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High court wants Scrushy conviction reviewed

The U.S. Supreme Court on Tuesday ordered a review of the fraud convictions of former Alabama Gov. Don Siegelman and ex-HealthSouth CEO Richard Scrushy.
Don Siegelman, Richard Scrushy
Former Alabama Gov. Don Siegelman, left, and former HealthSouth CEO Richard Scrushy, right, seen in separate photos. The U.S. Supreme Court has ordered a new review of the convictions in the government corruption case against both individuals.Dave Martin / AP
/ Source: The Associated Press

The U.S. Supreme Court on Tuesday ordered a new review of the convictions in the government corruption case against former Alabama Gov. Don Siegelman and ex-HealthSouth CEO Richard Scrushy.

The court's brief order vacated the decision of the 11th U.S. Circuit Court of Appeals, which had upheld their convictions, and ordered the lower court to review the appeals in light of a ruling that went against what is known as the "honest services" fraud law.

Last week the justices found fault with the anti-fraud law in the case of former Enron chief Jeffrey Skilling, and defense attorneys for Siegelman and Scrushy had hoped that ruling would give them a new chance to challenge their convictions.

Siegelman attorney Sam Heldman, who handled the former governor's case before the Supreme Court, called the court's decision Tuesday "a massive victory."

"I think this is a step toward a final and complete legal victory," Heldman said.

Justice Department spokeswoman Alisa Finelli said the agency had no comment on the Supreme Court decision.

The 11th Circuit last year struck down two charges that Siegelman was convicted of but upheld the other five — two for fraud and the others for bribery, conspiracy and obstruction of justice. Siegelman said Tuesday that all counts were mingled at trial and all five should be overturned in the 11th Circuit review.

The court upheld all six counts against Scrushy, with four appearing to involve the honest services fraud law directly. The others were for bribery and conspiracy.

Defense attorneys contend the honest services law is vague and used by prosecutors when they lack hard evidence, but its defenders say it is an important tool in fighting corruption. The Supreme Court said prosecutors may continue to seek honest services fraud convictions in cases where they put forward evidence that defendants accepted bribes or kickbacks.

"We were convicted under this vague notion that somehow we had violated the honest services of the state of Alabama. There was no basis under existing law for me to be found guilty of bribery," Siegelman told The Associated Press.

Siegelman, 64, was sentenced to more than seven years in prison and has been free on appeal bond since June 2008. Scrushy, 57, was sentenced to nearly seven years in prison and was denied release on appeal. He has been in prison since June 2007. His attorney, Jim Jenkins of Atlanta, said Tuesday he did not know if a new motion seeking his release would be filed.

"We're just enjoying the good news right now," Jenkins said.

Prosecutors argued that Siegelman appointed Scrushy to an influential hospital regulatory board in exchange for Scrushy arranging $500,000 in contributions to the governor's campaign for a state lottery in 1999.

"If they can put me in jail for reappointing Richard Scrushy to a board he had resigned from, they can put (Presidents Barack) Obama and George Bush in jail today," Siegelman said.

Scrushy had served on the board under other governors. Scrushy and Siegelman also contend there was no deal between them and that prosecutors failed to prove there was any explicit "quid pro quo" agreement, which is required in federal bribery cases. The defense also argued that U.S. District Judge Mark Fuller of Montgomery did not adequately instruct jurors that such an agreement was necessary for a conviction.

The federal appeals court, however, rejected both arguments. The judges also rejected defense claims of juror misconduct involving alleged e-mails during deliberations.

Siegelman, long a prominent Democrat at the Alabama Statehouse, lost a bid for re-election when the federal investigation surfaced during his 2002 campaign. He lost again in 2006 when his bid for the Democratic nomination coincided with his federal criminal trial.

He has claimed his prosecution was pushed by Republicans, including former White House political adviser Karl Rove. Career federal prosecutors and Rove, however, have repeatedly denied the claim.

Former New York Attorney General Bob Abrams, who was one of 91 former state attorneys general filing a brief on Siegelman's behalf, said the Supreme Court severely limited the reach of the honest services statute.

"A careful review of the facts in the Siegelman case will dictate a dismissal," Abrams said.

Scrushy, who built HealthSouth into one of the nation's largest rehabilitation chains, was ousted as CEO of the Birmingham-based company after a long-running $2.7 billion accounting fraud at the company was disclosed. While 15 former HealthSouth executives pleaded guilty and one was convicted, Scrushy was acquitted on criminal fraud charges by a federal court jury in Birmingham in 2005.

He was convicted the next year in Montgomery on separate government corruption charges.

A civil case also was brought against him by HealthSouth shareholders. A judge issued a $2.9 billion judgment against Scrushy, who is appealing but has had much of his property, including a 10-acre estate, lake mansion and vintage cars, seized and auctioned as part of the payment.