Richard Scrushy lost a key pretrial round yesterday when a judge refused to throw out secret recordings that prosecutors contend prove the...
BIRMINGHAM, Ala. — Richard Scrushy lost a key pretrial round yesterday when a judge refused to throw out secret recordings that prosecutors contend prove the fired HealthSouth CEO was part of a massive fraud.
In a separate order issued five days before opening statements in Scrushy’s trial, U.S. District Judge Karon Bowdre also ruled the FBI didn’t violate Scrushy’s privacy by searching his HealthSouth office suite without a warrant.
While the back-to-back decisions were a setback for the defense, Bowdre could still bar jurors from hearing the evidence once the trial opens on charges that Scrushy was behind a more than $2.6 billion fraud to overstate earnings by the rehabilitation chain.
A defense spokesman had no immediate comment on the judge’s rulings.
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Final jury selection is set for Monday, with opening statements Tuesday.
Scrushy, 52, is charged with fraud, conspiracy, perjury, obstruction of justice, money laundering and violating the new Sarbanes-Oxley law on corporate reporting.
Fifteen HealthSouth underlings have pleaded guilty and could testify against Scrushy, who blames them for the fraud.
Scrushy asked Bowdre to bar jurors from hearing digital recordings made secretly in 2003 by former HealthSouth chief financial officer William Owens at the direction of FBI agents. The recordings of conversations between Owens and Scrushy are full of flaws that make them inadmissible, the defense claimed.
But the judge agreed with prosecutors who said the recordings shouldn’t be thrown out before the trial. The government still must prove that agents handled the recordings properly — one key to whether jurors will get to hear them.
Scrushy also challenged a search of his corporate office conducted March 20, 2003, as being illegal. Agents lacked a warrant and had no right to enter the suite because it was his private office, Scrushy claimed.
But Bowdre again sided with prosecutors, who said the search was legal because HealthSouth lawyers granted permission. She rejected Scrushy’s claims that he wasn’t subject to HealthSouth policies that held any employee’s work area or computer was company property and subject to search.
The search — which netted computers and other items, according to the defense — did not violate Scrushy’s right to privacy, Bowdre said.
The search without a warrant of Scrushy’s suite came two days after authorities raided HealthSouth’s suburban headquarters with warrants for other areas.
The judge did not immediately rule on a request by Scrushy to make HealthSouth surrender documents including credit-card records the defense said could help prove his innocence by showing he wasn’t in town for meetings that prosecutors may claim he attended.
Spending records of people who pleaded guilty will reveal “some very comfortable business ‘perks’ ” that provided a motive for them to conceal what they were doing, the defense claimed. In one case, Scrushy’s lawyers said they wanted records on a $1 million check to Rebecca Kay Morgan, a former executive who pleaded guilty and is cooperating with authorities and could testify in Scrushy’s trial.
There was no elaboration about the $1 million check. Morgan’s attorney did not immediately return calls seeking comment.