The judge in the fraud trial of former HealthSouth CEO Richard Scrushy said yesterday she had dismissed a juror because of "external events"...
BIRMINGHAM, Ala. — The judge in the fraud trial of former HealthSouth CEO Richard Scrushy said yesterday she had dismissed a juror because of “external events” that could raise questions about impartiality.
The remaining jurors, meanwhile, heard from a former HealthSouth executive who winked at Scrushy while testifying about his former boss’ marketing prowess. But the witness stammered when confronted with an FBI statement in which he had described Scrushy in unflattering, potentially damaging terms.
U.S. District Judge Karon Bowdre, who previously excused a juror because of illness, did not say what had happened that prompted the latest juror’s removal.
“I want to be absolutely clear to everyone: This juror has not done anything wrong,” she said without elaborating.
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Bowdre did not identify the juror who was removed, but a woman was missing as evidence resumed with 16 jurors — 12 regular members and four alternates who will be identified once evidence is finished.
Called as a defense witness, former HealthSouth Vice President Jim Whitten glowingly described Scrushy as the brains behind an aggressive marketing machine.
“We wanted to create a branding for HealthSouth that was as well known as Coca-Cola,” Whitten said. He winked at Scrushy several times from the stand, including once before testifying that Scrushy never demeaned employees — the opposite of claims by prosecution witnesses.
Whitten said Scrushy had the idea for TV programs and a magazine produced by HealthSouth, plus the company’s defunct “Go For It!” road show, which featured appearances by pro athletes including Dan Marino, Hershel Walker, Mia Hamm, Tom Glavine and Bo Jackson.
But in a possible setback for the defense, Whitten hesitantly admitted telling FBI agents that “nothing” went on at HealthSouth that Scrushy didn’t know about — potentially damaging defense claims that Scrushy wasn’t heavily involved in financial matters.
“I felt like Richard was the boss. He was the CEO,” Whitten said.
Under cross-examination by Prosecutor Richard Smith, Whitten also confirmed telling the FBI that Scrushy made incorrect statements about HealthSouth stock during a national cable TV appearance and at least once made fun of an employee during weekly meetings.
Whitten testified that “Richard had a lot of power with the board of directors,” but said he didn’t recall telling the FBI that Scrushy “led them by the nose,” as indicated on an FBI synopsis of his statement.
“I don’t recall the exact words. This was two years ago,” Whitten said.
Other defense testimony was less mixed.
Kay Morgan, one of 15 former HealthSouth executives who pleaded guilty in the accounting scheme, told jurors that former finance chief Bill Owens ran meetings of a group called “the family,” which evidence showed carried out the fraud by making thousands of bogus entries.
While prosecutors claim Scrushy directed the fraud to make millions in bonuses, stock sales and salary, the defense contends Owens — who pleaded guilty and testified against Scrushy — led “the family” to commit the crime without Scrushy’s knowledge.
Neither the defense nor prosecutors asked Morgan whether Scrushy was involved in the conspiracy. The defense did, however, use testimony from Morgan to cast doubts on the claims of Weston Smith, another former finance chief who testified against Scrushy.
Smith had previously told jurors that his wife, Susan Smith, who also used to work at HealthSouth, had nothing to do with the fraud. But Morgan testified that Susan Smith attended meetings where “family” members figured out how to overstate HealthSouth earnings.
And the defense used testimony from Morgan and FBI agent Tom Mayhall in an attempt to raise questions about whether Owens tried to hide his discussions with Morgan about a more than $1 million executive loan he obtained from HealthSouth.