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Thursday, August 28, 2003

Oklahoma Sues WorldCom

NYT notes that the announcement by Oklahoma that they will bring criminal charges against WorldCom, Bernie Ebbers and some of his top cronies could hurt the pending federal criminal case against the company. The article is really negative, basically saying Oklahoma AG Drew Edmondson (a Democrat) is an idiot for doing this.

I think the piece is overly harsh in its criticism here, even if the complications to the federal case that's pending are all true. Edmondson, like most reasonable people, is probably outraged that the feds did not bring any criminal charges against Bernie Ebbers, who made himself fabuously rich by orchestrating a massive fraud. This is largely a commentary on how difficult it is to convict someone of a crime in this area, but there is also, I believe, warranted skepticism about how far the SEC will go to enforce existing law. I personally do not trust the administration to go after corporate fat cats with the requisite zeal, and I welcome the efforts by state AGs like Eliot Spitzer in New York and Edmondson to pick up the slack.

MORE: Via CBS Marketwatch, here are some Edmondson comments:

"[A]t a press conference to unveil the charges Wednesday, Oklahoma Attorney General Drew Edmondson expressed frustration with the punishment the company and its former senior officers have received so far for what is considered the largest accounting fraud in U.S. history.

"'I don't think the company has been punished; I think it's been rewarded for its bad acts,'" Edmondson said, referring to federal contracts MCI has received that are worth billions of dollars. 'I would be very surprised if Oklahoma remained the only state to file either criminal or civil actions against WorldCom and its officers.'

"'I have no lack of respect for our federal prosecutors in the FBI and the SEC,' Edmondson added. 'I simply do not believe that they are going to allege violations of Oklahoma law or pursue Oklahoma remedies.'"