Bernard J. Ebbers, who built a modest Mississippi phone company into a telecommunications giant, WorldCom, but later went to jail after its collapse in one of the nation’s largest corporate scandals, died on Sunday at his home in Brookhaven, Miss. He was 78.

His health had sharply deteriorated in recent months, his family said in a statement provided by his lawyer, Graham P. Carner, who confirmed the death. One of his daughters, Joy Ebbers Bourne, said in a court filing in October that Mr. Ebbers was “now experiencing full-blown dementia.”

Mr. Ebbers, who in 2005 was sentenced to 25 years in prison, was freed from a federal prison in Texas in December, having been granted compassionate release by a federal judge to spend his final months at home.

In what was once considered a great entrepreneurial success story, Mr. Ebbers turned his small company in Mississippi, Long Distance Discount Service, into a telecommunications juggernaut, earning him the sobriquet “the telecom cowboy.”