WorldCom grew largely by acquiring other telecommunications companies, including MCI Communications in 1998, and filed for bankruptcy in 2002 after an accounting scandal, in which several executives, including CEO Bernard Ebbers, were convicted of a scheme to inflate the company's assets.

WorldCom was originally headquartered in Clinton, Mississippi before relocating to Ashburn, Virginia when it changed its name to MCI.

However, the deal floundered due to opposition from the U.S. Department of Justice and the European Union on concerns that it would create a monopoly.

[8] Between September 2000 and April 2002, the board of directors of WorldCom authorized several loans and loan guarantees to CEO Bernard Ebbers so that he would not have to sell his WorldCom shares to meet margin calls as the share price plummeted during the bursting of the dot-com bubble.

[12] Beginning modestly during mid-1999 and continuing at an accelerated pace through May 2002, Ebbers, CFO Scott Sullivan, controller David Myers and general accounting director Buford "Buddy" Yates used fraudulent accounting methods to disguise WorldCom's decreasing earnings in order to maintain the company's stock price.

[12] The fraud was accomplished primarily in two ways: In June 2002, a small team of internal auditors at WorldCom led by division vice president Cynthia Cooper and senior associate Eugene Morse worked together, often at night and secretly, to investigate and reveal what was ultimately discovered to be $3.8 billion worth of fraudulent entries in WorldCom's books.

[13][14] The investigation was triggered by suspicious balance sheet entries discovered during a routine capital expenditure audit.

It would remain the largest accounting fraud ever uncovered until the exposure of Bernard Madoff's giant Ponzi scheme in 2008.

By this time, the U.S. Attorney for the Southern District of Mississippi, the Federal Bureau of Investigation and the U.S. Securities and Exchange Commission were already looking into the matter as well.

None of the criminal proceedings against WorldCom and its officers and agents were originated by referral from Gonzalez or the Department of Justice lawyers.

[18] On April 14, 2003, WorldCom changed its name to MCI, and relocated its corporate headquarters from Clinton, Mississippi, to Ashburn, Virginia.

Breeden actively involved himself with the management of the company, and prepared a report for Rakoff, titled Restoring Trust, in which he proposed extensive corporate governance reforms, as part of an effort to "cast the new MCI into what he hoped would become a model of how shareholders should be protected and how companies should be run".

Many of the small creditors included former employees, primarily those who were dismissed during June 2002 and whose severance and benefits were withheld when WorldCom filed for bankruptcy.

[26] On March 15, 2005, Bernard Ebbers was found guilty of all charges and convicted of fraud, conspiracy and filing false documents with regulators—all related to the $11 billion accounting scandal.

On September 26, 2006, Ebbers surrendered himself to the Federal Bureau of Prisons prison at Oakdale, Louisiana, the Oakdale Federal Correctional Institution, to begin serving his sentence; he was released in late 2019 for health reasons and died in February 2020, after serving 13 years of his sentence.