Prosecutors rested their case against fired HealthSouth Chief Executive Richard Scrushy yesterday after 12 weeks of trial that included...
BIRMINGHAM, Ala. — Prosecutors rested their case against fired HealthSouth Chief Executive Richard Scrushy yesterday after 12 weeks of trial that included testimony by five former finance chiefs linking Scrushy to a $2.7 billion earnings overstatement.
The defense — which argues that the testimony by the former chief financial officers and about 24 other government witnesses proved no such link — asked U.S. District Judge Karon Bowdre to dismiss all charges.
Bowdre scheduled a hearing for tomorrow on whether to throw out the case. Assuming she doesn’t, the defense will present its first witness later in the day.
Scrushy is the first chief executive officer charged with violating the Sarbanes-Oxley corporate-reporting law, enacted in 2002. He also is accused of conspiracy, fraud, money laundering and obstruction of justice.
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Scrushy went on trial Jan. 25, but the case has been delayed repeatedly by fights over evidence, juror illness and days off for spring break.
Outside court, U.S. Attorney Alice Martin expressed confidence that the government had proved Scrushy’s role in the fraud, saying it’s been “an easy story [to tell], but it’s been a long story.”
Defense lawyer Lewis Gillis called the government’s case “flimsy.” No decision has been made on whether Scrushy will testify, he said.
As the government rested, Bowdre granted a prosecution motion asking her to throw out two minor charges.
One accused Scrushy of mail fraud for allegedly causing a proxy card, an annual report and other documents to be mailed to AmSouth Bank in Birmingham. The materials actually went to an address in Georgia, the motion stated.
The other alleged that Scrushy laundered profits from the fraud by purchasing four antique Persian-style rugs. Prosecutors said they couldn’t prove the charge because the company that sold the items destroyed documents related to the deal.
Scrushy still faces 52 other counts.
The judge previously threw out a single money-laundering count and three perjury charges against Scrushy at the request of the defense.
In testimony, Scrushy lawyer Art Leach continued tough questioning of government expert William Bavis about the remaining money-laundering charges, which accuse Scrushy of spending millions on assets such as vintage cars and boats, even though he knew he made the money illegally.
Money laundering typically is thought of as trying to hide proceeds of a crime, not simply spending money — a point Leach tried to make by having Bavis read from Scrushy’s indictment.
“It doesn’t say money spending, does it?” asked Leach.
“No sir, it does not,” said Bavis, one of the government’s final witnesses.
Prosecutors claim Scrushy directed a seven-year scheme to overstate HealthSouth earnings to make it appear the rehabilitation and medical-services chain was meeting Wall Street forecasts. Scrushy made millions from stock sales, bonuses and salary because of the fraud, they say.
The defense blames the fraud on 15 aides who pleaded guilty in the scheme, including the five former finance chiefs who testified against Scrushy.
If convicted on all charges, Scrushy could be sentenced to life imprisonment and ordered to give up assets worth some $278 million.