Feb 11, 2002 : FBI, SEC Investigate Global Crossing

📅 February 11, 2002 - The FBI will investigate bankrupt network provider Global Crossing and its accounting practices, USA Today reported in its Friday addition.
The publication said "a senior law enforcement official" confirmed the investigation Thursday, though Global Crossing would not confirm whether the company had been contacted by the FBI.
On Friday, the company confirmed the U.S. Securities and Exchange Commission was expanding the scope of a previous investigation in to the company.
"As previously announced on February 4, 2002, Global Crossing received an inquiry from the SEC for the voluntary production of certain information in connection with issues raised in a letter from a former employee," the company said in a statement. "The company continues to cooperate fully with the SEC in providing the requested information."
The "issues" at hand are a number of allegations made by Roy Olofson, former Vice President of Finance at Global Crossing, regarding the company's accounting practices. Last August, Olofson wrote a letter to the company claiming that Global Crossing was inflating its results with transactions that did not increase the company's revenues in any material way.
Global Crossing has repeatedly refuted the allegations, and last Monday released a statement denying any wrongdoing and providing additional "details" regarding Olofson's actions. The statement questioned the motives behind Olofson's claims, noting that he is seeking financial compensation for his termination last November. Global Crossing said Olofson was let go "in connection with a substantial reduction in its workforce."
Olofson's attorneys responded with a statement accusing the company of "engaging in a carefully-orchestrated smear campaign against Olofson designed to divert attention from Global Crossing's accounting irregularities."
Numerous class-action lawsuits filed this week against Global Crossing its officers are centered around the company's methods of reporting revenues.
Global Crossing filed for bankruptcy protection January 28th. Analysts say the Bermuda-based firm couldn't handle the debt load that emerged from the construction of its global network, which reaches more than 200 major cities in 27 countries.