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Associated PressAn assistant controller gets jail time and four vice presidents get probation for their part in the scandal that cost shareholders $2.7-billion.
BIRMINGHAM, Ala. - A former HealthSouth executive was sentenced to five months in prison Wednesday and four co-workers got probation for their part in a $2.7-billion accounting scandal at the healthcare chain.
The five were the first to be sentenced in the fast-moving corporate corruption case in which 15 former executives agreed to plead guilty.
All five said they took part in the scheme to inflate earnings out of fear of losing their jobs, and all five got reduced sentences from U.S. District Judge Inge Johnson for their help in the investigation at HealthSouth, the nation's biggest chain of outpatient surgery, diagnostic imaging and rehabilitation centers.
Former assistant controller Emery Harris, facing a maximum penalty of 15 years in prison and $1.5-million in fines, was sentenced to five months behind bars and five months of home detention, ordered to forfeit $106,500 and fined $3,000.
Former corporate vice presidents Angela C. Ayers, Cathy C. Edwards and Rebecca Kay Morgan, and Virginia B. Valentine, a former assistant vice president, were sentenced to four years of probation, including six months of home detention, and fined $2,000. Morgan also was ordered to forfeit $235,000.
Each had faced up to five years in prison and fines of $250,000.
Prosecutors contend HealthSouth overstated earnings by $2.7-billion to match the forecasts of Wall Street analysts. Johnson ruled that actions by the five cost shareholders $66-million.
Fired chief executive Richard Scrushy, 51, is awaiting trial on charges he oversaw the scam. He contends subordinates kept him in the dark and are now trying to shift blame.
Scrushy's lawyers have said he will challenge the new federal law, known as the Sarbanes-Oxley Act, that makes chief executive officers and chief financial officers criminally liable for signing off on false financial reports.
In court, Edwards wept as she expressed her remorse.
"When I realized something was wrong, I understand I should have come forward. But in the situation I was in, I felt trapped. I was afraid of losing my job. I was afraid of my husband losing his job because he worked there," she said.
Based in Birmingham, HealthSouth has nearly 1,700 surgery centers and sites in all 50 states and abroad.