The news came as Scott Sullivan, WorldCom's former chief financial officer, pleaded not guilty on Wednesday to charges that he wrongly accounted for billions of dollars in expenses. Accounting executive Buford Yates Jr. also pleaded not guilty to the securities fraud charges.

Assistant U.S. Atty. David Anders told U.S. District Judge Barbara Jones at the arraignment that he plans to bring another indictment in the case.

"The government is continuing its investigation, and we do plan to supersede at some point, to add charges to the same scheme and to potentially add defendants," Anders said after Jones asked if he was prepared to set a trial date. A pretrial hearing was scheduled for Dec. 9.

WorldCom--which owns MCI, the nation's No. 2 long-distance telephone company--became the biggest bankruptcy in U.S. history on July 21 when it filed for court protection, owing more than $41 billion in debts.

Anders' latest statement is likely to intensify the pressure on WorldCom executives to tell what they know about the role that former Chief Executive Bernard Ebbers played in the alleged scheme to inflate the telecom giant's earnings. WorldCom hid more than $7 billion in operating expenses.

Anders said federal prosecutors were in plea negotiations with David Myers, WorldCom's former controller. Myers was arrested last month along with Sullivan on a criminal complaint, but he has not been indicted.

Jones freed Myers on a $2 million personal recognizance bond.

Sullivan is free on $10 million bail, while Yates, who was making his first court appearance Wednesday, was released on a $500,000 bond.

Sullivan and Yates were named last week in a seven-count indictment charging each of them with single counts of securities fraud and conspiracy to commit securities fraud. It also charges them with five counts of making false filings with the Securities and Exchange Commission.

The indictment alleges that the defendants orchestrated an illegal scheme that began in October 2000 and ended in June aimed at hiding expenses, thereby inflating WorldCom earnings to meet Wall Street expectations.

The conspiracy count carries a possible maximum five-year prison term and a $250,000 fine, while the securities fraud and false filings charges each carry a possible maximum term of 10 years and a $1 million fine.

When prosecutors announced the indictments last week, they also implicated Myers and two other WorldCom accounting executives as co-conspirators.

Anders said Wednesday that he expected the trial to last three to four weeks, but the judge did not set a date because of a government request for additional time to bring fresh charges. The federal prosecutor added that he was about to turn over to defense lawyers 100 to 150 boxes of evidence seized in the case.

Meanwhile, a separate federal bankruptcy court on Wednesday approved a new service deal for WorldCom with Verizon Communications.

Under the arrangement, WorldCom will pay Verizon $34.5 million in debt, and a billing agreement will be extended through 2003.

Local phone company Verizon had billed and collected charges for about 2 million WorldCom long-distance customers, but WorldCom fell behind on the fees it paid Verizon for the service.

Their contract was set to expire on Sept. 10, but the companies agreed to settle the unpaid debt and extend the contract until Dec. 31, 2003.

-- Delroy Alexander; Tribune wire services contributed to this report.

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