BANKRUPTCY COURT APPROVES WORLDCOM SETTLEMENT;
FIRM TO PAY U.S. MORE THAN $27 MILLION TO SETTLE FRAUD ALLEGATIONS

WASHINGTON, D.C.- The United States Bankruptcy Court presiding over WorldCom, Inc.'s bankruptcy petitions has authorized the company to enter into a settlement with the United States, the Justice Department announced today. The court approved WorldCom’s agreement to pay the government $27 million to settle claims that it defrauded the General Services Administration (GSA) from 1999 to the present. In addition, MCI will also pay $670,000 in credits to GSA.

Today’s civil settlement resolves allegations that MCI WorldCom Communications, Inc. defrauded the U.S. by knowingly passing through to the government costs and fees for Presubscribed Interexchange Carrier Charges in excess of the costs and fees that MCI WorldCom was allowed to assess under the FTS 2001 contract. Such charges are fees that long distance companies pay to local telephone companies to recover part of the costs of providing facilities, such as underground conduit and telephone poles, that link each telephone customer to the telephone network.

“This settlement illustrates the Justice Department’s determination to recover funds that are owed to the United States,” said Peter D. Keisler, Assistant Attorney General for the Civil Division. "We will continue to vigorously enforce the False Claims Act for the protection of the taxpayers and the United States government."

The allegations arose from a lawsuit filed by telecommunications specialist John Russo under the whistleblower provisions of the False Claims Act, a federal law that allows private individuals to sue on behalf of the United States. The civil investigation and settlement were jointly handled by the Office of the United States Attorney for the Central District of California and the Civil Division of the Department of Justice, with assistance from the United States General Services Administration, as well as the United States Attorney's Office for the Southern District of California.

The action is entitled United States ex rel. John Russo v. WorldCom, Inc. and MCI Group, Civil No. 03-822-SVW (MANx)(C.D. Cal.).

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