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This article is about LDDS, which later changed its name to WorldCom and purchased MCI Communications. MCI Communications Corp was an American Telecommunications company that was instrumental in legal and regulatory changes that led to the breakup of the AT&T . For other uses, see MCI.
MCI logo
MCI logo

MCI, Inc. was an American telecommunications company that was headquartered in Ashburn, Virginia. The United States of America —commonly referred to as the Ashburn Virginia is an unincorporated area located in Loudoun County, Virginia, 30 miles west of Washington D The corporation was the result of the merger of WorldCom (formerly known as LDDS followed by LDDS WorldCom) and MCI Communications, and used the name MCI WorldCom followed by WorldCom before taking its final name on April 14, 2003 as part of the corporation's emergence from bankruptcy. MCI Communications Corp was an American Telecommunications company that was instrumental in legal and regulatory changes that led to the breakup of the AT&T Events 43 BC - Battle of Forum Gallorum: Mark Antony, besieging Julius Caesar 's assassin Decimus Junius Brutus in Year 2003 ( MMIII) was a Common year starting on Wednesday of the Gregorian calendar. The company formerly traded on NASDAQ under the symbols "WCOM" (pre-bankruptcy) and "MCIP" (post-bankruptcy). The corporation was purchased by Verizon Communications with the deal closing on January 6, 2006, and is now identified as that company's Verizon Business division with the local residential divisions slowly integrated into local Verizon subsidiaries. "Verizon" redirects here this article is about the corporation see also Verizon Wireless, Verizon Online DSL and Verizon FiOS. Events 1066 - Harold Godwinson is crowned King of England. 1205 - Philip of Swabia becomes King Year 2006 ( MMVI) was a Common year starting on Sunday of the Gregorian calendar.

MCI's history, combined with the histories of companies it has acquired, echoes most of the trends that have swept American telecommunications in the past half-century: It was instrumental in pushing legal and regulatory changes that led to the breakup of the AT&T monopoly that dominated American telephony; its purchase by WorldCom and subsequent bankruptcy in the face of accounting scandals was symptomatic of the Internet excesses of the late 1990s. Before proposing a merge request please see Talk and see if the merger you propose has recently been made and It accepted a proposed purchase by Verizon for US$7. "Verizon" redirects here this article is about the corporation see also Verizon Wireless, Verizon Online DSL and Verizon FiOS. 6 billion.

For a time, WorldCom (WCOM) was the United States' second largest long distance phone company (AT&T was the largest). The United States of America —commonly referred to as the A telephone company (or telco) provides Telecommunications services such as Telephony and Data communications Most of the largest telcos whatever Before proposing a merge request please see Talk and see if the merger you propose has recently been made and WorldCom grew largely by acquiring other telecommunications companies, most notably MCI Communications. MCI Communications Corp was an American Telecommunications company that was instrumental in legal and regulatory changes that led to the breakup of the AT&T It also owned the Tier 1 ISP UUNET, a major part of the Internet backbone. A Tier 1 Network is an IP network (typically but not necessarily an Internet Service Provider) which connects to the entire Internet solely via Settlement UUNET is one of the largest Internet service providers and one of the nine Tier 1 networks It is based in Northern Virginia and is the first commercial The Internet backbone refers to the main "trunk" connections of the Internet. It was based in Clinton, Mississippi before moving to Ashburn, Virginia. Clinton is a city in Hinds

Contents

History

Corporate founding

Long Distance Discount Services, Inc. (LDDS) began in Hattiesburg, Mississippi in 1983. Hattiesburg, known as "The Hub City" is a city in Forrest and Lamar Counties in the U Year 1983 ( MCMLXXXIII) was a Common year starting on Saturday (link displays the 1983 Gregorian calendar) In 1985 LDDS selected Bernard Ebbers to be its CEO. Year 1985 ( MCMLXXXV) was a Common year starting on Tuesday (link displays 1985 Gregorian calendar) Bernard John "Bernie" Ebbers (born August 27, 1941 in Edmonton, Alberta) is a Canadian -born businessman. A chief executive officer ( CEO) or chief executive is typically the highest-ranking corporate officer ( executive) or administrator The company went public in August 1989 when it merged with Advantage Companies Inc. Year 1989 ( MCMLXXXIX) was a Common year starting on Sunday (link displays 1989 Gregorian calendar) The company name was changed to LDDS WorldCom in 1995, and later just WorldCom. Year 1995 ( MCMXCV) was a Common year starting on Sunday. Events of 1995

The company’s growth under WorldCom was fueled primarily through acquisitions during the 1990s and reached its apex with the acquisition of MCI in 1998. MCI Inc is an American Telecommunications company that is headquartered in Ashburn Virginia. Among the companies that were bought or merged with WorldCom were Advanced Communications Corp. (1992), Metromedia Communication Corp. Year 1992 ( MCMXCII) was a Leap year starting on Wednesday (link will display full 1992 Gregorian calendar) Metromedia (also often MetroMedia) was a media company that owned radio and Television stations in the United States from 1956 (1993), Reurgens Communications Group(1993), IDB Communications Group, Inc (1994), Williams Technology Group, Inc. Year 1993 ( MCMXCIII) was a Common year starting on Friday (link will display full 1993 Gregorian calendar) Year 1994 ( MCMXCIV) was a Common year starting on Saturday (link will display full 1994 Gregorian calendar) (1995), and MFS Communications Company (1996). Year 1995 ( MCMXCV) was a Common year starting on Sunday. Events of 1995 Year 1996 ( MCMXCVI) was a Leap year starting on Monday (link will display full 1996 Gregorian calendar) The acquisition of MFS included UUNet Technologies, Inc., which had been acquired by MFS shortly before the merger with WorldCom. UUNET is one of the largest Internet service providers and one of the nine Tier 1 networks It is based in Northern Virginia and is the first commercial In February 1998, a complex transaction saw WorldCom purchase online pioneer CompuServe from its parent company H&R Block. Year 1998 ( MCMXCVIII) was a Common year starting on Thursday (link will display full 1998 Gregorian calendar) CompuServe, ( CompuServe Information Service, also known by its acronym CIS) was the first major commercial Online service in the United States H&R Block ( is a Tax preparation company in the United States claiming more than 22 million customers worldwide with offices in Canada Australia and the United Kingdom WorldCom then retained the CompuServe Network Services Division, sold its online service to America Online, and received AOL's network division, ANS. The acquisition of Digex (DIGX) in June 2001 was also complex; Worldcom acquired Digex's corporate parent, Intermedia Communications, and then sold all of Intermedia's non-Digex assets to Allegiance Telecom. Digex was an early provider of Internet services in the United States credited with creating the "managed hosting" business

MCI acquisition

MCI WorldCom logo (Used from 1998–2000)
MCI WorldCom logo (Used from 1998–2000)

On November 10, 1997, WorldCom and MCI Communications announced their US$37 billion merger to form MCI WorldCom, making it the largest merger in US history. Events 1444 - Battle of Varna: The crusading forces of King Vladislaus III of Varna (aka Ulaszlo I of Hungary and Wladyslaw Year 1997 ( MCMXCVII) was a Common year starting on Wednesday (link will display full 1997 Gregorian calendar MCI Communications Corp was an American Telecommunications company that was instrumental in legal and regulatory changes that led to the breakup of the AT&T On September 15, 1998 the new company, MCI WorldCom, opened for business. Events 668 - Eastern Roman Emperor Constans II is assassinated in his bath at Syracuse Italy. Year 1998 ( MCMXCVIII) was a Common year starting on Thursday (link will display full 1998 Gregorian calendar)

Sprint merger

WorldCom logo (Used from 2000–2003)
WorldCom logo (Used from 2000–2003)

On October 5, 1999 Sprint Corporation and MCI WorldCom announced a $129 billion merger agreement between the two companies. Events 869 - The Fourth Council of Constantinople is convened to decide about what to do about Patriarch Photius of Constantinople Year 1999 ( MCMXCIX) was a Common year starting on Friday (link will display full 1999 Gregorian calendar) Sprint Nextel Corporation ( is a Telecommunications company based in Overland Park, Kansas. Had the deal been completed, it would have been the largest corporate merger in history, ultimately putting WorldCom ahead of AT&T as the largest communications company in the United States. Before proposing a merge request please see Talk and see if the merger you propose has recently been made and The United States of America —commonly referred to as the However the deal did not go through because of pressure from the US Department of Justice and the EU on concerns of it creating a monopoly. For animal rights group see Justice Department (JD The United States Department of Justice ( DOJ) is a Cabinet department The European Union ( EU) is a political and economic union of twenty-seven member states, located primarily in On July 13, 2000, the Board of Directors of both companies acted to terminate the merger. Events 1174 - William I of Scotland, a key rebel in the Revolt of 1173-1174, is captured at Alnwick by forces loyal to 2000 ( MM) was a Leap year that started on Saturday of the Common Era, in accordance with the Gregorian calendar. Later, in 2000, MCI WorldCom renamed itself 'WorldCom' without Sprint being part of the company. 2000 ( MM) was a Leap year that started on Saturday of the Common Era, in accordance with the Gregorian calendar. Sprint Nextel Corporation ( is a Telecommunications company based in Overland Park, Kansas.

Accounting scandals

Bernard Ebbers became very wealthy from the rising price of his holdings in WorldCom’s stock. Bernard John "Bernie" Ebbers (born August 27, 1941 in Edmonton, Alberta) is a Canadian -born businessman. [1] However, shortly after the MCI acquisition in 1998, the telecommunications industry entered a downturn and WorldCom’s growth strategy suffered a serious blow when it was forced to abandon its proposed merger with Sprint in late 2000. By that time, WorldCom’s stock was declining and Ebbers came under increasing pressure from banks to cover margin calls on his WorldCom stock that was used to finance his other businesses (timber and yachting, among others). In finance a margin is collateral that the holder of a position in securities, options, or Futures contracts has to deposit to cover [2] During 2001, Ebbers persuaded WorldCom’s board of directors to provide him corporate loans and guarantees in excess of $400 million to cover his margin calls. [3] The board hoped that the loans would avert the need for Ebbers to sell substantial amounts of his WorldCom stock, as his doing so would put further downward pressure in the stock's price. However, this strategy ultimately failed and Ebbers was ousted as CEO in April 2002 and replaced by John Sidgmore, former CEO of UUNet Technologies, Inc.

Beginning in 1999 and continuing through May 2002, the company (under the direction of Scott Sullivan (CFO), David Myers (Controller) and Buford “Buddy” Yates (Director of General Accounting) used fraudulent accounting methods to mask its declining earnings by painting a false picture of financial growth and profitability to prop up the price of WorldCom’s stock. John W Sidgmore became the Chief Executive Officer of UUNET Technologies in June 1994 A chief executive officer ( CEO) or chief executive is typically the highest-ranking corporate officer ( executive) or administrator UUNET is one of the largest Internet service providers and one of the nine Tier 1 networks It is based in Northern Virginia and is the first commercial Scott D Sullivan is an American Certified Public Accountant and the former Chief Financial Officer, Treasurer, Board member and Secretary [4]

The fraud was accomplished primarily in two ways:

  1. Underreporting ‘line costs’ (interconnection expenses with other telecommunication companies) by capitalizing these costs on the balance sheet rather than properly expensing them.
  2. Inflating revenues with bogus accounting entries from ‘corporate unallocated revenue accounts’.

Eugene Morse, an internal auditor at WorldCom reporting to Cynthia N. Cooper, uncovered approximately $3. Eugene Morse is the Internal auditor and Whistleblower who uncovered and exposed massive Accounting fraud at WorldCom in 2002 Internal auditing is a profession and activity involved in advising organizations regarding how to better achieve their objectives Cynthia F Cooper (born July 1964 to Gene Ferrell and the former Patsy Lee is an Internal auditor and consultant best known for being the Whistleblower who exposed 8 billion of the fraud in June 2002 during an examination of capital expenditures. [1]. Cynthia Cooper subsequently alerted the company’s new auditors, KPMG (who had replaced Arthur Andersen, WorldCom’s external auditors during the fraud) and the chairman of the audit committee, and she has been widely credited as having uncovered the fraud at Worldcom. KPMG is one of the largest Professional services firms in the world Arthur Andersen LLP, based in Chicago, was once one of the "Big Five" accounting firms among PricewaterhouseCoopers, Deloitte Touche Shortly thereafter, the company’s audit committee and board of directors were notified of the fraud and acted swiftly: Sullivan was fired, Myers resigned, Arthur Andersen withdrew its audit opinion for 2001, and the U.S. Securities and Exchange Commission (SEC) launched an investigation into these matters on June 26, 2002 (see accounting scandals). The US Securities and Exchange Commission (commonly known as the SEC) is an independent agency of the United States government which holds primary responsibility Events 363 - Roman Emperor Julian is killed during the retreat from the Sassanid Empire. See also 2002 (disambiguation Year 2002 ( MMII) was a Common year starting on Tuesday of the Gregorian calendar. Accounting scandals, or corporate accounting scandals are political and business scandals which arise with the disclosure of misdeeds by trusted executives By the end of 2003, it was estimated that the company's total assets had been inflated by around $11 billion. Year 2003 ( MMIII) was a Common year starting on Wednesday of the Gregorian calendar. [5]

Bankruptcy

On July 21, 2002, WorldCom filed for Chapter 11 bankruptcy protection in the largest such filing in United States history. Events 356 BC - Herostratus sets fire to the Temple of Artemis in Ephesus, one of the Seven Wonders of the World See also 2002 (disambiguation Year 2002 ( MMII) was a Common year starting on Tuesday of the Gregorian calendar. Chapter 11 is a chapter of the United States Bankruptcy Code, which permits reorganization under the Bankruptcy laws of the United States The United States of America —commonly referred to as the WorldCom changed its name to MCI, and moved the corporate headquarters from Clinton, Mississippi to Dulles, Virginia, on April 14, 2003. Clinton is a city in Hinds Dulles Virginia is an unincorporated Census-designated place located in Loudoun County, Virginia, part of the Washington Metropolitan Events 43 BC - Battle of Forum Gallorum: Mark Antony, besieging Julius Caesar 's assassin Decimus Junius Brutus in Year 2003 ( MMIII) was a Common year starting on Wednesday of the Gregorian calendar.

Under the bankruptcy reorganization agreement, the company paid $750 million to the SEC in cash and stock in the new MCI, which was intended to be paid to wronged investors.

In May 2003, the company was given a no-bid contract by the United States Department of Defense to build a cellular telephone network in Iraq. No-bid contract is a popular term for what is officially known as a "sole source contract The United States Department of Defense ( DOD or DoD) is the federal department charged with coordinating and supervising all agencies and functions of the government For a topic outline on this subject see List of basic Iraq topics. The deal has been criticized by competitors and others who cite the company's lack of experience in the area.

Post-bankruptcy

Bernard Ebbers
Bernard Ebbers

The company emerged from Chapter 11 bankruptcy in 2004 with about $5. Bernard John "Bernie" Ebbers (born August 27, 1941 in Edmonton, Alberta) is a Canadian -born businessman. Chapter 11 is a chapter of the United States Bankruptcy Code, which permits reorganization under the Bankruptcy laws of the United States "MMIV" redirects here For the Modest Mouse album see " Baron von Bullshit Rides Again " 7 billion in debt and $6 billion in cash. About half of the cash was intended to pay various claims and settlements. Previous bondholders ended up being paid 35. In Finance, a bond is a Debt security, in which the authorized issuer owes the holders a debt and is obliged to repay the principal and Interest 7 cents on the dollar, in bonds and stock in the new MCI company. The previous stockholders' stock was valueless. Software for Fixed assets management and Stock control developed in 2004.

It has yet to pay many of its creditors, who have waited for two years for a portion of the money owed. Many of the small creditors include former employees, primarily those who were laid off in June 2002 and whose severance and benefits were withheld when WCOM filed for bankruptcy.

On August 7, 2002, the exWorldCom 5100 group was launched. Events 322 BC - Battle of Crannon between Athens and Macedon following the death of Alexander the Great. See also 2002 (disambiguation Year 2002 ( MMII) was a Common year starting on Tuesday of the Gregorian calendar. It was composed of former WorldCom employees with a common goal of seeking full payment of severance pay and benefits based on the WorldCom Severance Plan. The '5100' stands for the number of WorldCom employees laid off on June 28, 2002 before WorldCom filed for bankruptcy. Events 1098 - Fighters of the First Crusade defeat Kerbogha of Mosul. See also 2002 (disambiguation Year 2002 ( MMII) was a Common year starting on Tuesday of the Gregorian calendar. [6]

On February 14, 2005, Verizon Communications agreed to acquire MCI for $7. Events 842 - Charles the Bald and Louis the German swear the Oaths of Strasbourg in the French and German Year 2005 ( MMV) was a Common year starting on Saturday (link displays full calendar of the Gregorian calendar. "Verizon" redirects here this article is about the corporation see also Verizon Wireless, Verizon Online DSL and Verizon FiOS. 6 billion.

On March 15, 2005 Bernard Ebbers was found guilty of all charges and convicted of fraud, conspiracy and filing false documents with regulators — all related to the $11 billion accounting scandal at the telecommunications company he founded. Events 44 BC - Julius Caesar, Dictator of the Roman Republic, is stabbed to death by Marcus Junius Brutus, Year 2005 ( MMV) was a Common year starting on Saturday (link displays full calendar of the Gregorian calendar. Bernard John "Bernie" Ebbers (born August 27, 1941 in Edmonton, Alberta) is a Canadian -born businessman. He was sentenced to 25 years in prison. Other former WorldCom officials charged with criminal penalties in relation to the company's financial misstatements include former CFO Scott Sullivan (entered a guilty plea on March 2, 2004 to one count each of securities fraud, conspiracy to commit securities fraud, and filing false statements [7]), former controller David Myers (pleaded guilty to securities fraud, conspiracy to commit securities fraud, and filing false statements on September 27, 2002 [8]), former accounting director Buford Yates (pleaded guilty to conspiracy and fraud charges on October 7, 2002 [9]), and former accounting managers Betty Vinson and Troy Normand (both pleading guilty to conspiracy and securities fraud on October 10, 2002 [10]). Scott Sullivan can refer to Scott Sullivan (executive, accountant and executive involved in the WorldCom scandal Scott Sullivan (baseball Events 986 - Louis V becomes King of the Franks. 1127 - Assassination of Charles the Good "MMIV" redirects here For the Modest Mouse album see " Baron von Bullshit Rides Again " Events 489 - Odoacer attacks Theodoric at the Battle of Verona and is defeated again See also 2002 (disambiguation Year 2002 ( MMII) was a Common year starting on Tuesday of the Gregorian calendar. Events 3761 BC - The epoch (origin of the modern Hebrew calendar ( Proleptic Julian calendar) See also 2002 (disambiguation Year 2002 ( MMII) was a Common year starting on Tuesday of the Gregorian calendar. Events 680 - Battle of Karbala: Shia Imam Husayn bin Ali, the grandson of the Prophet Muhammad, is decapitated See also 2002 (disambiguation Year 2002 ( MMII) was a Common year starting on Tuesday of the Gregorian calendar.

On July 13, 2005 Bernard Ebbers received a sentence that would keep him in prison for 25 years. Events 1174 - William I of Scotland, a key rebel in the Revolt of 1173-1174, is captured at Alnwick by forces loyal to Year 2005 ( MMV) was a Common year starting on Saturday (link displays full calendar of the Gregorian calendar. At time of sentencing, Ebbers was 63 years old. On September 26, 2006, Ebbers self-surrendered to the Bureau of Prisons facility at Oakdale, Louisiana, the Oakdale Federal Corrections Institution ("Oakdale FCI") to begin serving his sentence. FBOP redirects here For the bank holding company see FBOP Corporation. This prison facility is 35 miles south of Alexandria, LA, and 58 miles north of Lake Charles, LA. His projected release date is July 4, 2028.

In March 2005, 16 of WorldCom's 17 former underwriters reached settlements with the investors ([11]). MCI Inc is an American Telecommunications company that is headquartered in Ashburn Virginia. Citigroup settled for $2. 65 billion on May 10, 2004 ([12]).

In December 2005, Microsoft announced that MCI will join them by providing Windows Live Messenger customers voip service to make calls around the world. Windows Live Messenger (formerly MSN Messenger Voice-over-Internet protocol ( VoIP, vɔɪp is a protocol optimized for the transmission of voice through the Internet This was MCI's last totally new product called "MCI Web Calling". After the merge, this product was renamed "Verizon Web Calling".


See also

References

Citations

Report of Investigation by The Special Investigative Committee of the Board of Directors fo Worldcom, Inc.. SEC. Retrieved on 2008-01-04. 2008 ( MMVIII) is the current year in accordance with the Gregorian calendar, a Leap year that started on Tuesday of the Common Events 46 BC - Titus Labienus defeats Julius Caesar in the Battle of Ruspina.

  1. ^ [http://www.worldcomlitigation.com/courtdox/2005-09-21CoteOpApprovSetts.pdf OPINION & ORDER in re: WORLDCOM, INC. SECURITIES LITIGATION 02 Civ. 3288 (DLC) Denise Cote, United States District Judge]. Retrieved on May 06, 2008.

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