The former chief financial officer for HealthSouth Corp. will pay at least $6.9 million for his role in the health care company's $2.7 billion accounting fraud.
Weston Smith, one of the handful of former HealthSouth chief financial officers who pleaded guilty and testified against their former boss, ex-chief executive Richard Scrushy, made the deal earlier this month. Smith also agreed to be barred from serving as an officer or director of a public company.
The Securities and Exchange Commission announced the settlement of the complaint, which it originally filed in March 2003, accusing Smith of making, or directing employees to make, false accounting entries to inflate reported operating results. In related criminal proceedings, Smith was sentenced to serve 27 months in prison,.
Earlier this month, a federal appeals court ordered the res-entencing of another former finance chief. The 11th Circuit Court of Appeals called the week-long prison term given to Mike Martin "shockingly short," before ordering another sentencing. Martin was initially sentenced to probation and house arrest, and received the seven-day sentence only after prosecutors won an appeal.
Smith, who actually was among the first to expose the company's accounting scheme and cooperate with authorities, had received by far the longest sentence of any executive at the company until former vice president Hannibal "Sonny" Crumpler, who was convicted in November on charges of conspiracy and making false statements to auditors, was sentenced to eight years last month.
Previously on WebCPA:
Feds Get Scrushy on Bribery Charges (July 3, 2006)
HealthSouth Exec Gets 8 Years (June 19, 2006)
HealthSouth Whistleblower Gets Jail Time (Sept. 26, 2005)
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