Mr. Hollomon had the three accountants sign a so-called proffer agreement with prosecutors, stating what the three were willing to tell them. Although there was no written agreement that they wouldn’t be prosecuted, several lawyers involved say the Mississippi U.S. attorney’s office had told Mr. Hollomon that the accountants would likely be viewed as witnesses, not targets of the probe.
But Mr. Hollomon warned his clients that “all bets were off” if the case was moved to the Manhattan U.S. attorney’s office, which has a long history of aggressively prosecuting high-profile business cases. The Mississippi office often emphasizes gaining cooperation from witnesses rather than targeting them for prosecution, according to several lawyers.
On Monday afternoon, Mr. Yates, Mr. Normand and Ms. Vinson left their offices one at a time and drove to a Courtyard Marriott in Jackson. They told their story to an official from the SEC, an FBI agent and an assistant U.S. attorney.
WorldCom’s problems were about to explode into public view. On June 25, the day after the meetings at the Marriott, the SEC got a call from WorldCom’s lawyers with a shocking disclosure: Ms. Cooper and her fellow auditors had found $3.8 billion in fraudulent accounting entries. The following day, the SEC charged the company with accounting fraud.
Though the Mississippi U.S. attorney’s office had initially taken the lead on the case, the U.S. attorney’s office in Manhattan began to play a more dominant role. Soon, Mr. Hollomon’s fears were realized. In July, after a turf war with Mississippi, the Justice Department granted jurisdiction to the Manhattan U.S. attorney’s office and it quickly became clear that the New York prosecutors had a different take on the accountants.
Mississippi U.S. Attorney Dunn Lampton said he was “disappointed” he didn’t remain involved. He wouldn’t discuss his initial plans for the case.”Deciding who to prosecute is one of the toughest decisions a prosecutor faces,” he says.
Soon, Ms. Vinson’s hopes that she would continue to be viewed as a witness were dashed. On a flight to Mississippi after an interview with prosecutors in New York, Mr. Hollomon told Ms. Vinson that he was concerned that they were focusing on the fact that she had made her own decisions about which capital expense accounts she transferred the line costs into. He thought prosecutors might draw the conclusion that she hadn’t simply been following orders.
Mr. Hollomon told her that Mr. Myers was cooperating with prosecutors, who now suspected that Ms. Vinson and the other accountants from the beginning had been instrumental to making the scheme work, according the person close to Ms. Vinson.
On Aug. 1, Ms. Vinson received a call from Mr. Hollomon telling her that the prosecutors in New York would probably indict her. In the end, they viewed the information Ms. Vinson had supplied at the Courtyard Marriott as more of a confession than a tip-off to wrongdoing, people familiar with the cse say.
Crying, she called her husband, who was on a business trip, and reached him at the airport in Atlanta to tell him that charges against her were imminent. Within hours, she was fired because of the expected indictment. The only thing she was allowed to take with her was a plant from her desk.
On Aug. 28, Mr. Sullivan and Mr. Yates were indicted, and Ms. Vinson and Mr. Normand were named as unindicted co-conspirators in the scheme. Mr. Myers pleaded guilty to three felony counts and Mr. Yates soon pleaded guilty to one count of securities fraud and one count of conspiracy to commit securities fraud.
Ms. Vinson and her husband tried to think of a way out of their predicament. Unable to afford the legal bill that would result from a lengthy trial, Ms. Vinson decided to negotiate a guilty plea as well. They hoped to cut a deal that wouldn’t include a prison sentence.
On Oct. 10, the U.S. attorney’s office announced that Ms. Vinson and Mr. Normand had pleaded guilty to two criminal counts of conspiracy and securities fraud, charges that carry a maximum sentence of 15 years in prison.
At a court hearing, Ms. Vinson answered U.S. Magistrate Judge Andrew Peck’s questions so meekly that he asked her to speak up. Mr. Hollomon held a microphone close to her as she read a statement admitting that she had started making the illegal entries in October 2000. “I was very concerned about the order to make the adjustment,” she said. Ms. Vinson was released on a bond secured by $25,000 of equity in her home. She is now working as an accountant for a large Kentucky Fried Chicken franchise.
Her sentencing is scheduled for February.
Postscript: As of October 1, Ms. Vinson is cooperating with federal prosecutors and has not yet been sentenced. Ms. Vinson, as well as Mr. Ebbers, Mr. Sullivan, Mr. Myers, Mr. Yates, and Mr. Normand, were recently charged in a criminal complaint by Oklahoma’s attorney general.