The Vinsons moved to a quiet, manicured neighborhood on the outskirts of Jackson. They attended their daughter’s soccer games, took on home-improvement projects and played with Cupcake, their curly-haired mutt. In her spare time, Ms. Vinson taught Sunday school and devoured John Grisham novels.
When she joined WorldCom, it was a small long-distance company on the verge of becoming a star of the Wall Street telecom boom. Ms. Vinson developed a reputation for being hardworking and diligent. She was known as a loyal employee who would “do anything you told her,” says a former colleague. Many nights after dinner, she would retreat to her den to work on WorldCom’s books until nearly midnight. On vacations, she squeezed in some work on her laptop.
Within two years, Ms. Vinson was promoted to be a senior manager in WorldCom’s corporate accounting division, reporting to Buford Yates. In her new job, she helped compile quarterly results, along with 10 employees who reported to her. She analyzed the company’s operating expenses and loss reserves, amounts put aside to cover certain kinds of expenses.
Mr. Yates, known as Buddy, had been recruited to join WorldCom in 1997 by David Myers, the company’s controller. They had worked together at Lamar Life Insurance in Jackson. Also working for Mr. Yates was Troy Normand, a Baton Rouge, La., native, who oversaw accounting for the company’s fixed expenses, such as property, plants and equipment.
Ms. Vinson’s work world began to change in mid-2000. With the telecommunications industry in a severe slump, Chief Executive Bernard Ebbers and Chief Financial Officer Scott Sullivan informed Wall Street in July that the company’s results for the second half of the year would fall below expectations. That warning turned out to be far too mild.
The company had a looming problem: Its huge line costs — fees paid to lease portions of other companies’ telephone networks — were rising as a percentage of the company’s revenue. Those numbers were carefully monitored by Wall Street. Then in the third quarter of 2000, the company was hit with $685 million in unpaid bills, after some of its small customers went belly-up.
Scrambling to Account
Inside the accounting department, a scramble ensued to try to reduce expenses on the company’s financial statements enough to meet Wall Street’s expectations for the quarter. But Ms. Vinson, Mr. Normand and Mr. Yates were able to scrape together only $50 million, far from the hundreds of millions it would take to hit the company’s profit target.
In October, Mr. Yates convened a meeting with Ms. Vinson and Mr. Normand in the accounting department, which occupied a corner of the fourth floor at WorldCom’s headquarters. He told them that Mr. Myers and Mr. Sullivan had asked them to dip into a reserve account set aside to cover line costs and other items for WorldCom’s telecommunications unit, fish out $828 million and use it to pay other expenses, according to people familiar with the meeting. In doing so, they would reduce expenses for the quarter and boost earnings. An attorney for Mr. Myers didn’t return phone calls.