The WorldCom Scandal - A Simple Overview

WorldCom committed one of the biggest accounting frauds in American history. This video gives a simple overview of it.

*Note: This video was completed in July 2019. Unreleased until now. I'm putting it out today, mostly unaltered, as part of my 6-years on YouTube celebration.

I want to mention that Bernie Ebbers has since passed away.

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Company Declines:
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[srs]

I studied accounting in college. One of my teachers quit Arthur Anderson while this was going on. He said his moment of clarity was watching a manager threaten violence against one of his coworkers if he didn't sign papers he knew to be fraudulent. My teacher went home, thought about what was going on, and turned in his resignation letter the next day.

[UnbarablePain]

Used to work in the old WorldCom building in Clinton. I remember my supervisor saying to me, "This building's foundation is made of deceit and lies!"

[taylormiller]

Unironically my MBA program mentioned this scandal like 10 times, but they never went into exactly what happened. Thanks for clarifying this.

[Primitive]

Bernie Ebbers was my parents Sunday school teacher…I’ll never forget this time period…crazy to see a YouTuber I follow cover this!

[blodyholy_]

I worked at WorldCom in my early 20s throughout this scandal. It was very interesting to all be brought into a conference room to have Bernie Ebbers basically say on a pre-recorded message that the company has no money, and we’re all out of a job. Fortunately, as I was in my 20s, I was able to recover. Those long time MCI and WorldCom employees were not.

[tommyblack]

I'm the son of an MCI-WorldCom employee that was laid off during the bankruptcy. This was only a couple years after he was laid off as part of the Inacom bankruptcy. In both cases, he worked for a company that was acquired by the corrupt conglomerate (MCI and Vanstar) only to lose all his job security immediately. Going through this while I was a teenager is definitely a huge part of why I have little respect for corporate America to this day.

[jamesrobinson]

These scandals were a daily thing back then. I remember watching the financial news and trying to guess who'd be next.

[edwardcaine]

When I was 16 I worked in a boiler room style call center for a company called Telecom USA. During training we learned that we were essentially MCI but we’re not allowed to say that to any prospective customers. It was a high pressure sales environment where the top closers were consistently using the same dirty tactics to scam seniors and were upheld as model employees. It was a bizarre crazy ride. I learned a lot and made a ridiculous hourly for a 16 year old. I believe it was like 13-16 an hour with overtime available during the time when 5.15 was minimum wage.

[utterden]

I worked for MCI from the AT&T breakup days thru the Worldcom debacle. Lets just say that when we walked into work and found out we had been bought by the 4th largest telecom company (us being the 2nd largest at the time) we were all in disbelief. We found out shortly later how it all happened and lets just say as we were getting laid off the name Bernie Ebbers was not one you wanted to utter.

[thebestcentaur]

The WorldCom and Enron scandals are why it's been the Big Four since I was in kindergarten

[SheldonBird]

I love when you cover scandals! I learn a lot about business and accounting, oddly enough lol

[editorick]

I live down the street from what was Worldcom's headquarters. It was a giant building in the middle of a bunch of fields. It's now Verizon and in the middle of dozen's of Data Centers. I had two friends, a husband and wife that both worked for Worldcom. Over night, they went from both making over $150K to the husband delivering pizzas. Worldcom laid miles of fiber in the area which is why 80% of the internet now runs through that area.

[LIUKANG]

I was in the middle of binge catching up on your videos and just finished the last one until I saw this pop on my notifications. Needless to say, this is a good lunch break

[PickpocketJones]

I was a contractor to MCI Worldcom during the dying days. When you walked into the office they had a little sign with the stock price that day. Over the course of 6 or 8 months I watched that sign start at like 80 and it was at like 10 when I left the job just before the total collapse. At that job they employed an army of people doing "provisioning" which is getting circuits turned up (ie getting your phone line activated). The job could be done in about 1 hour each day and the rest of the time was wasted. I sat adjacent to a middle manager who took all her conference calls on speaker and I got to listen to 2 hour phone calls where nothing was accomplished. I got pulled in at one point to help them figure out how to process orders for the FTS2000 contract which was a multi-billion dollar contract with GSA and found that they had been sitting on like a thousand orders for more than a year unable to figure out how to process them. I just called around the company talking to actual engineers til we finally figure out how to get some processed and it was like I invented fire around there. Worldcom would buy up little CLECs all over the country then never both to integrate them. So if I was doing a circuit in Chicago I needed to use Ameritel's 20 year old garbage software, if it was in Texas maybe its Brooks Communications old legacy garbage, etc etc.

It was the worst run company I have still ever witnessed from the inside.

[nykthosnyx]

I remember this vividly as I was directly affected. One of my parents was an senior engineer for them at MCI, it was hard for my dad to find work in IT up until the 2010's.

[derek]

I remember this, mainly because it came so soon after the Enron collapse.

I have an anecdotal experience not related to the fraud, but even at the time I thought it was indicative of a poorly-run company: It' was around 2000 (before cell phones were ubiquitous). For my job I had a pager and a company-issued Worldcom card with a code I could punch in at payphones to have the charges billed to my credit card for reimbursement. I only made one or two calls per month with it, maybe 2 minutes long. But each month I received via mail a ~30-page invoice filled with boilerplate. It must have cost them 20x what my phone bill was to mail that.

[warriorlink]

If this scandal, the Enron scandal, and the 2008 banking scandals have taught us anything, it's that we need watchers to watch the watchers. Aurthor Anderson was the trusted auditor, their job was to track and ensure proper accounting practices. The ratings agencies were trusted to rate bank loans and CDOs properly to ensure risks were called out.
And still, no one watches the watchers... the auditors and ratings agencies get all kinds of fees and need to report profit growth as well.

[jessicaseyfried]

I was working as an accountant for a long distance reseller in the late nineties and my boss used to give me history lessons about the phone business to go along with my school experience. WorldCom got a lot of the money from them. Of course like most of the resellers, this one went out of business. I also went to work for nonprofits after that because it’s more complicated from an accounting perspective but less chance of fraud.

[cullinan]

I worked at WorldCom during this time. It was a crazy change from being one of best companies in the world to a bankrupt one when Post Its required an official requisition.

[cannibalvegetableyt]

My mother worked for WorldCom (MCI before and then ATT after what was left was bought) and she said she saw the book cooking beforehand, but was told to shut up.

She was not involved in their money department, but saw a strange trend in corporate sales vs profits. She worked in corporate sales.

We lived in Houston. When Enron went, one of the execs committed unlive a few miles from my house and my partner went to school with one of the Women of Enron featured in Playboy.. it was a weird city to live in during the last crash.