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Jurors urged to convict HealthSouth’s Scrushy

Prosecutors urged jurors Wednesday to convict former HealthSouth Corp. CEO Richard Scrushy in a $2.7 billion fraud, claiming he pulled off the huge crime with the stroke of a pen by signing financial statements he knew were false.
/ Source: The Associated Press

Prosecutors urged jurors Wednesday to convict former HealthSouth Corp. CEO Richard Scrushy in a $2.7 billion fraud, claiming he pulled off the huge crime with the stroke of a pen by signing financial statements he knew were false.

Projecting HealthSouth budgets on a screen and playing an audio tape of Scrushy speaking to his one-time managers, U.S. Attorney Alice Martin said the testimony of dozens of witnesses proved Scrushy was behind the massive scheme.

Evidence showed Scrushy was one of a handful of people who saw reports that the rehabilitation and medical services chain was awash in red ink in 1996, Martin said in closing arguments, and he ordered underlings to solve the problem by creating bogus numbers.

“He led this conspiracy just like he led that corporation,” said Martin.

Martin said Scrushy — seated just a few feet away at the defense table — was “the quintessential micromanager.”

“He had his finger on the pulse of HealthSouth,” she said.

Scrushy made some $275 million from the fraud simply by signing financial reports containing billions of dollars in false numbers, she said.

“All it took was a signature on 10Ks and 10Qs that he knew contained false financial information,” Martin said.

Defense closing arguments will come later; U.S. District Judge Karon Bowdre gave each side three hours to talk to jurors Wednesday.

While prosecutors claim Scrushy directed the fraud during 1996-2002, the defense blames the scheme on Scrushy subordinates including 15 former HealthSouth executives who pleaded guilty, including five former finance chiefs who implicated Scrushy in the conspiracy.

More than 120 spectators jammed the courtroom for closing arguments, and another 200 filled a second room where the session was shown on closed-circuit TV.

The judge said deliberations will begin Thursday.

Scrushy is the first CEO charged under the Sarbanes-Oxley law, passed after a wave of corporate scandals. He also is accused of conspiracy, false reporting to the Securities and Exchange Commission, multiple fraud counts and money laundering.

Scrushy, 52, faces millions of dollars in fines and a maximum sentence that amounts to life if convicted of all counts. The exact range of his possible penalty is impossible to say, partly because of uncertainty over federal sentencing rules.