Bernard Ebbers The Man Who Stole $11 Billion to Save Himself Then Lost Everything | Financial Karma — Transcript

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1. 0:00Bernard Ebers was a former basketball
2. 0:02coach who built a hundred billion dollar
3. 0:04empire from nothing. Just four years
4. 0:06later, he buried it under the largest
5. 0:08accounting fraud in American history.
6. 0:10This is the story of WorldCom and how
7. 0:12the telecom cowboy lost everything on a
8. 0:14bet he couldn't pay. Ebers built
9. 0:16WorldCom through a relentless string of
10. 0:18acquisitions, including a 47 billion
11. 0:21purchase of MCI in 1998. He became
12. 0:24personally wealthy. Hotels Gulf Cools, a
13. 0:28massive ranch in Canada. He wore cowboy
14. 0:30boots to the office and earned the
15. 0:32nickname the telecom cowboy. But his
16. 0:34empire was built on a foundation of
17. 0:36glass. Then the dot bubble burst.
18. 0:39WorldCom stock collapsed. The problem
19. 0:42was personal. Ebers had borrowed
20. 0:44hundreds of millions of dollars against
21. 0:45his own shares. If the price kept
22. 0:48dropping, he would be ruined. To cover
23. 0:50those personal loans and keep the
24. 0:51company looking profitable for Wall
25. 0:53Street, WorldCom's leadership began
26. 0:55using a dirty trick. They disguised
27. 0:57ordinary operating expenses as long-term
28. 0:59capital investments. On paper, it looked
29. 1:02like a smart financial move. On the
30. 1:04books, it was a crime. Between 1999 and
31. 1:072002, the fraud inflated WorldCom's
32. 1:10earnings by more than 11 billion. It
33. 1:12became the largest accounting fraud in
34. 1:14United States history at the time. While
35. 1:16Wall Street was applauding, someone
36. 1:18inside the company noticed the numbers
37. 1:20didn't add up. It was uncovered not by
38. 1:22regulators, but by the company's own
39. 1:25internal auditor, Cynthia Cooper,
40. 1:27working at night to avoid detection. She
41. 1:30and her team traced billions of dollars
42. 1:32moving illegally from the income
43. 1:33statement to the balance sheet. In June
44. 1:352002, WorldCom disclosed the fraud. The
45. 1:38company collapsed into bankruptcy the
46. 1:40following month. Nearly 17,000 employees
47. 1:43lost their jobs overnight. Ebers told
48. 1:45Congress under oath that he had no
49. 1:47knowledge of the fraud, that it was
50. 1:49engineered by his chief financial
51. 1:50officer, Scott Sullivan. He invoked the
52. 1:53fifth amendment and refused to answer
53. 1:55further questions, but Sullivan pleaded
54. 1:57guilty and testified against him. In
55. 2:002005, a jury found Ebers guilty of
56. 2:02fraud, conspiracy, and filing false
57. 2:05documents. The judge said the evidence
58. 2:07showed he was clearly a leader of the
59. 2:09criminal activity, not a bystander. He
60. 2:12was sentenced to 25 years in federal
61. 2:14prison. He wept in the courtroom. Ebers
62. 2:17was stripped of nearly everything he
63. 2:19owned. His mansion, his ranch, and
64. 2:21millions in assets were surrendered to
65. 2:23repay shareholders who lost their
66. 2:24savings, their retirement funds, and
67. 2:27their pensions when the company he built
68. 2:28collapsed. He served 13 years before
69. 2:31being released in December 2019 due to
70. 2:33declining health. He died 2 months later
71. 2:36in February 2020 at 78 years old. He
72. 2:39built an empire on debt and kept it
73. 2:41alive with lies to protect his own
74. 2:43fortune. In the end, it cost him
75. 2:45everything he built and the freedom he
76. 2:47had left. Karma doesn't ask twice. Karma
77. 2:50remains completely undefeated. This has
78. 2:53been financial karma. And if the story
79. 2:55moved you, subscribe to Karma Unleashed.
80. 2:58Every episode, we follow the money and
81. 3:00the consequences that never stop
82. 3:02arriving. Next episode, another name,
83. 3:05another empire, another fall. The
84. 3:08history of financial karma is far from
85. 3:10over.