Judge gives preliminary OK to Ebbers settlement

NEW YORK — A judge gave her blessing Monday to a civil suit settlement under which former WorldCom chief Bernard Ebbers will forfeit nearly all his cash and personal assets — as much as $45 million.

U.S. District Judge Denise Cote gave preliminary approval to the deal two days before Ebbers, 63, faces sentencing, and almost certain lengthy prison time, on his criminal conviction in the record WorldCom fraud.

The civil settlement, which springs from a suit filed by angry former investors in the toppled telecom, will leave a modest Mississippi home for Ebbers’ wife and roughly $50,000 for her to live on.

“Basically we left them with their furniture and the silverware,” said Sean Coffey, a lawyer for New York state Comptroller Alan Hevesi, the lead plaintiff in the investor suit.

Major investment banks that underwrote WorldCom securities, auditing firm Arthur Andersen and 12 former WorldCom board members have all also reached settlements and agreed to pay a total of more than $6 billion.

In the Ebbers deal, the former CEO will turn over nearly everything he owns, including his mansion in Brookhaven, Miss., to a trust that eventually will sell the assets for an expected $25 million to $40 million. Ebbers must also pay more than $5 million cash up front.

Left for Ebbers’ wife and family will be a much smaller home in Jackson, Miss., plus oil and gas assets and a retirement account that were described by lawyers in the case as very modest.

“It seems to me this is an excellent recovery for the class,” Cote said in granting preliminary approval.