A former HealthSouth chief financial officer testified that fired chief executive Richard Scrushy, who is on trial for charges that include conspiracy, fraud, money laundering, obstruction of justice, perjury and false corporate reporting, was a deeply involved manager "responsible for everything" -- including orders to prepare phantom revenues and false financial statements, according to published reports.

In testimony Tuesday, former CFO Bill Owens, who has pleaded guilty to his role in the scheme to inflate revenue by $2.7 billion at the health care concern, described Scrushy as a micromanager who oversaw everything from major acquisitions to who parked where at headquarters, the Associated Press reported.

Owens is one of five former HealthSouth CFOs who pleaded guilty in the fraud. In all, 15 former HealthSouth employees reached plea deals and are cooperating with prosecutors.

Owens said that after Scrushy "directed"' him to overstate earnings, it was his job to figure out how to alter financial statements and accounts, AP reported. He also listed numerous other executives that he said had assisted the scheme.

Owens said that Scrushy told him and another former CFO, Aaron Beam, to "fix the numbers" once a shortfall occurred, according to the report. After adding millions in false revenues to the books, Owens said that he took the new, bogus numbers to Scrushy and explained what had been done.

"His primary question to me was could I get this past the auditors,'' Owens reportedly said. He said that Scrushy later pressured him and Beam to continue the fraud as HealthSouth's true financial performance sagged.

According to the AP report, Scrushy has depicted Owens as the leader of the fraud, which lasted seven years and led to the overstatement of HealthSouth earnings by $2.7 billion. The defense contends that Owens and other subordinates in HealthSouth's corporate accounting offices lied to Scrushy for years, leaving him unaware of the conspiracy.

If convicted, Scrushy could receive what amounts to a life sentence, according to the report. Prosecutors also are seeking $278 million in assets.

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access