- The Washington Times - Tuesday, November 4, 2003

BIRMINGHAM, Ala. (AP) — Former HealthSouth Corp. head Richard Scrushy was indicted yesterday on 85 counts charging he was the mastermind of an enormous corporate scheme that allowed him to pocket more than a quarter-billion dollars.

Mr. Scrushy pleaded not guilty to the federal fraud charges,

The indictment, dated Oct. 29 and released yesterday at the federal courthouse, accuses Mr. Scrushy of a range of criminal violations, including false certification of corporate statements — a charge the FBI says makes Mr. Scrushy the nation’s first chief executive officer accused under a new federal law.

The charges carry a maximum penalty of 650 years in prison and $36 million in fines.

At a news conference in Washington to announce the charges, Assistant Attorney General Christopher Wray said that from 1996 through March 2003 HealthSouth consistently failed to meet its own predictions and the expectations of Wall Street’s security analysts.

“Instead of telling the public the truth, Scrushy and his accomplices lied,” Mr. Wray said.

The indictment asserts that Mr. Scrushy and his accomplices reported $2.7 billion in fictitious income.

Because Mr. Scrushy’s compensation was tied in part to HealthSouth’s performance, the scheme allowed him to pocket $267 million in salary, bonuses and stock options, Mr. Wray said.

To hide the fraud, Mr. Scrushy ordered HealthSouth’s employees to falsify financial documents, Mr. Wray said. The company executive enforced discipline among the members of the conspiracy “through threats, intimidation and payoffs,” Mr. Wray said, and also eavesdropped on employees’ telephone calls and e-mail.

The indictment seeks forfeiture of more than $278 million in Mr. Scrushy’s possessions, including a 92-foot yacht; luxury cars such as a Rolls-Royce Corniche and a Lamborghini; a nearly 22-carat diamond and platinum ring; property in Alabama and Florida; aircraft and other boats; and paintings by Picasso, Chagall, Renoir and Miro.

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