WorldCom CEO Bernie Ebbers orchestrated an $11 billion accounting fraud — the largest in US history at the time — by secretly reclassifying ordinary operating expenses as capital expenditures, artificially inflating the company’s profits as the telecom industry collapsed around it in the early 2000s. The fraud was not uncovered by auditors from Arthur Andersen or by the SEC, but by a small internal audit team led by VP Cynthia Cooper, who worked nights and weekends in secret after CFO Scott Sullivan ordered them to halt their investigation. WorldCom filed for bankruptcy in July 2002 with $107 billion in assets and laid off 17,000 employees; Ebbers was sentenced to 25 years in prison, and Cooper became one of Time Magazine’s Persons of the Year for her courage in exposing the fraud.
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