The Justice Department has added perjury and obstruction of justice charges to the criminal case against Richard M. Scrushy, the former chief executive and chairman of scandal-plagued HealthSouth Corp.
The DOJ said yesterday that a federal grand jury in Birmingham returned a 58-count superseding indictment that added three counts of perjury and one count of obstruction of justice to the charges previously filed against Scrushy. It also consolidated the conspiracy and fraud charges against him and trimmed the counts from 85 to 58.
Scrushy previously pled not guilty to charges of conspiracy; mail, wire and securities fraud; false statements; false certifications; and money laundering in connection with what the Justice Department says was a wide-ranging scheme to defraud investors, the public and the government about HealthSouth's financial condition. Scrushy was scheduled for arraignment yesterday afternoon before U.S. Magistrate Judge T. Michael Putnam.
The DOJ said that the new charges arose out of a Securities and Exchange Commission investigation into HealthSouth's finances. The DOJ alleges that during the commission's investigation, Scrushy gave false testimony to an SEC officer, stating that the company's 10-K filed for 2001 was accurate, that he hadn't instructed anyone to change numbers and that he never signed a document filed with the SEC that he believed or understood to not be accurate.
The obstruction of justice charge alleges that in March of 2003, after he testified before the SEC, Scrushy met with other HealthSouth officers and co-conspirators and told them about the SEC's investigation, as well as about some of the examiners' questions and his responses. The indictment alleges that Scrushy "attempted to corruptly persuade one of the co-conspirators in order to influence his testimony in an official SEC proceeding."
The DOJ alleges that Scrushy and others devised a scheme to inflate HealthSouth's earnings by cooking the books and by covering up the accounting fraud with false financial filings and statements, adding roughly $2.6 billion in fictitious income to HealthSouth's books and records.
If convicted of all the charges in the superseding indictment, Scrushy faces a maximum sentence of 450 years in prison and more than $30 million in fines. The superseding indictment, like the previous indictment, also seeks the forfeiture of more than $278 million in property.
So far, 19 people have been charged in connection with the HealthSouth investigation, and 17 people have pled guilty, including former chief financial officers Aaron Beam, Michael Martin, William Owens, Weston Smith and Malcolm McVay, and vice president of finance Emery Harris.
