This just in! John Rigas and his son Tim Rigas will spend 15 and 20 years respectively behind bars, and that just could be the kind of news that would make Bernie Ebbers quaking in his boots. He is expected to be sentenced on July 13, and soon there after many of his underlings are likely to get their future read to them. Dennis Kozlowski and Mark Swartz get their due on August 2 and two days later it will be the turn of accounting wunderkid Scott Sullivan of WorldCom. “Ebbers was the CEO of the biggest fraud in history,” Seth Taube, head of litigation in the New York office of Baker Botts LLP tells The Wall Street Journal. “It’s hard to imagine a more compelling case for a severe sentence.” Amen to that!
3 thoughts on “Bad News Bernie”
I’m not a fan of RIGAS. But RIGAS case is a miscarriage of justice. The founder of Global Crossing walked away with $900 Million that he gained by selling the Global Crossing Shares at their highest klevel knowing fully well that Global Crossing was about to file bankruptcy. Soon asfter he resigned as chairman of Global Crossing Global Crossing filed for bankeruptcy. The new Global Crossing was as criminal as the founder of Global crossing. It filed with thed US Bankruptcy a reorganization plan calling for two foriegn companies one of which was Singapore telecommunication to buy 66% of the newely issued Common Stock of global crossing for $900Million. Afterwards thed two companies backed out of their agreement and Global crossing amended the reorganization plan calling for Singapre Telecommunications only to buy the 66% of the Common Stock for only $250 Million. After the reorganization plan was again approved by the bankruptcy Court Singapore technology again backed out five more times and Singapore technologies got 66% of the Common Stock for less than $50 Million. The balance of the Common stock was issued to the debtors in exchange for the debt valued at more than $10 Billion. The creditors got in addition to the 34% of common Stock new notes worth less than $100 Million against the previously established precident that one debt can’t be exchanged for new debt.
Rigas Case Indeed was a miscarriage of Justice. Broadband Industry itself is fraudulent in that it raised billions of dollars of capital by making false promises that the insiders in the industry knew could not be delivered.
The reason broadband Companies failed is that broadband internet service is not faster than Conventional Internet service and hence it could not charge higher prices than the conventional Internet service and had to pay the local telephone Companies fees for using the telephone lines of the local phone companies. In many cases these broadband service companies sold the internet service at less than cost to the telephone companies. These telephone companies survived because of the very profitable local telephone service protected by rates established by Public service Companies.
The Time has come to establish truly fast internet service by changing the way Internet service is delivered. The Internet Infrastructure has to be redsigned so that the it is server oriented which means that the role of the client is limited to that of sending the surfing Commands to the Server. The server will process these Commands itself. This will allow introduction of multitasking since the server will service several Clients simultaneously.
Although the time for landline internet service is gone the fiber optic Broadband Internet service could still survive if this Internet Infrastructure is developed because the increased speed will allow the companies to increase the service rates that will allow these fiber optics companies to make a profit inspite of making payments to local phone companies for the use of their lines.
Thie internet infrastructure is discussed in the following blogs:
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No harm No Foul?
I will not try to defend Ebbers but consider if Ebbers did not “cook the books” would those people have been in worse shape? I saw the former salesman who testified during Ebbers penalty phase say he lost everything. Well all things considered a “fool and his money are lucky to ever have gotten together in the first place.” How could he have lost everything? If I bought WorldCom at 49 and it went to 75 common sense says to take my profits and either run or diversify..Why not sell before the stock plumets to bottom? Also fraud or no fraud that guy was destined to lose his job..Bernie gave him 18-24 months more in that industry than he would have gotten under the best of circumstances. Bottom Line?….Anyone who got taken in this fraud was to dumb or too blind anyway