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Scrushy talks of old job but more cases loom

The fired HealthSouth chief faces at least 61 federal lawsuits related to fraud at the company.

BIRMINGHAM, Ala. - Richard Scrushy's days in court are far from over despite his stunning acquittal on charges of leading a $2.7-billion earnings overstatement at HealthSouth Corp.

Aside from a lawsuit filed by the Securities and Exchange Commission, the fired HealthSouth chief executive officer and aspiring preacher is named in at least 61 other federal lawsuits filed in Birmingham over the massive fraud.

Scrushy, meanwhile, has made noises about trying to return to his old job at HealthSouth or at least trying to force the rehabilitation chain to pay his multimillion-dollar legal bills - moves that could mean more lawsuits.

"I expect he will be tied up in the civil stuff for a while," Scrushy spokesman Charlie Russell said Wednesday. "He believes and his civil lawyer believes he is still under contract as CEO and chairman. He was illegally removed from his job."

The company, which Scrushy founded in 1984, said he was removed properly in 2003 and isn't welcome back.

Paul Lapides, an expert on white-collar crime and director of the Corporate Governance Center at Kennesaw State University near Atlanta, said he can't imagine any company wanting Scrushy on the payroll. At the least, Scrushy failed to detect a huge fraud going on in the building where he worked, and Lapides said he could be a liability for a corporation.

The scandal devastated HealthSouth, which teetered on the edge of bankruptcy for months despite once having more than 50,000 employees at 1,900 locations in all 50 states. Its stock traded around $30 a share before it was delisted from the New York Stock Exchange, and is now worth about $6.

Layoffs and closings at the company have reduced employment to about 41,000 people at 1,380 sites.

Jurors on Tuesday rejected prosecutors' claims that Scrushy led a seven-year fraud at HealthSouth, acquitting him on 36 counts of violating the Sarbanes-Oxley act, false reporting, conspiracy, fraud and money laundering.

Government lawyers argued that Scrushy made millions in salary and bonuses from the scheme. But jurors sided with the defense, which claimed aides committed the fraud on their own and hid it from Scrushy for years.

Afterward, jurors told reporters they believed a fraud occurred, but that there wasn't any credible evidence linking Scrushy to the crime.

Jurors said they didn't believe the testimony of five former HealthSouth finance chiefs who testified that Scrushy was in on the fraud. They also discounted FBI recordings that prosecutors said captured him talking about the fraud with one of the CFOs, Bill Owens.

"There were a lot of things in those tapes that could go either way," said Juror 546, identified only by court-assigned number.

Seated in the courtroom, all eight jurors refused to answer questions about deliberations - which at one point found jurors deadlocked on all 36 counts.

From where jurors sat in the end, though, there was plenty of reasonable doubt to shoot down government claims that Scrushy directed a systematic earnings overstatement at the rehabilitation chain he founded and ran for 19 years.

"The smoking gun wasn't pointing toward Mr. Scrushy," said Juror 538.

"We would have been very pleased to have someone who was a credible witness be on the stand," Juror 300 said.

Juror 152 said he "would have liked to have maybe heard more tapes." The recordings prosecutors played - including one where Scrushy asked if an aide was wearing a hidden microphone - were "ambiguous," he said.

While prosecutors used Owens to lay out details of years of fraud, the defense cast him, not Scrushy, as its captain.

Juror 152 said Owens' testimony was "a little strange."

"I definitely did not find him credible," he said. Juror 152 didn't accept prosecutors' claim that Scrushy - who was already worth millions when the fraud began - directed the scheme to get even wealthier.

While a longtime HealthSouth director testified that Scrushy was a financial genius, Juror 300 agreed with the defense that he was more of a salesman who was deceived by underlings. Juror 546 couldn't accept the idea of Scrushy knowingly doing something that could have hurt HealthSouth.

The verdict was tough on former HealthSouth executives like Emery Harris, one of 15 people who pleaded guilty in the fraud and the only person who has served time for the scheme so far.

Harris, an assistant controller who served five months in prison, is still trying to put the years at HealthSouth behind him, according to his lawyer, Steve Salter.

Erskine Mathis, a lawyer for Virginia Valentine, a former assistant vice president who pleaded guilty and got probation, said the Scrushy case was very different from the one against his client and the others who pleaded guilty.

Still, Mathis said, he was surprised by the full acquittal.

U.S. Attorney Alice Martin said she intends to appeal a judge's decision to throw out perjury and obstruction of justice charges before jurors got the case, meaning there could be another criminal trial if an appeals court overrules U.S. District Judge Karon Bowdre.

Meanwhile, his spokesman said, Scrushy is working with Marin Inc., his private development company, and continuing with his Christian-themed TV program, a project he began with his wife after legal troubles started brewing.

Scrushy, who began speaking in churches once the HealthSouth fraud unraveled, plans to continue the talks, according to Russell. "He's a busy guy," he said.

[Last modified June 30, 2005, 11:43:46]