Scrushy Acquitted in HealthSouth Fraud

After more than 20 days of deliberation and a five-month trial, a federal jury yesterday found former HealthSouth chief executive Richard Scrushy not guilty on all counts in the multi-billion-dollar fraud at the medical services company. Scrushy was accused of directing the fraud, which vastly overstated HealthSouth's earnings. He faced 36 charges, including money laundering, fraud and making false statements to the Securities and Exchange Commission, as well as the first-ever charges of violating the Sarbanes-Oxley Act. While leaving court after the verdict, according to a report from Fox News, Scrushy said, "I'm going to go to a church and pray. I'm going to be with my family. Thank God for this." The verdict was considered a stunning defeat for the prosecution and the federal government, which had five former HealthSouth financial officers testify against Scrushy. Meanwhile, only a day before, HealthSouth, which teetered on the edge of bankruptcy after the revelation of the fraud, restated its financials for the period, lowering its earnings for 2000 and 2001 by approximately $1.5 billion. Following an intensive forensic accounting investigation that cost over $250 million, HealthSouth reported a loss of $364 million for 2000, and a loss of $191 million for 2001; it has previously reported profits of over $200 million for both years. The company also reported losses of over $400 million for both 2002 and 2003, and said that it hopes to have statements for 2004 by the end of this year.