WorldCom, originally founded in 1983 as Long Distance Discount Services, Inc., grew to become one of the largest telecommunications companies in the United States through a series of acquisitions, notably merging with MCI in 1997. At its peak, it was the second-largest long-distance telephone company after AT&T. Bernard Ebbers, a co-founder, served as CEO from 1985 to 2002, leading the company through a period of rapid expansion. WorldCom offered long-distance services to businesses and residents, and its growth was significantly aided by acquiring over 70 companies, including MCI Communications. The company aimed to become the largest in the industry, but a proposed merger with Sprint was scrapped due to monopoly concerns.
In 2002, WorldCom filed for Chapter 11 bankruptcy after admitting to overstating its earnings by $3.8 billion, which later investigations revealed to be over $11 billion in accounting fraud. This scandal, one of the largest in U.S. history, led to significant losses for investors (over $180 billion) and prompted the Sarbanes-Oxley Act of 2002, aimed at improving corporate accountability. Several executives, including CEO Bernard Ebbers, were arrested and convicted; Ebbers received a 25-year prison sentence. After emerging from bankruptcy in 2004, WorldCom rebranded as MCI. Verizon Communications acquired MCI in 2006, integrating its network assets into Verizon Business. Bernard Ebbers, who had been lauded as a visionary leader, was found guilty of fraud and conspiracy, serving as a cautionary tale in corporate governance.
