HealthSouth sentencing
Ricardo Lopez / The Birmingham N
Bills Owens, left, former Healthsouth chief financial officer, walks to the federal courthouse in Birmingham, Ala., with his attorney Fred Helmsing Friday. Owens, who pleaded guilty to accounting fraud charges, was sentenced to five years in prison.
updated 12/9/2005 6:03:10 PM ET 2005-12-09T23:03:10

A main government witness in the failed prosecution of fired HealthSouth Corp. CEO Richard Scrushy was sentenced to five years in prison Friday by a judge who sharply criticized Scrushy’s acquittal earlier this year.

Bill Owens, a one-time HealthSouth chief financial officer who secretly recorded Scrushy for federal agents, had asked for probation, saying he was deeply sorry for a crime that wrecked his marriage, career and personal finances.

U.S. District Judge Sharon Lovelace Blackburn rejected Owens’ plea to stay out of prison but said his sentence would have been twice as long without his “extraordinary” assistance to the government.

Blackburn said she would hold a hearing later on how much money Owens must forfeit — an amount that could reach into the millions, although Owens said he is broke. She declined to impose a fine, saying he would not be able to pay it once the forfeiture is assessed early next year.

Blackburn said it was apparent that Scrushy directed the $2.7 billion fraud but, with his acquittal, would never go to prison for it.

“In my opinion that is a travesty,” said Blackburn. The judge said she watched some of the Scrushy trial and reviewed much of the government’s evidence, which she called “overwhelming.”

Blackburn repeatedly said she believed Owens’ testimony that Scrushy led HealthSouth through intimidation and ran the fraud. While the Scrushy defense painted Owens as the architect of the scheme, Owens said Scrushy hatched the fraud to make it appear the company was meeting Wall Street forecasts.

“I believe you told the truth,” Blackburn told Owens.

U.S. District Judge Karon Bowdre, who presided over Scrushy’s trial, was in the courtroom audience but left during a break after Blackburn’s most biting comments. Outside of court, she declined comment.

In a statement, Scrushy repeated his claim that Owens was to blame.

“Anyone who sat in the courtroom during my six-month trial would know that today’s comments about me are totally inappropriate given that there was not one shred of evidence or credible testimony linking me to the fraud,” he said.

Standing before Blackburn, Owens choked back tears as he apologized to HealthSouth investors, employees and his family for what he had done. He said he got involved in the plot at the direction of Scrushy and that he would carry the guilt “for the rest of my life.”

“I do understand that I must pay for my crimes,” said Owens, 47, the last of five CFOs who served under Scrushy to be sentenced in the massive earnings overstatement.

Owens pleaded guilty in March 2003 to charges of conspiracy, wire fraud and falsifying a financial report. Prosecutors said he provided invaluable help with the cases against Scrushy, 14 other HealthSouth executives who pleaded guilty and another who was convicted by a jury.

Despite the assistance, prosecutors said Owens could be sentenced to as long as 30 years in prison under federal guidelines and recommended a sentence of slightly more than seven years behind bars.

Owens wore a hidden FBI microphone to record conversations with Scrushy and testified against Scrushy for 11 days. Like four other former CFOs, Owens said he was pressured into the crime by Scrushy.

In acquitting Scrushy, jurors rejected all those claims and sided with the defense, which portrayed Owens as the mastermind of the fraud and Scrushy as an unwitting victim. In closing arguments, Scrushy’s lawyer portrayed Owens as “a big rat” who turned on his former boss.

Neil Seiden, an accountant with the Securities and Exchange Commission, said the latest evidence showed the earnings overstatement totaled at least $2.7 billion and cost investors about $6.9 billion in lost share and bond value.

The defense disputed Seiden’s loss calculations as excessive and said Owens deserved leniency because he admitted his guilt and devoted himself to righting the wrongs he committed by helping prosecutors.

Owens’ wife of 30 years divorced him after learning of his role in the fraud, and the defense said Owens’ liabilities outweigh his assets by $157,000. Owens reported $1.8 million in holdings, including a $1.4 million home, but said in court documents he owed HealthSouth $1.3 million for an executive loan, the Internal Revenue Service $400,000 in penalties and interest and his lawyer $250,000.

Of the four other HealthSouth CFOs who were previously sentenced, whistleblower Weston Smith got the stiffest punishment: 27 months in prison.

Aaron Beam, who helped Scrushy found the company, was sentenced to three months in prison; and Mike Martin, who told Owens which numbers to falsify, was sentenced to one week in prison. Tad McVay was sentenced to probation and house arrest.

While Scrushy was acquitted of all charges in June, he faces civil lawsuits over the accounting fraud and has been indicted by a federal grand jury in Montgomery for allegedly paying $500,000 to the lottery campaign of ex-Gov. Don Siegelman for a position on a state health regulatory board.

Scrushy pleaded innocent and said the charges are government retaliation for his acquittal in the HealthSouth fraud trial.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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