vv_social security+processi
Krispy Kreme head ousted amid probeBy Amy Yee in New York and Doug Cameron in HoustonPublished: January 18 2005 15:40 Last updated: January 18 2005 15:40
The chief executive of Krispy Kreme Doughnuts stepped down yesterday amid a federal probe into an accounting scandal. The man leading the turnround of Enron is to succeed him.
Scott Livengood, chairman and chief executive of the doughnut maker, retired less than two weeks after Krispy Kreme announced that a planned restatement of financial results would hurt net income more than expected. The news sent shares in Krispy Kreme up more than 10 per cent at the close on Tuesday.
His replacement, Stephen Cooper, is interim chief executive of Enron and chairman of Kroll Zolfo Cooper, a turnround firm and consultancy.
Mr Cooper and his Enron turnround team arrived at the bankrupt energy group in January 2002 with a track record that included Laidlaw, the Canadian owner of the Greyhound bus group; Federated Department Stores; Laker Airways and Maxwell Newspapers.
Bankruptcy experts have credited him for the work at Enron, notably in maximising the sale proceeds from its remaining assets. However, he has courted controversy among current and former employees with his attempt to secure a $25m “success fee” for his work on top of the $63.4m in salaries and fees paid. A bankruptcy judge is due to rule on the claim in November.
Mr Cooper heads the corporate restructuring and advisory group at Kroll, the investigative firm owned by Marsh & McLennan, which acquired his own turnround business in 2002. He will be joined at Krispy Kreme by a team from the Kroll Zolfo Cooper corporate restructuring unit.
Steven Panagos, a managing director of Kroll Zolfo Cooper, has been named president and chief operating officer.
The company said its lenders had agreed to postpone until January 24 a deadline for refiling a 2004 quarterly financial statement from the original January 14 date. Krispy Kreme risks defaulting on a $150m credit facility if it fails to meet the deadline. It is unable to borrow funds under the credit facility.
Krispy Kreme added that “significant sales declines” could result in a loss-making fourth quarter. Substantial legal costs associated with the federal probe are also taking a toll.
Krispy Kreme was one of the highest-profile non-technology initial public offerings of the stock market boom. But the company suffered a series of setbacks last year including profit warnings and a formal investigation launched by the SEC in October into how it accounted for buy-backs of some of its franchises.
Correction of accounting errors from the fiscal year ending February 1 2004 would reduce net income by up to 8.6 per cent $4.9m,or 8 cents a share the company said in a January 4 filing with the SEC.
The company is also the focus of an ongoing shareholder lawsuit filed in US district cout in North Carolina. The complaint alleges that Krispy Kreme misrepresented its financial condition and engaged in improper accounting that inflated pre-tax income for fiscal year 2004 by as much as $8.1m.
http://news.ft.com/cms/s/c2a863d6-6966-11d9-81e7-00000e2511c8.html
1.1 CEO Ousted at Troubled Krispy Kreme
2.1 CEO Scott Livengood Ousted at Krispy Kreme Amid Scrutiny, Lawsuits; Shares Jump on News
The Associated Press
Jan. 18, 2005 - Chief executive officer Scott Livengood was ousted Tuesday as head of troubled Krispy Kreme Doughnuts Inc., which has been under regulators' scrutiny for its franchise buybacks and earnings outlooks and is facing shareholder lawsuits. Shares of Krispy Kreme jumped more than 17 percent on the news.
The Winston-Salem company's board of directors said Livengood, a 28-year veteran of the doughnut maker who has been criticized for his handling of the company's recent financial problems, would retire as part of a series of "important actions to address the company's current situation." Livengood, who had been CEO for since 1998, was replaced as CEO by Stephen Cooper, who most recently shepherded the Enron Corp. bankruptcy reorganization.
The company said Livengood also retired from his positions as president, chairman of the board and as a director of the company and will become a consultant on an interim basis.
Krispy Kreme stock surged $1.52 at $10.24 in morning trading on the New York Stock Exchange.
Steven Panagos was named president and chief operating officer and James Morgan, who has served as a director of the Company since July 2000 and vice chairman since March 2004, has been elected chairman.
Earlier this month, the company said it was restating earnings for the last three quarters of fiscal 2004. That came after allegations in a shareholder lawsuit that the company padded shipments to hide declining sales over the last two years
In its latest SEC filing, the company said it continues reviewing other errors and proposed adjustments that could result in the company's net income for the year being trimmed by as much as 7.6 percent.
Krispy Kreme is under a formal SEC investigation of its franchise buybacks and earnings outlooks and is facing shareholder lawsuits. The once-high flying company in November posted a $3 million third-quarter loss, its second losing quarter of 2004 and its stock has dropped sharply to about a quarter of its 2003 value.
Krispy Kreme has closed a number of stores since May and taken other steps to address its problems.
Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Copyright © 2005 ABC News Internet Ventures
http://abcnews.go.com/Business/wireStory?id=421231
3.1 Fraud Trial Begins for Ex-WorldCom Chief
4.1 If Guilty, Former WorldCom CEO Bernard Ebbers Could Face Up to 85 Years in Prison
By CHARLES HERMAN
Jan. 18, 2005 - A federal court in New York will be the stage today as former WorldCom Inc. chief executive officer Bernard Ebbers goes on trial on charges he committed an $11 billion fraud that caused the company's collapse.
Ebbers is accused of criminal fraud and conspiracy that resulted in WorldCom, one of the world's largest telecommunications companies, filing the largest U.S. bankruptcy ever in 2002. If convicted on all charges, including seven counts of false filings with the Securities and Exchange Commission, Ebbers could face up to 85 years in prison.
Ebbers built a small long-distance company into a telecom giant that merged with MCI in 1997 and at its peak, was worth more than $160 billion. But was it all a shell game?
Federal prosecutors have accused Ebbers of lying and actively hiding the company's true financial standing from employees, investors, Wall Street and regulators. WorldCom filed for bankruptcy with an estimated accounting fraud totaling $11 billion.
Ebbers has insisted he is innocent of the charges, and the defense maintains there is no concrete evidence implicating him.
Star Witness
The prosecution's star witness will be WorldCom's former chief financial officer, Scott Sullivan, who pleaded guilty in 2004 before his own trial was to start.
Prosecutors are expected to play a voicemail message Sullivan left for Ebbers in June 2001 in which Sullivan told his boss he was worried about "accounting fluff" and that the company was "disguising what is going on."
It is expected that Ebbers' attorneys will argue that the former CEO left accounting decisions to Sullivan and was too high up the corporate ladder to concern himself with day-to-day accounting issues.
And the testimony promises to get personal. On Tuesday U.S. District Judge Barbara Jones ruled that defense attorneys could quiz Sullivan about alleged marital infidelity so jurors can weigh his honesty as a witness.
Defense attorneys had also hoped to show that Ebbers discussed the collapse of Enron Corp. with Sullivan to show that Ebbers was aware that WorldCom's accounting practices were also illegal, but Jones ruled any Enron testimony irrelevant.
CFO vs. CEO
That could give rise to a "he-said he-said" trial, leaving the jury to decide whose story is the most believable.
"The prosecution will have to show evidence from other witnesses or other evidence that Ebbers was aware of the accounting treatment Sullivan originated," says John Coffee, a securities law professor at Columbia Law School.
But unlike other high-profile white-collar crime trials, prosecutors don't appear to have a paper trail from Ebbers, who supposedly rarely used e-mail.
"If it's only Sullivan telling the jury what he was doing, the jury may see it as a credibility contest and that could give rise to some reasonable doubt," Coffee said.
Civil Suits
In civil suits filed against the company by investors, 10 of 12 former WorldCom directors recently agreed to pay $18 million of their own money to settle. This amount is in addition to $36 million from insurance policies. In settling, the 10 directors did not admit to any wrongdoing. Civil suits continue against the other two WorldCom directors.
This $54 million is pennies, however, compared to the $2.6 billion that Citigroup has agreed to pay investors and debt holders for the work the bank performed for WorldCom. Other investment banks face a class-action lawsuit scheduled to begin Feb. 28.
Criminal Trial
Today, potential jurors will be given questionnaires with actual jury selection to begin Monday. Opening statements are expected to begin next week, and the trial could last up to two months.
The Ebbers trial kicks off as another prominent corporate fraud saga continues in New York. On Tuesday, jury selection began in the retrial of two former Tyco International executives accused of stealing $600 million from the conglomerate. A judge declared a mistrial last year in the first trial of former CEO Dennis Kozlowski and former CFO Mark Swartz.
With additional reporting by Sheila Marikar.
Copyright © 2005 ABC News Internet Ventures
January 19, 2005
5.1 A Witness's Personal Life Is Fair Game in Ebbers Trial
By KEN BELSON
awyers for Bernard J. Ebbers, the former chief executive of WorldCom accused of securities fraud, won the right yesterday to introduce personal details about the prosecution's main witness.
At a hearing held ahead of jury selection, Judge Barbara S. Jones of United States District Court in Manhattan, said the defense would be allowed to introduce details about the "marital infidelities" of Scott D. Sullivan, WorldCom's former chief financial officer, because it would help the jury determine his reliability as a witness.
Prosecutors had opposed introduction of the information.
Mr. Ebbers's lead lawyer, Reid H. Weingarten, called details about Mr. Sullivan's personal life "a piece of the puzzle."
In allowing the lawyers to cite aspects of Mr. Sullivan's life, Judge Jones said "that the defendant is entitled to a very wide latitude when it comes to impeachment evidence with respect to the government's main witness against him," calling such evidence worthwhile "with respect to Mr. Sullivan's character for truthfulness."
WorldCom collapsed in July 2002 in the biggest corporate bankruptcy. Mr. Ebbers is accused of masterminding an $11 billion accounting fraud that hid the true nature of the company's expenses.
Mr. Sullivan's testimony will be crucial to the case because he worked closely with Mr. Ebbers. It may also come down to Mr. Ebbers's word against Mr. Sullivan's because there may not be as much of a paper trail as there has been in other corporate fraud cases.
Mr. Sullivan has pleaded guilty to charges of securities fraud and agreed to testify against Mr. Ebbers in hope of reducing his sentence. Defense lawyers will probably seize on this as well to discredit Mr. Sullivan's testimony.
Mr. Sullivan faces up to 25 years in jail; Mr. Ebbers, if convicted on all counts of conspiracy, securities fraud and filing false reports to regulators, could be sentenced to as much as 85 years.
While winning the right to discuss details of Mr. Sullivan's personal life was a victory for the defense, introducing it at the trial could backfire, legal experts said.
The case will focus on whether WorldCom executives committed fraud, they said, and discussions of a witness's personal life may appear to the jury like an effort to distract attention from larger, more relevant points.
"The defense still has to ask themselves whether it will make them look desperate," said Seth C. Farber, a specialist in corporate law who is a partner at Dewey Ballantine. "Juries are likely to be skeptical of that tactic."
The defense is likely to decide whether to introduce the personal information after hearing what Mr. Sullivan says to prosecutors on the stand, Mr. Farber said. "They will want to see what he looks like as a witness," he said.
Prosecutors may also try to pre-empt any attempt by defense lawyers to cast doubt on Mr. Sullivan's reputation by asking him first about his personal life, Mr. Farber said.
In yesterday's one-hour hearing, which Mr. Ebbers attended, the prosecution won several victories.
Notably, the judge denied another motion to grant immunity to three former WorldCom financial officers who, the defense says, could support Mr. Ebbers's case.
Mr. Weingarten said the executives were "critically important" because they were "far more sophisticated in accounting" than Mr. Ebbers.
Prosecutors also won the right to call as witnesses institutional investors who lost money when WorldCom's stock price plunged.
The judge will decide later whether prosecutors will be allowed to call individual investors as well.
Today, potential jurors will start filling out questionnaires, with jury selection expected to begin on Monday.
Labor Presses Case Against Privatizing Social Security
By Ben WhiteWashington Post Staff WriterWednesday, January 19, 2005; Page E03
NEW YORK, Jan. 18 -- The AFL-CIO on Tuesday stepped up its opposition to private Social Security accounts, accusing Wall Street's main trade group, the Securities Industry Association, of campaigning in favor of policy changes that would put workers' retirement at risk while showering billions of dollars in fees on SIA members.
"Support for privatizing Social Security creates a conflict of interest for the member firms of the SIA like those which led to the financial industry scandals of recent years," AFL-CIO President John J. Sweeney wrote in a letter to SIA Chairman Daniel J. Ludeman.
The labor federation began to take a more aggressive stand on corporate governance issues after scandals at Enron Corp., WorldCom Inc. and other companies. The scandals cost thousands of jobs and vaporized the retirement savings of many workers.
The SIA board of directors is scheduled to meet here on Wednesday. The group is expected to discuss its Social Security lobbying strategy.
The Bush administration is pressing for major changes to Social Security, including allowing workers to put some of their payroll taxes into private investment accounts. Bush has said the existing system will go bankrupt without major changes. Opponents of privatization have accused Bush of vastly exaggerating the program's financial difficulties.
For the most part, Wall Street executives have been silent on the issue, though the SIA has long favored private accounts.
Ludeman, who is also chief executive and president of Wachovia Securities LLC, declined to comment on Sweeney's letter. SIA President Marc E. Lackritz also declined to comment.
SIA spokesman Daniel V. Michaelis said the association was doing what all trade groups do, assessing a policy issue and determining what broad position would be most beneficial to its members.
"SIA's position is that Social Security needs to be fixed and needs to be fixed sooner rather than later," Michaelis said. "We are looking at that task in a constructive way and looking for solutions. That's a better approach than just being negative."
William B. Patterson, director of the office of investments at the AFL-CIO, said partial privatization of Social Security is too big a public policy issue to be decided by "business as usual" in which trade groups in Washington take the lead in speaking for corporate interests.
"The stakes are like 100 million times higher" than most other issues, Patterson said. "This debate is critical to the development of the country and the capital markets."
Exactly how much Wall Street firms could earn from private Social Security accounts depends to a large degree on how much workers are allowed to invest and on any limits the federal government places on fees.
Last year, University of Chicago economist Austan D. Goolsbee released a report suggesting that private accounts could earn as much as $940 billion in fees for Wall Street. The SIA then released its own report, widely viewed as a rebuttal to Goolsbee, estimating the amount at $39 billion to $279 billion over 75 years.
http://www.washingtonpost.com/wp-dyn/articles/A19515-2005Jan18.html?nav=hcmodule
http://www.aflcio.org/aboutaflcio/about/
http://www.wto.org/english/news_e/events_e/events_e.htm
http://www.weforum.org/site/homepublic.nsf/Content/Tackling+corruption+is+good+for+business
http://www.sia.com/about_sia/
AFL-CIO, the federation of America's labor unions, representing more than 13 million working women and men.
Washington, 15:00 USA: SUSSIDI DISOCCUPAZIONE CROLLANO A 319.000 Scendono molto piu' delle attese le richieste di nuovi sussidi di disoccupazione nella settimana chiusa il 15 gennaio: sono stati 319.000 contro i 367.000 della settimana precedente. E' la caduta piu' consistente, 48.000 nuove domande in meno, dall'8 dicembre 2001. Le previsioni degli analisti indicavano il dato in discesa a 345.000 nuove richieste di sussidio. La media delle ultime quattro settimane si attesta a 341.000 contro i 344.000 della media registrata la settimana dell'8 gennaio.
prec: WP_new doubts
The chief executive of Krispy Kreme Doughnuts stepped down yesterday amid a federal probe into an accounting scandal. The man leading the turnround of Enron is to succeed him.
Scott Livengood, chairman and chief executive of the doughnut maker, retired less than two weeks after Krispy Kreme announced that a planned restatement of financial results would hurt net income more than expected. The news sent shares in Krispy Kreme up more than 10 per cent at the close on Tuesday.
His replacement, Stephen Cooper, is interim chief executive of Enron and chairman of Kroll Zolfo Cooper, a turnround firm and consultancy.
Mr Cooper and his Enron turnround team arrived at the bankrupt energy group in January 2002 with a track record that included Laidlaw, the Canadian owner of the Greyhound bus group; Federated Department Stores; Laker Airways and Maxwell Newspapers.
Bankruptcy experts have credited him for the work at Enron, notably in maximising the sale proceeds from its remaining assets. However, he has courted controversy among current and former employees with his attempt to secure a $25m “success fee” for his work on top of the $63.4m in salaries and fees paid. A bankruptcy judge is due to rule on the claim in November.
Mr Cooper heads the corporate restructuring and advisory group at Kroll, the investigative firm owned by Marsh & McLennan, which acquired his own turnround business in 2002. He will be joined at Krispy Kreme by a team from the Kroll Zolfo Cooper corporate restructuring unit.
Steven Panagos, a managing director of Kroll Zolfo Cooper, has been named president and chief operating officer.
The company said its lenders had agreed to postpone until January 24 a deadline for refiling a 2004 quarterly financial statement from the original January 14 date. Krispy Kreme risks defaulting on a $150m credit facility if it fails to meet the deadline. It is unable to borrow funds under the credit facility.
Krispy Kreme added that “significant sales declines” could result in a loss-making fourth quarter. Substantial legal costs associated with the federal probe are also taking a toll.
Krispy Kreme was one of the highest-profile non-technology initial public offerings of the stock market boom. But the company suffered a series of setbacks last year including profit warnings and a formal investigation launched by the SEC in October into how it accounted for buy-backs of some of its franchises.
Correction of accounting errors from the fiscal year ending February 1 2004 would reduce net income by up to 8.6 per cent $4.9m,or 8 cents a share the company said in a January 4 filing with the SEC.
The company is also the focus of an ongoing shareholder lawsuit filed in US district cout in North Carolina. The complaint alleges that Krispy Kreme misrepresented its financial condition and engaged in improper accounting that inflated pre-tax income for fiscal year 2004 by as much as $8.1m.
http://news.ft.com/cms/s/c2a863d6-6966-11d9-81e7-00000e2511c8.html
1.1 CEO Ousted at Troubled Krispy Kreme
2.1 CEO Scott Livengood Ousted at Krispy Kreme Amid Scrutiny, Lawsuits; Shares Jump on News
The Associated Press
Jan. 18, 2005 - Chief executive officer Scott Livengood was ousted Tuesday as head of troubled Krispy Kreme Doughnuts Inc., which has been under regulators' scrutiny for its franchise buybacks and earnings outlooks and is facing shareholder lawsuits. Shares of Krispy Kreme jumped more than 17 percent on the news.
The Winston-Salem company's board of directors said Livengood, a 28-year veteran of the doughnut maker who has been criticized for his handling of the company's recent financial problems, would retire as part of a series of "important actions to address the company's current situation." Livengood, who had been CEO for since 1998, was replaced as CEO by Stephen Cooper, who most recently shepherded the Enron Corp. bankruptcy reorganization.
The company said Livengood also retired from his positions as president, chairman of the board and as a director of the company and will become a consultant on an interim basis.
Krispy Kreme stock surged $1.52 at $10.24 in morning trading on the New York Stock Exchange.
Steven Panagos was named president and chief operating officer and James Morgan, who has served as a director of the Company since July 2000 and vice chairman since March 2004, has been elected chairman.
Earlier this month, the company said it was restating earnings for the last three quarters of fiscal 2004. That came after allegations in a shareholder lawsuit that the company padded shipments to hide declining sales over the last two years
In its latest SEC filing, the company said it continues reviewing other errors and proposed adjustments that could result in the company's net income for the year being trimmed by as much as 7.6 percent.
Krispy Kreme is under a formal SEC investigation of its franchise buybacks and earnings outlooks and is facing shareholder lawsuits. The once-high flying company in November posted a $3 million third-quarter loss, its second losing quarter of 2004 and its stock has dropped sharply to about a quarter of its 2003 value.
Krispy Kreme has closed a number of stores since May and taken other steps to address its problems.
Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Copyright © 2005 ABC News Internet Ventures
http://abcnews.go.com/Business/wireStory?id=421231
3.1 Fraud Trial Begins for Ex-WorldCom Chief
4.1 If Guilty, Former WorldCom CEO Bernard Ebbers Could Face Up to 85 Years in Prison
By CHARLES HERMAN
Jan. 18, 2005 - A federal court in New York will be the stage today as former WorldCom Inc. chief executive officer Bernard Ebbers goes on trial on charges he committed an $11 billion fraud that caused the company's collapse.
Ebbers is accused of criminal fraud and conspiracy that resulted in WorldCom, one of the world's largest telecommunications companies, filing the largest U.S. bankruptcy ever in 2002. If convicted on all charges, including seven counts of false filings with the Securities and Exchange Commission, Ebbers could face up to 85 years in prison.
Ebbers built a small long-distance company into a telecom giant that merged with MCI in 1997 and at its peak, was worth more than $160 billion. But was it all a shell game?
Federal prosecutors have accused Ebbers of lying and actively hiding the company's true financial standing from employees, investors, Wall Street and regulators. WorldCom filed for bankruptcy with an estimated accounting fraud totaling $11 billion.
Ebbers has insisted he is innocent of the charges, and the defense maintains there is no concrete evidence implicating him.
Star Witness
The prosecution's star witness will be WorldCom's former chief financial officer, Scott Sullivan, who pleaded guilty in 2004 before his own trial was to start.
Prosecutors are expected to play a voicemail message Sullivan left for Ebbers in June 2001 in which Sullivan told his boss he was worried about "accounting fluff" and that the company was "disguising what is going on."
It is expected that Ebbers' attorneys will argue that the former CEO left accounting decisions to Sullivan and was too high up the corporate ladder to concern himself with day-to-day accounting issues.
And the testimony promises to get personal. On Tuesday U.S. District Judge Barbara Jones ruled that defense attorneys could quiz Sullivan about alleged marital infidelity so jurors can weigh his honesty as a witness.
Defense attorneys had also hoped to show that Ebbers discussed the collapse of Enron Corp. with Sullivan to show that Ebbers was aware that WorldCom's accounting practices were also illegal, but Jones ruled any Enron testimony irrelevant.
CFO vs. CEO
That could give rise to a "he-said he-said" trial, leaving the jury to decide whose story is the most believable.
"The prosecution will have to show evidence from other witnesses or other evidence that Ebbers was aware of the accounting treatment Sullivan originated," says John Coffee, a securities law professor at Columbia Law School.
But unlike other high-profile white-collar crime trials, prosecutors don't appear to have a paper trail from Ebbers, who supposedly rarely used e-mail.
"If it's only Sullivan telling the jury what he was doing, the jury may see it as a credibility contest and that could give rise to some reasonable doubt," Coffee said.
Civil Suits
In civil suits filed against the company by investors, 10 of 12 former WorldCom directors recently agreed to pay $18 million of their own money to settle. This amount is in addition to $36 million from insurance policies. In settling, the 10 directors did not admit to any wrongdoing. Civil suits continue against the other two WorldCom directors.
This $54 million is pennies, however, compared to the $2.6 billion that Citigroup has agreed to pay investors and debt holders for the work the bank performed for WorldCom. Other investment banks face a class-action lawsuit scheduled to begin Feb. 28.
Criminal Trial
Today, potential jurors will be given questionnaires with actual jury selection to begin Monday. Opening statements are expected to begin next week, and the trial could last up to two months.
The Ebbers trial kicks off as another prominent corporate fraud saga continues in New York. On Tuesday, jury selection began in the retrial of two former Tyco International executives accused of stealing $600 million from the conglomerate. A judge declared a mistrial last year in the first trial of former CEO Dennis Kozlowski and former CFO Mark Swartz.
With additional reporting by Sheila Marikar.
Copyright © 2005 ABC News Internet Ventures
January 19, 2005
5.1 A Witness's Personal Life Is Fair Game in Ebbers Trial
By KEN BELSON
awyers for Bernard J. Ebbers, the former chief executive of WorldCom accused of securities fraud, won the right yesterday to introduce personal details about the prosecution's main witness.
At a hearing held ahead of jury selection, Judge Barbara S. Jones of United States District Court in Manhattan, said the defense would be allowed to introduce details about the "marital infidelities" of Scott D. Sullivan, WorldCom's former chief financial officer, because it would help the jury determine his reliability as a witness.
Prosecutors had opposed introduction of the information.
Mr. Ebbers's lead lawyer, Reid H. Weingarten, called details about Mr. Sullivan's personal life "a piece of the puzzle."
In allowing the lawyers to cite aspects of Mr. Sullivan's life, Judge Jones said "that the defendant is entitled to a very wide latitude when it comes to impeachment evidence with respect to the government's main witness against him," calling such evidence worthwhile "with respect to Mr. Sullivan's character for truthfulness."
WorldCom collapsed in July 2002 in the biggest corporate bankruptcy. Mr. Ebbers is accused of masterminding an $11 billion accounting fraud that hid the true nature of the company's expenses.
Mr. Sullivan's testimony will be crucial to the case because he worked closely with Mr. Ebbers. It may also come down to Mr. Ebbers's word against Mr. Sullivan's because there may not be as much of a paper trail as there has been in other corporate fraud cases.
Mr. Sullivan has pleaded guilty to charges of securities fraud and agreed to testify against Mr. Ebbers in hope of reducing his sentence. Defense lawyers will probably seize on this as well to discredit Mr. Sullivan's testimony.
Mr. Sullivan faces up to 25 years in jail; Mr. Ebbers, if convicted on all counts of conspiracy, securities fraud and filing false reports to regulators, could be sentenced to as much as 85 years.
While winning the right to discuss details of Mr. Sullivan's personal life was a victory for the defense, introducing it at the trial could backfire, legal experts said.
The case will focus on whether WorldCom executives committed fraud, they said, and discussions of a witness's personal life may appear to the jury like an effort to distract attention from larger, more relevant points.
"The defense still has to ask themselves whether it will make them look desperate," said Seth C. Farber, a specialist in corporate law who is a partner at Dewey Ballantine. "Juries are likely to be skeptical of that tactic."
The defense is likely to decide whether to introduce the personal information after hearing what Mr. Sullivan says to prosecutors on the stand, Mr. Farber said. "They will want to see what he looks like as a witness," he said.
Prosecutors may also try to pre-empt any attempt by defense lawyers to cast doubt on Mr. Sullivan's reputation by asking him first about his personal life, Mr. Farber said.
In yesterday's one-hour hearing, which Mr. Ebbers attended, the prosecution won several victories.
Notably, the judge denied another motion to grant immunity to three former WorldCom financial officers who, the defense says, could support Mr. Ebbers's case.
Mr. Weingarten said the executives were "critically important" because they were "far more sophisticated in accounting" than Mr. Ebbers.
Prosecutors also won the right to call as witnesses institutional investors who lost money when WorldCom's stock price plunged.
The judge will decide later whether prosecutors will be allowed to call individual investors as well.
Today, potential jurors will start filling out questionnaires, with jury selection expected to begin on Monday.
Labor Presses Case Against Privatizing Social Security
By Ben WhiteWashington Post Staff WriterWednesday, January 19, 2005; Page E03
NEW YORK, Jan. 18 -- The AFL-CIO on Tuesday stepped up its opposition to private Social Security accounts, accusing Wall Street's main trade group, the Securities Industry Association, of campaigning in favor of policy changes that would put workers' retirement at risk while showering billions of dollars in fees on SIA members.
"Support for privatizing Social Security creates a conflict of interest for the member firms of the SIA like those which led to the financial industry scandals of recent years," AFL-CIO President John J. Sweeney wrote in a letter to SIA Chairman Daniel J. Ludeman.
The labor federation began to take a more aggressive stand on corporate governance issues after scandals at Enron Corp., WorldCom Inc. and other companies. The scandals cost thousands of jobs and vaporized the retirement savings of many workers.
The SIA board of directors is scheduled to meet here on Wednesday. The group is expected to discuss its Social Security lobbying strategy.
The Bush administration is pressing for major changes to Social Security, including allowing workers to put some of their payroll taxes into private investment accounts. Bush has said the existing system will go bankrupt without major changes. Opponents of privatization have accused Bush of vastly exaggerating the program's financial difficulties.
For the most part, Wall Street executives have been silent on the issue, though the SIA has long favored private accounts.
Ludeman, who is also chief executive and president of Wachovia Securities LLC, declined to comment on Sweeney's letter. SIA President Marc E. Lackritz also declined to comment.
SIA spokesman Daniel V. Michaelis said the association was doing what all trade groups do, assessing a policy issue and determining what broad position would be most beneficial to its members.
"SIA's position is that Social Security needs to be fixed and needs to be fixed sooner rather than later," Michaelis said. "We are looking at that task in a constructive way and looking for solutions. That's a better approach than just being negative."
William B. Patterson, director of the office of investments at the AFL-CIO, said partial privatization of Social Security is too big a public policy issue to be decided by "business as usual" in which trade groups in Washington take the lead in speaking for corporate interests.
"The stakes are like 100 million times higher" than most other issues, Patterson said. "This debate is critical to the development of the country and the capital markets."
Exactly how much Wall Street firms could earn from private Social Security accounts depends to a large degree on how much workers are allowed to invest and on any limits the federal government places on fees.
Last year, University of Chicago economist Austan D. Goolsbee released a report suggesting that private accounts could earn as much as $940 billion in fees for Wall Street. The SIA then released its own report, widely viewed as a rebuttal to Goolsbee, estimating the amount at $39 billion to $279 billion over 75 years.
http://www.washingtonpost.com/wp-dyn/articles/A19515-2005Jan18.html?nav=hcmodule
http://www.aflcio.org/aboutaflcio/about/
http://www.wto.org/english/news_e/events_e/events_e.htm
http://www.weforum.org/site/homepublic.nsf/Content/Tackling+corruption+is+good+for+business
http://www.sia.com/about_sia/
AFL-CIO, the federation of America's labor unions, representing more than 13 million working women and men.
Washington, 15:00 USA: SUSSIDI DISOCCUPAZIONE CROLLANO A 319.000 Scendono molto piu' delle attese le richieste di nuovi sussidi di disoccupazione nella settimana chiusa il 15 gennaio: sono stati 319.000 contro i 367.000 della settimana precedente. E' la caduta piu' consistente, 48.000 nuove domande in meno, dall'8 dicembre 2001. Le previsioni degli analisti indicavano il dato in discesa a 345.000 nuove richieste di sussidio. La media delle ultime quattro settimane si attesta a 341.000 contro i 344.000 della media registrata la settimana dell'8 gennaio.
prec: WP_new doubts
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