- The Washington Times - Wednesday, December 10, 2003

BIRMINGHAM, Ala. (AP) — A tearful former HealthSouth executive was ordered to prison for five months yesterday and four co-workers received probation in the first sentencings linked to the fraud that rocked the rehabilitation chain.

All five contended they took part in the scheme to inflate earnings out of fear of losing their jobs, and all five received reduced sentences from U.S. District Judge Inge Johnson for their help in the investigation.

Former assistant controller Emery Harris, facing a maximum penalty of 15 years in prison and $1.5 million in fines, was sentenced to five months in prison and another five months of home detention. He also was ordered to forfeit $106,500 and pay a $3,000 fine.

Wiping away tears, Mr. Harris told Judge Johnson he was relieved when an FBI agent and a prosecutor showed up in his driveway in March after a raid at the company’s Birmingham headquarters.

“I knew I could finally get out of this mess,” said Mr. Harris, 32.

Judge Johnson said she had a hard time coming up with the right sentence for Mr. Harris, who was ordered to report to prison Feb. 2. “You’re just a kid. I have a son your age,” she said.

Former corporate Vice Presidents Angela C. Ayers, Cathy C. Edwards and Rebecca Kay Morgan, and Virginia B. Valentine, a former assistant vice president, were sentenced to four years’ probation, including six months of home detention, and fined $2,000. Miss Morgan also was ordered to forfeit $235,000.

Each had faced maximum sentences of five years in prison and fines of $250,000. But Judge Johnson ruled previously that the women were little more than data-entry clerks altering accounts, despite their titles.

The government sought light sentences but objected to the judge’s refusal to order restitution for victims of the scam. U.S. Attorney Alice Martin said the five weren’t typical criminals.

“I do believe that regardless of their actions they believed in HealthSouth and they believed in management,” Miss Martin said. “Unfortunately, there were people in which they misplaced their trust.”

Miss Morgan, 56, accepted responsibility for helping in the fraud — actions she said were prompted by intimidation, fear and a misplaced trust in her superiors.

“I believed what we were doing was temporary,” she said.

The five were the first people sentenced in the fast-moving corporate corruption case in which 15 former executives agreed to plead guilty. The government contends earnings were inflated by $2.7 billion in a systematic fraud.


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