The company had a looming problem: Its huge line costs -- fees paid to lease portions of other companies' telephone networks -- were rising as a percentage of the company's revenue. Those numbers were carefully monitored by Wall Street. Then in the third quarter of 2000, the company was hit with $685 million in unpaid bills, after some of its small customers went belly-up. Scrambling to Account Inside the accounting department, a scramble ensued to try to reduce expenses on the company's financial statements enough to meet Wall Street's expectations for the quarter. But Ms. Vinson, Mr. Normand and Mr. Yates were able to scrape together only $50 million, far from the hundreds of millions it would take to hit the company's profit target. In October, Mr. Yates convened a meeting with Ms. Vinson and Mr. Normand in the accounting department, which occupied a corner of the fourth floor at WorldCom's headquarters. He told them that Mr. Myers and Mr. Sullivan had asked them to dip into a reserve account set aside to cover line costs and other items for WorldCom's telecommunications unit, fish out $828 million and use it to pay other expenses, according to people familiar with the meeting. In doing so, they would reduce expenses for the quarter and boost earnings. An attorney for Mr. Myers didn't return phone calls. Ms. Vinson and Mr. Normand were shocked by their bosses' proposal and the huge sum involved. All three accountants were worried that the adjustment wasn't proper, according to the people familiar with the conversation. Under accounting rules, reserves can be set up only if management expects a loss in the unit where the reserve is established, and there must be a good reason to reduce them. The transfer would violate those rules, the accountants believed, because there was no business reason for depleting the reserve account. Ms. Vinson and Mr. Normand told their boss that the transfer wasn't good accounting, according to a person close to Ms. Vinson. Mr. Yates replied that he wasn't happy about it either. But he said that Mr. Myers had assured him that it would never happen again and that he had agreed to go along. Finally, so did Ms. Vinson and Mr. Normand. They made the transfer. David Schertler, a lawyer who now represents Mr. Yates, says that his client was put in an "untenable" position by his bosses. "I think that Vinson, Normand and Yates are all low-level players in this who wound up being the victims of unscrupulous higher managers," he says. Afterward Ms. Vinson suffered pangs of guilt. On Oct. 26, the same day the company publicly reported its third-quarter results, she told Mr. Yates that she was planning to resign. Mr. Normand felt similarly, according to the person close to Ms. Vinson and others. Word of the mutiny in the accounting department reached Mr. Ebbers. After a conference call with analysts, he approached Mr. Myers in a corridor and vowed that the accountants would never again be placed in such an uncomfortable position says a former employee. Reid Weingarten, Mr. Ebbers's lawyer, declined to comment for this story. Several days later, Mr. Sullivan tried to talk Ms. Vinson and Mr. Normand out of resigning. The two accountants, who had met the CFO only a few times before, took seats on a sofa in his office's large seating area. Mr. Myers and Mr. Sullivan sat in two chairs facing them, according to two people familiar with the meeting. Mr. Sullivan explained that he was trying to fix the company's financial problems. Think of it as an aircraft carrier, he said, according to the people familiar with the meeting. He continued, in their account: We have planes in the air. Let's get the planes landed. Once they are landed, if you still want to leave, then leave. But not while the planes are in the air. Ms. Vinson listened silently. Mr. Normand said that he was worried he would be held liable for making the accounting changes. But Mr. Sullivan assured him that nothing they had done was illegal and that he would assume all responsibility, according to two people familiar with the meeting. He noted that the company had just cut by half its projections for the fourth quarter, and that the accounting switch wouldn't be repeated. Mr. Sullivan's attorney, Roy Black, declined to comment for this story. By the time Mr. Sullivan stopped talking, Ms. Vinson's resolve to quit her job was wavering, according to the person close to her. That night, she told her husband about the meeting and her worries over the accounting. Mr. Vinson, who is a printing-equipment salesman, didn't fully understand his wife's accounting concerns, but he urged her to quit. He already was unhappy about the long hours she was putting in at WorldCom. But after further thought, Ms. Vinson decided against quitting, says the person close to her. She was the family's chief breadwinner, earning more than her husband's roughly $40,000 a year compensation. The Vinsons depended on her insurance. She was anxious about entering the job market as a middle-age worker. Though Ms. Vinson still worried about the accounting issues, she began to rationalize her decision to comply with her bosses' request, according to the person close to her. After all, Mr. Sullivan had been heralded as one of the top chief financial officers in the country. If he thought the transfer was all right, who was she to question it? Back in the office, Ms. Vinson told Mr. Yates that she had changed her mind about quitting. They commiserated about how hard it would be to leave their jobs and probably Jackson, where it wasn't easy to find well-paying work, according to a person familiar with the conversation. Mr. Normand also changed his mind about leaving WorldCom. By the end of the first quarter of 2001, it was clear Ms. Vinson would have to prepare another bad financial report. As the company's revenue fell, its line costs, as a percentage of revenue, were well above the company's 42% goal. Again, Ms. Vinson and her colleagues searched for costs they could reduce. But this time they could find no large pools of reserves to transfer to solve the profit shortfall. The gap was a whopping $771 million. As the situation grew dire, a troubling solution was ordered up by Mr. Sullivan, according to a former WorldCom employee. Rather than count line costs as part of operating expenses in the quarterly report, they would shift $771 million in line costs to capital-expenditure accounts, according to SEC filings. The shift would boost the company's bottom line. That's because operating expenses, such as salaries and benefits, are subtracted from income as they occur, reducing a company's current profit. Capital expenses are subtracted from income over long periods of time. When Mr. Yates told Ms. Vinson about the $771 million transfer, she was shocked, according to the person close to her. While the accounting maneuver in October had been questionable, she believed this transfer was even less defensible. Accounting rules make clear that line costs are to be counted as operating leases, which can't be delayed by calling them capital expenses. In fact, Mr. Yates initially had refused to execute the plan when Mr. Myers told him about it, according to a person close to Mr. Yates. And in turn Mr. Myers, the controller, had argued to Mr. Sullivan that the transfer could not be justified, says a former employee. But Mr. Myers eventually passed the order down the line to Mr. Yates after he was persuaded by Mr. Sullivan that the transfer was WorldCom's only way out of its troubles, according to the former employee. When the order landed on Ms. Vinson's lap she felt trapped, the person close to her says. Threatening again to resign wasn't going to help. And she was still reluctant to quit without another job. She and Mr. Normand met with Mr. Yates in his immaculate office to talk about their concerns, but nothing was resolved, according to a person close to Mr. Yates. That night Ms.Vinson reviewed her options with her husband, the person close to her says. She decided to put together a resume and begin looking for a job. She didn't think about retaining a lawyer or talking to the SEC, says this person. She hadn't really started to think about the ramifications of her actions. At WorldCom, the wheels were already in motion to transfer the line costs. Ms. Vinson reluctantly went along. It fell to her, Mr. Normand and Mr. Yates to figure out into which of five capital accounts they should transfer the costs. As they considered the options, Mr. Myers walked into Ms. Vinson's office and the group commiserated about how unhappy they were about the transfers. Still, they agreed they had to keep bailing water for the time being, according to a person familiar with the conversation. Ms. Vinson then made the entries transferring the $771 million, backdating the entries to February by changing the dates in the computer for the quarter, according to court and SEC documents. Recurring Dilemma Ms. Vinson faced the same dilemma in the second, third, and fourth quarters of 2001. Each quarter she, Mr. Yates and Mr. Normand scraped together small amounts of liabilities that legitimately could be lowered for the quarter, hoping that they wouldn't be required to make a large questionable adjustment. But each quarter they found themselves in the same uncomfortable spot and wound up making giant and fraudulent entries. In the second quarter, they transferred $560 million to the capital accounts. In the third quarter, it was $743 million, and in the fourth quarter, it was $941 million. Ms. Vinson began waking up in the middle of the night, unable to go back to sleep because of her anxiety, says the person close to her. Her family and friends noticed she was losing weight and her face took on a slightly gaunt look. At work she withdrew from co-workers, afraid she might let something slip, says the person close to her. In early 2002, she received a promotion, from senior manager to director, along with a raise that brought her annual salary to about $80,000, according to a former WorldCom staffer. Meanwhile, she and her two co-workers were increasingly distraught. Mr. Yates decided to look for a lawyer, according to a person close to him. Through a cousin, he got the name of Joseph Hollomon of Jackson, a former federal prosecutor in Mississippi. Mr. Yates met with Mr. Hollomon, but unsure of what to do, didn't retain him immediately. Ms. Vinson continued to cling to the notion that each transfer would be the last, says the person close to her. That hope was dashed in late April 2002. Ms. Vinson, Mr. Normand and Mr. Yates had just finished putting together the financial reports for the first quarter, which included an $818 million transfer of line costs. Shortly afterward, they made a discovery that spurred them finally to act. Mr. Normand and Mr. Yates were talking about WorldCom's 2002 financial plan, a copy of which Mr. Sullivan had circulated. Mr. Normand flipped his copy over and began scribbling on the back. Mr. Normand handed his calculations to Mr. Yates, says a person close to Mr. Yates. It suddenly was clear to both men that the line-cost transfers would have to continue at least through 2002 because there was no other way the company would be able to make its projections, say several people familiar with the discussion. The two men shared their discovery with Ms. Vinson and they all agreed that they had had enough, say two people familiar with their decision. Ms. Vinson vowed to begin looking for a new job, says the person close to her. Mr. Yates decided to launch a job search as well and Mr. Normand decided to quit but ask for a package, according to internal documents and one of the people close to Mr. Yates. They made another pact as well: They would refuse to make any more improper accounting entries. Over the next few days, each of them met with Mr. Myers to tell him of their plans and their decision to make no more transfers. In March, the SEC made a request for information from WorldCom because it was suspicious about the company's good financial results. The company's head of internal auditing, Cynthia Cooper, started asking Mr. Myers and others about certain accounting decisions, and the entries made by Ms. Vinson and Mr. Normand. On the afternoon of June 17, Ms. Cooper and Glyn Smith, another auditor, walked into Ms. Vinson's office and asked her to justify the transfers. Ms. Vinson said she couldn't and told them that the amounts were provided to her by Mr. Yates and Mr. Myers. She suggested that Ms. Cooper talks to them, according to internal documents released by Congress. Moments later, Ms. Cooper and Mr. Smith were in Mr. Yates's office asking the same questions. He sent them to see Mr. Myers, according to the documents.

What else, if anything, might Betty Vinson have tried to do to stand up for her values at Worldcom? Draw on what you learned about Giving Voice to Values in class.? How is Betty Vinsons story relevant to you? Whats the take-away for your own life?