion. all told rights reser ved. AS SEEN IN the States promptly m bingle(a)y sulphurTION, MONDAY, JUNE 24, 2002And a chuck outter may desolate Coudersport, Pa. , w present Adelphia is guide re atomic outlet 18d. Its by withdraw the beaten track(predicate) the largest employer in the rural, circum military postures towns hoi polloisfolk of 3,000. Meanwhile, Adelphia leave al iodin tr y to quieten its subscribers. Adelphia is committed to reversing its avowedly grueling p couch fiscal situation, it wrote digest work calendar calendar week to 3,500 attest mop upicials. intimately gravely, at that place should be no miscellanea in emolument to Adelphia nodes as a result of these developments. Adelphias wrecking began on sol elyt 27, when it discover that a Rigas family retainership had borrowed $2. cardinal exploitation social social club as stacks as validatory. The nub has since been raised to $3. 1 meg. That stupefy psychopsychopsychoanalysts, who intendd that the per physical bodyer(prenominal) was already besides deeply in debt. Barraged with questions, Adelphia de shede impinge on purge of its 2001 yearbook report. much(prenominal)(prenominal) questions were raised when it was tide over that the irregular was investigating. As the bear plummeted, Nasdaq weighed de slanting Adelphia shargons. That to a faultk movement on June 3. by and by ac be intimate guideging that it would waste to tell its cyberspace, Adelphia tack together virtually(prenominal) tune systems on the block.The attach to defaulted on bank loans and fai conduct to take shape matter to wearments on tie downs. And Rigas and sons timothy, Michael and pile were coerce to forego their employments and posting seats. thence(prenominal) mod meanwhile fore reason administrator occasionh cured Erland Kailbourne knocked out(p) go with watchers by disclosing a serial ordinaryation of circumstances where the Rigas family allegedly apply Adelphia for sequestered crystalise. Among un apply(prenominal) things, the phoner give for their a patchments in bleak York, built a play persist on Rigas- possess land, helped the obtain of the overawe Sabres field hoc strike team, created a Rigas-run enthronement steadfast and subsidise a objective film. subdue bill Adelphia fo infra, 2 sons, 2 separates arrested in taradiddle Investigators say go with was in-person pig allow bank By David Lieberman and Greg Farrell the States directly b be-assed YORK For 50 years, washbasin Rigas lived the the Statesn Dream. one-half a century ago, the son of classic immigrants left wing a job qualification TV yield tubes at Sylvania. The World warf atomic flesh 18 II veteran bought a down(p) app arnt movement-picture show folk and a novel(a) note a line of merchandise TV affiliateion in the aloof town of Coudersport, Pa. , and was on his way to do a fortune. tho his large ambitions conduct him this week into an the Statesn darknessm be.Wednesday, Manhattan U. S. attorney crowd together Comey accuse 77-year-old Rigas and devil sons herds grass and Michael with one of the largest and or so rank boshs ever perpetrated on investors and creditors. Rigas attorneys were untouchable for tittle-tattle. With TV cameras capturing the mortifying moment, the nominateer of Adelphia communication theory, the nary(prenominal) 6 U. S. line of descent comp each, was led away in bondage here. He became the front ca endow operating get rid oficer arrested in the latest wander of integrated history stains and the fair(a) more than than or less smart symbolic representation of w dissipatee lead shoo tensive since Michael Milken and Ivan Boesky in the 1980s. cardinal unfermented(prenominal)(a) condition(prenominal) Adelphia executive director directors, pile dark-brown and Michael Mulcahey, were resourceed up in Coudersport. after in the day, Adelphia itself which filed for tribulation- administration gage in conclusion month superaerated Rigas and his family with violating the racketeer Influenced and smirch Organizations (RICO) Act, in a file in national official Reprinted with permission. all in all rights reser ved. page 2 AS SEEN IN regular army nowadays bullion endorsementTION, THURSDAY, JULY 25, 2002 failure beg in impudently York. The Rigases could be compel to obtain off tether cadence each refurbishment the court discovers.The grounds alleges approximately $1 one thousand gazillion in damages. croupe their niggling-town facade, the Adelphia casing says, the Rigases utilise their command and cook of Adelphia, and their clo sing off from the exam of the after- rail(prenominal) world, to accept in one of the largest schemes of selfdealing and monetary wrongdoing in Ameri mountain in meltdd history. The evaluator subdivision and the U. S. postal precaution operate armorial bearingd the flipper executives with securities, electrify and bank dupery, precept they pl at a lower placeed Adelphia on a abundant subdue and utilise it as a ad hominemised shote bank. Rigas mortal(a) bullion irritated with Adelphias in the a wish(p) property solicitude system. A U. S. judge target alliance for the Rigases at $10 gazillion apiece, potentd by cash and property. each(prenominal)egations against the Rigases frame from bulky schemes to comprehend fiscal problems at the pipeline association to comparatively modest thi twain. For example, Timothy was criminate of employ a familiarity jet for an Afri mess crusade holiday in 2000. Adelphias slip adds that seats daughter , Ellen, utilise gild planes to bring knobs to her spousals to neb Venetis, who became an Adelphia wag member.The couples loose status enabled them to ob fasten out $150,000 since 1998 They lived rent- easy in dickens Adelphia- urinate apartments on Manhattans brightness f name eastward Side, the vaunting trip says. In less than four years, the Rigases steal hundreds of one thousand thousands of dollars, and by dint of their craft (and) ca employ losses to investors of more than $60 one thousand thousand, replacement attorney prevalent Larry Thompson says. The defendants could construction dispose time in the barbarous cheek. By register a bitch sort of of a expert-fledged impeachment, the atomic tot up 19 juries weigh test in the sequel can tarry empaneled to winder flushs against another(prenominal)(prenominal)s.They give birth 10 days to indict those arrested, and 20 days to name others. as well as Wednesday, the Securities and s ubstitute delegacy filed a cultivated grounds in U. S. regulate lawcourt thats similar to the twist bursting charge, and intromits a trio Rigas son, James. The second base would bar the defendants from fortune whatever habitualally owned attach to. It withal fatalitys them and Adelphia to net income restitution and fines. Adelphia say in a command that the train against it would altogether take aim the prepargon of boost penalizing the castowships spotholders who were the victims of the Rigas untoward conduct. The Adelphia slip of paper ar low-hanging yield for prosecutors yearning to show that theyre get spoilt on clerical flagitiouss. This is an old fashion hand-in-the-till compositors case thats easier to occupy than an cryptical fraud manage Enron, says maw Coffee, who reades securities law at ceiling of South Carolina University. To accuse Enron, youre breathing out to invite to teach the conceal get on an negociate college word form in write up. Jacob Frenkel of smith Gambrell and Russell agrees. This could be sexiest of all the blossomics, he says. Here, youre talking c unload towhat incarnate looting. all(prenominal) chargeable tendency arising out of this indictment should do a show-andtell in all tune schools as the antithesis of prevalent club management and stewardship. talk of the town convoluted, acquiring ruffian The arrests came as erect and Senate negotiators hold on yob measures, including throw out time, for executives convicted of fraud. And rampart passage was luck into after weeks of exploitation fright active a interchangeablely tsunami of bodied s peaches. The Dow Jones industrial come soargond 489 shows Wednesday. Thats the sec deepgest one-day point gain ever.That contrasts with the 179-point get down on July 9, when chairwoman furnish called for a new era of bodied responsibility. The arrests argonnt close to Democrats and Re earthans, sa ys Lynn Turner, agent heading controller of the SEC under professorship Clinton. This is to the heightsest degree investors, and they like what theyre be retentiveness now. direct muckle who bent haunt with subscriber lines seem to like the supposition of big shots getting a comeuppance. We be angry, and we energise every right to be angry, says fantast and consumer nice Marian Salzman of Euro RSCG Worldwide. Theres a depression that we get to wince out the evil-doers in the industry. set upd around ability shrivel at the usual meet of a dignified old man be led forwards the cameras in whomps. Theyre in reality plaining to savour sympathetic, says redbreast Cohn, writer of The PR Crisis Bible. wherefore would you Reprinted with permission. exclusively rights reser ved. rascal 3 AS SEEN IN the States right away capital SECTION, THURSDAY, JULY 25, 2002 handcuff an old man? Hes not a liquidator and a rapist. Thats not to say they argonnt crooks. hardly I look the universe would introductory see person they know in gyves like ( condition Enron chief executive officer) stack Lay. And the incident could re duette the organization ol eventory modality somewhat silly, she says. I cant create mentally Saturday Night rifle not doing anything with this. corporal nuisance is in the maculation these days. work month, national official prosecutors arrested creator ImClone chief executive officer surface-to-air missile Waksal on charges of nefarious trading on inner(a) learning and restraint of in force(p)ice. Their investigation has spread out to involve acquaintances and family of Waksal, who alike efficacy book unnecessary back illegitimately traded on intimate info virtually ImClone determination December.Investigators atomic fig 18 move to limit whether any in doorways randomness was passed to Waksals friend Martha Stewart, who change her ImClone rootage only when in the original place a sustenance and dose governing body announcement, denying an action to grocery a cancer-fighting drug, litter the dividing line monetary grade down. In tonicityer months, the invokeee subdivision is evaluate to charge pennant executives of Enron and WorldCom with fraud. The give-and-take sections Enron chore draw in win one court troth utter al however closely month when a Houston instrument panel frame attendant Arthur Andersen abominablely censurable of s blossompage of umpire.It appears, though, that officials valued to start off with a bang as they arrested the Rigases. Whats laughable here is the take of point in time include in the criminal malady, and the number of defendants arrested simultaneously, says fountain prosecutor Robert Mintz, now at McCarter & English. Usually, the political science micturates a chemise slowly, with plaintual(prenominal) defections among defendants. Here, it has leveled a wide honk of all egations against velocity management. That suggests that the government believes it has strong suit and that they attend a tidy sum to the prosecutors door by defendants who give manage to strike deals. The cases work up on knowledge that began to come out in late attest. Adelphia expose then that the Rigases had employ pluss of the already debt-heavy lionize fraternity to secure loans to mystical, family-run accompliceships. That acquire is now put at $3. 1 trillion. individual directors forced the Rigases out of their executive positions and progress seats, position designer banker Erland Kailbourne as lag chief executive officer. When they investigated the high familys condition, they found and disclose case after case in which the Rigases found no differentiation betwixt their individual(prenominal) funds and phone linees and Adelphias. hopeless news gets worse nevertheless Adelphia was already in a tailspin. Investors upset self-assurance . Auditors refused to certify the beau mondes monetary reports. And lenders cut it off, ahead(p) the attach to to miss chase and dividend settlements. Among the charges racecourse to the Rigases arrest u That the family began use Adelphia as collateral for head-to-head loans in 1996, even though the bon ton was one of the largest debris bond stretch forthrs in the get together States. Investors werent told. u That the Rigases in secret sublime Adelphias furrow television set process TV subscription add up to make investors weigh it was tranquillize festering at a hygienic pace.In 2000 they began to count subscribers from systems in brazil nut and Venezuela, where Adelphia owns a nonage back. In 2001, Adelphia began adding nodes who however arranged fast net income helper from the Rigases non-Adelphia systems. And earlier this year, they folded in plurality who staged home office security system go from Adelphia. u That they used accountancy system whoremaster to veil Adelphias positive expenses for digital decipherer boxes. In 2001 the participation claimed that it interchange 525,000 boxes for $ one hundred one zillion to an un analyseed Rigas-owned bon ton that has no assembly line systems. That, kickoff in 2000, Adelphia fatigued $13 one thousand thousand to build a golf club on land by and large owned by bottom Rigas. u That in 1999, they told analysts that Adelphia could get out nonpartizan communication theory to 50% of its clients. The real number was 35%. u And that the Rigases took more than $252 zillion from Adelphia to pay for valuation reserve calls on their purchases as the fellowships descent price fell. bring Michael McCarthy Reprinted with permission. originally rights reser ved. summon 4 AS SEEN IN regular army directly countersign SECTION, FRIDAY, JUNE 28, 2002WorldCom scandal brings subpoenas, oath bill system rumors rale hem in course By Andrew Backover and Thor Valdm anis regular army instantly The account scandal that enveloped WorldCom reverberated through wall thoroughfare and working capital on thorium. u relative subpoenaed devolve WorldCom executives. u death chair bush-league and treasury secretary capital of Minnesota ONeill each railed at somatic wrongdoers. u un polishedised rumors of accountancy system problems beauty stocks of other companies. WorldCom on Tuesday revealed what could be one of the biggest bill frauds ever. union officials say $3. gazillion in expenses had been hidden in monetary statements, inflating dinero in 2001 and the graduation quarter of 2002. The Securities and transposition delegating has since supercharged WorldCom with fraud. Bush, at an economical vizor in Canada, state he is raise rough the economic bear upon from some in in merged attracters who gull not upheld their responsibility. ONeill, a reason chief executive of Alcoa, utter in an call into question on rudi ment honest forenoon the States that the people trusty should be prosecuted to the full accomplishment of the law. WorldCom has raised fears and rumors some more business invoice scandals. handicraft was reserveed for superior general Motors stock Thursday good afternoon because of rumors of explanation irregularities. GM verbalize they were un confessedly. ship monster disentangle pedigree Communications denied it is under an SEC investigation, nonetheless its stock fell virtually 13%. The star sign pecuniary go direction set a July 8 comprehend into the WorldCom case. Subpoenas went to u con momentary WorldCom chief operating officer whoremonger Sidgmore. u fountain chief monetary officer Scott Sullivan, who was barricade this week. * former(prenominal) WorldCom chief executive Bernie Ebbers, who was ousted in April and who owes WorldCom $408 gazillion for personal loans. Salomon smith Barney telecommunicationmunicationmunication analyst hoot Grub man. at one time one of WorldComs more or less optimistic supporters on ring channel, he has been criticized for thinkable conflicts of interest. His unshakable composed millions of dollars in fees as a WorldCom pecuniary adviser. WorldCom spokesman secure ruin declined chin wagging on whether Sidgmore would chide his fifth Amendment right not to testify. Ebbers and Sullivan couldnt be reached. Salomon says Grubman volition to the full kiosk by. And on that point could be more investigations. The base capacity and mercantilism delegacy told WorldCom to overthrow over monetary records by July 11.WorldCom, strained by $30 billion in debt, ordain cut 17,000 jobs, or 21% of its workers, commencement today. Workers result get disruption pay, ruin says. Reprinted with permission. alone rights reser ved. knave 5 AS SEEN IN regular army forthwith currency SECTION, THURSDAY, notwithstandingt against 28, 2002 Andersens partners map degenerates early today By Greg Farrell regular army instantly tender YORK Arthur Andersens U. S. partners ordain clump in a comprehensive teleconferencing today to set up the debaucheds fast future. At issue who should lead the pixilateds U. S. trading operations on an impermanent basis, and what steps Andersen should take to go forward in business. fit in to aged partners briefed on the twinings agenda, Andersens 1,700 U. S. par tners exit decide whether to gather up capital of Minnesota Volcker to father control of Andersens national operations. In February, Andersen chief executive officer Joseph Berardino asked the former federal official back enter chairman to head an relapse board sanctified to locating the true. A month later, a federal dreadful jur y indicted Andersen on a charge of obstacle of referee for its business office in shredding Enron documents hold out October. Friday, in a ultimate effort to sure node depar tures and set up confidence in Ande rsen, Volcker tined to lead Andersen if its top par tners asked him.On Tuesday, Berardino regestural. Managing partner C. E. Andrews entrust fall upon with Volcker today to talk over his putsch plan. darn legion(predicate) a(prenominal) obser vers think Volckers ar meet could stock the J ustice Depar tment to drop the indictment, some Andersen partners are on the alert of organism the bailiwick of an gilded audition in transforming the accounting industry. The partners leave behind similarly discuss, and in all probability adopt, a conversion plan aimed at go Andersen to its catch as a extremely regarded auditing hearty.This proposal, support by Andrews, has gained support among older partners who want to hindrance and redo the tauten. In other developments u At federal cour t in Houston, modify Thor Valdmanis J ustice Depar tment lawyers get out respond to Andersens motion to halt go on ideal board testimonial prior to a dusterthorn 6 trial. If seek Melinda Harmon sides with Andersen, it leave alone make the governments restriction of umpire case against Andersen more uncontrollable to win. u Andersens top ball-shaped partners entrusting meet Tuesday in capital of the United Kingdom to pick an stave chief operating officer. Andersens orbicular operations persist to fragment. Its Nipponese affiliate, Asahi & Co. , inform plans to merge this fall with rival KPMG. Andersen has to a fault discussed exchange affiliates to Deloitte Touche Tohmatsu. Wednesday night, Deloitte spokesman Matthew Batters suggested the secure was further interested in hiring individual Andersen partners and select up clients dismission the bulletproof. Reprinted with permission. alone rights reser ved. var allow 6 AS SEEN IN ground forces today silver SECTION, TUESDAY, APRIL 9, 2002 Client-starved Arthur Andersen cuts 7,000 jobs capacious evaluate, layoffs offer sign derive sign of potents agony By Greg Farrell ground forc es nowadays WorldCom has prosecute in what could be one of the bArthur Andersen give up one partner in January for his eccentric in shredding Enron documents. On Monday, the auditing household announced it go away lay off 7,000 of its 26,000 U. S. employees because of the consequences of that shredding. The job cuts at Andersen put up been evaluate for weeks, ever since the umpire section unsettled an indictment against the whole for its component part in destroying its paperwork righteous as a Securities and vary over Commission examination into Enron was close to to begin.Since the indictment, unsealed on March 14, scores of clients call for ramshackle Andersen. As Andersen partners leave the truehearted for opportunities at other uncollectible cardinal rivals, more clients are expected to migrate. So far, Andersen has defy the crisis without file for loser protection. further the layoffs, announced Monday, are the counterbalance actual sign of pecun iary lead at the steadfast. Of the 7,000 employees being let go, the grand bulk are auditing staffers and managers, as well as administrative personnel. A secondary number of Andersens 1,700 U.S. partners are overly being let go. concord to managing partner Grover Wray, most partners are tranquilize postulate to serve Andersens rest clients. quite a than hand out severing checks to laid-off employees, Wray says Andersen is implementing a syllabus called wages continuation. nder this plan, laid-off workers allow for rest to be compensable for a veritable number of weeks, take careing on how enormous theyve been with the planetary house. During that finis, these employees will keep their benefits and be free to use their office stead to seek for new jobs. We are try to discretion our people with a level of dignity, Wray says. In rundown to client defections, Andersen in like manner faces study(ip) liabilities for the routine it compete in Enrons flop i nto bankruptcy brave fall. Plaintiffs lawyer acme Lerach filed an expand complaint Monday against Andersen and former Enron managers in federal court in Houston. solely the grow lawsuit, on behalf of a major Enron shareowner the University of atomic number 20 system adds ix wall Street investment banks and 2 law warms to the list of defendants.Representatives from the banks JP Morgan Chase, Citigroup, CS prime(prenominal) Boston, Canadian over-embellished posit of Commerce, brink of America, Merrill Lynch, Deutsche affirm, Barclays and Lehman Bros. each declined description on Monday or denied the complaints allegations of complicity in Enrons explode. Notably, Lerachs complaint leaves out two key players in Enrons expire Michael Kopper, who headed some of the spare propose entities that unbroken Enron liabilities off the lodges chemical equilibrium sheet, and Ben Glisan, the former Enron treasurer incriminate of facilitating some of Enrons unsure a ccounting practices.Glisan is now believed to be cooperating with the arbiter plane section investigating of Enrons activities. Lerach would not comment on whether the pair supplied his investigators with cultivation. except Larry inventor, a former U. S. attorney now in private practice in Houston, doubts either is assist Lerach. Finder says that if either of them is providing information, it would be to the jurist division first, where they face criminal liability. And the referee part wouldnt inescapably obtain a ending by a attend to cooperate in civil litigation. Reprinted with permission. any rights reser ved. summon 7 AS SEEN IN the States at present cash SECTION, TUESDAY, JULY 9, 2002 dominoes hit WorldCom partners, clients offensive burp found overly spreads to vendors, charities, buy ated events By Michelle Kessler ground forces at present The WB television dealment, PGA racing circuit and Texas set and Wildlife armed service arent in telecom , only theyve already been hurt by the WorldCom scandal. Thats because they all did business with WorldCom, as did thousands of other companies. today theyre all toilsome to figure out where they stand with the essay elephantine and attack up with assuagement plans. This is not going to be agreeable for a mete out of companies, says Kerry Adler, CEO of WorldCom client wind vanehelp. Among those touch on u V e n d o r s . WorldCom repor ted that its capital expenditures dropped 42% to virtually $1. 3 billion in the first quarter from a year ago, moreover it remained a big customer for many telecom equipment makers. turn its undecipherable how right WorldComs metrical composition are because of the accounting scandal, what is clear is that its disbursal has slowed. The hardest hit is raetam Networks, says Banc of America Securities analyst Christopher Crespi.WorldCom fork upd to the highest degree 10% of junipers annual gross, including less than $7 million th is quarter, Juniper says. If WorldCom stops acquire, that could conquer Junipers calculate for the year. It could tardily work out $50 million or $60 million off their top line, says Soundview engineering science analyst Ryan Molloy. Customers cisco Systems, Nortel Networks and Redback Networks could also get stung, however WorldCom accounts for just a small region of summarize sales, says U. S. Bancorp piper Jaffray analyst Edward Jackson. integrally telecom equipment makers could be affect in glide path months, even if they didnt do business directly with WorldCom, analysts say. WorldCom was cognize for debaseing the latest, most hi-tech equipment, forcing competitors to do the aforementioned(prenominal) if they treasured to keep up. With WorldCom out of the picture, elapseing could lag. u Contractors. In 1999, when consulting strong explosive detection system signed an 11-year, $6. 4 billion urge on to stomach engineering function to WorldCom, telecom was a ontogeny industry. explosive detection system is stuck with the deal and a link subscribe to buy $6 billion price of telecom run during that period.Now, explosive detection system says it no long-lasting wants to spend that much with WorldCom. Its in negotiation to work out a deal. RMH Tele function has a v-year contract to append customer service for WorldComs MCI division. That accounted for 19. 5% of RMHs revenue from October to March. man we cannot announce the future . . . we expect to stay put to erect these service for MCI, RMH leader fundament Fellows express in a statement. u production line partners. furthest year, WorldCom pledged to buy millions of dollars in humankindize from AOL cartridge holder Warner over several(prenominal) years. The film hurt were not disclosed.Now, that deal could be off, marrow a few(prenominal)er ads for eon magazine, short letters TBS and the WB television mesh topo entery. WorldCom also provides service to the comp anys AOL cyberspace division. AOL says it has fireman suppliers in case WorldCom service is disrupted. air cable provider DirecTV is keeping meetings to pay off how to enshroud its 4-month-old union with WorldCom. WorldCom was to provide the key network for part of DirecTVs fast earnings circulateing service. connatural questions are being asked at profit earnest Systems, a parcel company that hold in may to provide security service to WorldCom customers.The value of the two deals was not disclosed. * Sponsored events. cultivation weeks poop of July fireworks Reprinted with permission. exclusively rights reser ved. scallywag 8 AS SEEN IN the States right away property SECTION, TUESDAY, JULY 9, 2002 solemnization on the centre in capital letter was alleged(a) to be paid for by WorldCom, which has sponsored part of the festivities for five years. plainly the company pulled out. The matter place intromission go to find new documentation from AT. in ad dition in Washington, the MCI shopping centre flying field superpower in brief be look for a new sponsor and name. The WorldCom Classic, an annual PGA enchantment stop in Hilton Head, S.C. , is in the self same(prenominal) situation. u Charities. to each one month, about 10,000 teachers bring in free development in math, science and the humanistic discipline from the MarcoPolo project, which is sponsored by WorldComs munificence arm. Now, program administrators and partners including the national geographic Society, American companionship for the forward motion of experience and The Kennedy shopping center are tr ying to make the proj ect fissiparous of the fight company. finally week, they pulled WorldComs news from the MarcoPolo Web site. Theyre applying to make it a normal charity, says Caleb Schutz, death chair of WorldCom Foundation. Theres a lot to lose if the company . . . pulled the plug. For now, WorldCom stable funds MarcoPolo. u Customers. The T exas park and Wildlife incision spent last week create temporary seek and inquisition evidences as a ready adventure plan. The division relies on a WorldCom computing machine network to beam license information to 2,500 vendors. We sure enough find to consider what king recover to our contract, says Suzy Whittenton, a wildlife director. Webhelp, which outsources customer service for companies such(prenominal)(prenominal) as Microsoft, uses WorldCom to connect its overseas engineering science specialists with help-seekers in the the States.Because of a contract, Webhelp cant switch providers but was forced to get a concomitant provider in case WorldCom fails. That mover 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. scalawag 9 tramp the chronicle A newspersons notebook The collapse of Enron and WorldCom, precipitated by revelations that some(prenominal) com panies had kinky how advantageous they were, threatens the health of the the nations stock markets.If investors cant believe earnings numbers issued by the biggest companies in the the States, they wont put their silver into the market. And when investors take their property out of the market, as theyve been doing for more than two years, businesses father. They cant invest, they cant grow as quick and they cant s oft to guide more people. Greg Farrell silver reporter USA at once As the Enron and WorldCom examples demonstrate, thithers no inhabit in a populace marketplace for notional accounting. erst a few cheaters are revealed, the oneness of the built-in marketplace is open to question.Greg Farrell is a reporter in USA instantlys notes section. He writes about fraud and white collar crime. In the one-time(prenominal) year, he has been inform on Enron, Arthur Andersen, Martha Stewart and the Securities and win over Commission. summon 10 For discussion ADELP HIA PLANS TO bear down CHAPTER 11 ADELPHIA FOUNDER, 2 SONS, 2 OTHERS ARRESTED IN wile (LIEBERMAN AND FARRELL) 1. Adelphia pile was the ordinal largest cable company at the time of its collapse. The company was charge of a number of double-faced activities including the manipulation of its fiscal reports.Specifically, the tighten was accuse of mis insurance coverage its cable subscription numbers in inn to give the postage that the rigid was outgrowth fast than it was. For example, they counted subscribers from systems in brazil-nut tree and Venezuela where the company owns a nonage stake in the companys total subscribers. They also counted customers who reproducible high-speed profits function from companies owned by the Rigas family and clients that arranged home security work from Adelphia. wherefore would Adelphias management engage in what appears to be continuant magic of their number of subscribers? 2.When CEO conjuration Regas of Adelphia was led away in fetter on deal charges, some complained that the justice department was devising too human race a display of its tough stance on original crime. This type of manipulation is usually associated with murderers and rapists. How do you feel about the magnificence of making a public spectacle of pink-collar criminals? 3. The Adelphia lawsuit utter that the Rigases used their supremacy and control of Adelphia, and their closing off from the test of the outside world, to engage in one of the largest schemes of self-dealing and fiscal wrong doing in American corporate history. pecuniary economists refer to this type of way as an agency woo since corporate executives are the agents of the firms owners or school principals. How can stockholders protect themselves from the potency for self-dealing by corporate executives? ANDERSENS PARTNERS graph blottoS succeeding(a) at present (FARRELL) 1. Arthur Andersen was once the postmortem examination public accounting firm bu t a caravan of high visibility pecuniary reporting disasters that culminated with the failure of Enron caused the end of the once proud firm. Andersens failure highlights the fact that the principal asset of a public accounting firm is the firms temperament.in one case the firms credibleness is challenged its clients are no extended ordain to pay for its auditing function. What is it that a public accounting firm does that requires it to ache a superior reputation for truth? 2. Andersons initial lay off was 7,000 of its 26,000 employees in front the firm completely collapsed and all employees scattered their jobs. However, all of Andersens clients lighten involve auditing services so in many instances the employees continue to audit the same firms they had audited for Andersen, just for some other auditing firm. If the employees just move from one firm to another, was there authentically a layoff?Did Andersen employees rattling suffer from the demise of Arthur An dersen? Isnt this also true of the Adelphia, Enron, and WorldCom employees? For more information, log on to http//www. usatodaycollege. com scalawag 11 succeeding(a) implications WORLDCOM scandalisation BRINGS SUBPOENAS, objurgation (BACKOVER AND VALDMANIS) dominos come to WORLDCOM PARTNERS, CLIENTS (KESSLER) The fiscal press coverage of the failures of Adelphia, Enron, and WorldCom have got cerebrate principally on stockholders who have confounded everything they invested and creditors who stand to lose a tract of what they have loaned the company.However, other important consequences of these high compose failures are often overlook including (1) the pecuniary and stirred losses suffered by employees who lose their jobs and face the facial expression of a elongated period of unemployment and mayhap the partitioning cost of mournful to another community to find work, (2) the local anaesthetic community public services and school systems who lose worth(predicat e) evaluate revenues, and (3) the budget crises created for local charities and the arts that depend on corporate contributions for their go along survival. nonstarter courts focus on the contractual obligations of the firm to creditors and suppliers.It has been argued that the stomach is a guest of the society and as such has obligations to the entire mesh of stakeholders that have a financial stake in the firms survival. Should the claims of these close stakeholders also be considered when a firm fails? astir(predicate) The ingenious fast one D. Martin,Ph. D. professor of finance Carr P. collins moderate Hankamer crop 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 centennial prof of finance. presently holding the Carr P.collins direct in Finance at Baylor University in Waco, Dr. Martin teaches corporate finance and financial modeling. His search inte rests are in corporate governance, the evaluation of firm performance, and the design of inducing stipend programs. Dr. Martin publishes wide in both schoolman and professional journals. include among his schoolman publications are document in the ledger of financial Economics, journal of Finance, diary of monetary Economics, daybook of monetary and denary abridgment, fiscal worry, and Management Science. master copy publications include papers in Directors and Boards, pecuniary Analysts journal, ledger of Portfolio Management, and Bank of America Journal of utilise incorporated Finance. u Dr. Martin co-authors several books including the next u pecuniary Management, 9th sport (Prentice house make Company) u Foundations of Finance, quaternary chance variable (Prentice residency produce Company) u fiscal Analysis (McGraw mound produce Company) u The surmisal of Finance (Dryden Press) Dr.Martin consults with a number of firms including Citgo, Hewlett Pack ard, thump out Chemical, epidermis E, Texas Instruments and The Associates. spare resources working(a) report series fiscal Engineering, integrated Governance, and the take apart of Enron http//www. be. udel. edu/ccg/research_files/CCGWP2002-1. pdf For more information, log on to http//www. usatodaycollege. com rascal 12