WorldCom was the U.S. telecommunications company that filed for bankruptcy in 2002 after admitting it had inflated profits by about $11 billion.
WorldCom became one of the largest long-distance telephone companies in the United States through aggressive acquisitions, including its purchase of MCI. Its accounting problems centered on billions of dollars of ordinary operating costs that were improperly recorded as capital expenditures, making the company appear more profitable.
The accounting fraud was uncovered after internal auditor Cynthia Cooper and her team investigated suspicious entries. WorldCom disclosed the irregularities in 2002 and later filed for what was then the largest U.S. corporate bankruptcy. The company emerged as MCI in 2004.
Former chief executive Bernard Ebbers was convicted of securities fraud, conspiracy, and related offenses. WorldCom is sometimes mixed up with Enron, but the companies used different accounting schemes and failed in different industries.