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WorldCom case ignites turf battle
NEW YORK (CNNfn) -- Oklahoma Attorney General W.A. Drew Edmondson has ignited a new turf battle between the states and the U.S. federal government by filing criminal charges against bankrupt WorldCom, its former chief executive, Bernard Ebbers, and five other former WorldCom employees. WorldCom, now known as MCI, is the No.2 U.S. long-distance and data services company. It is trying to emerge from bankruptcy after an $11 billion accounting scandal. The U.S. attorney's office in New York and the Securities and Exchange Commission issued separate statements criticizing Edmondson Wednesday. "In the name of cooperation and coordination, we are disappointed that we were not told that charges were imminent," the U.S. attorney's office said. "Competing interests can impede and delay the administration of justice." Justice Department prosecutors have been investigating WorldCom and Ebbers for more than a year without bringing criminal charges against either party. The Justice Department did file criminal charges against five former WorldCom employees, four of whom have pleaded guilty. Former Controller David Myers, former Director of Accounting Buford Yates and accountants Betty Vinson and Troy Normand are awaiting sentencing. WorldCom's former Chief Financial Officer Scott Sullivan has pleaded not guilty to securities fraud charges. "We were disappointed that the SEC was not contacted by the Oklahoma attorney general," the SEC said in its statement, adding, "Our goal and our hope is to coordinate federal and state enforcement actions." The SEC reached a final settlement with WorldCom last month requiring the company to pay $500 million in cash and $250 million in stock. The payment will go to bondholders and shareholders who lost more money through the company's downfall. A confirmation hearing on MCI's bankruptcy reorganization plan is scheduled for September 8. Edmondson Wednesday criticized the SEC settlement as inadequate, saying, "I don't think this company has been punished. I think it's been rewarded and I intend to prosecute them criminally." He also defended the timing of Oklahoma's lawsuit. "The problem we have when there's joint jurisdiction, both state and federal, if you wait too long watching what's going to happen at the federal level you're allowing the statue of limitations to run on your state charges," Edmondson told CNNfn. "If at the conclusion of that process you're not satisfied with the severity of sanctions it's too late then to file state charges." WorldCom said it intends to fully cooperate with the Oklahoma attorney general but still hopes to gain bankruptcy court approval to emerge from Chapter 11 protection at a hearing next month. Ebbers' attorney, Reid Weingarten, said in a written statement there is "a total lack of any evidence that Mr. Ebbers committed crimes." New York Attorney General Elliot Spitzer last year grabbed the securities prosecution spotlight from federal authorities by leading the investigation into Wall Street analysts' conflicts of interest. -- from CNNfn's Allan Chernoff in New York
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