NEW YORK (AP) – The judge in the WorldCom fraud case on Friday praised the massive settlement reached with investors who lost billions, but postponed finalizing the deal to review details of how the money will be distributed.

After a three-hour hearing in federal court in Manhattan, a lead attorney for the plaintiffs, John Coffey, predicted U.S. District Judge Denise Cote would sign off on the settlement sometime next week.

The class-action suit has netted more than $6 billion for investors thanks to what Cote called a “historical settlement” that she said helped restore faith in the stock market after the $11 billion fraud at WorldCom.

The judge asked lawyers for more information about a distribution formula for the roughly 830,000 parties that have filed claims. The formula greatly restricts the amount that can be claimed by investors who sold their WorldCom stock before January 2002, when evidence of the fraud began to surface.

People in the restricted category are “not getting a slice of the pie,” complained one attorney, Joseph Weiss. “They’re not even getting crumbs.”

Cote already had given preliminary approval to a deal that would force telecom’s former finance chief, Scott Sullivan, to sell the Boca Raton mansion – an ornate Mediterranean-style lakefront home with 10 bedrooms and seven fireplaces – and turn over the proceeds to WorldCom investors. Sullivan was sentenced last month to five years in prison.

In his own settlement with investors, former WorldCom CEO Bernard Ebbers agreed to sell his mansion in Mississippi and various business holdings and turn over the proceeds, a total that could approach $40 million. Ebbers is appealing his 25-year sentence.

WorldCom, which went bankrupt in 2002, has emerged under the name MCI and now operates out of Ashburn, Va. Verizon Communications Inc. has agreed to buy MCI for $8.5 billion in a deal expected to close by early 2006.



On the Net:

Plaintiffs in investor suit: http://www.worldcomlitigation.com

MCI: http://www.mci.com

AP-ES-09-09-05 1848EDT


Only subscribers are eligible to post comments. Please subscribe or to participate in the conversation. Here’s why.

Use the form below to reset your password. When you've submitted your account email, we will send an email with a reset code.