AP photo by Dave Martin|
Former HealthSouth CEO Richard Scrushy departs the federal courthouse in Montgomery with his wife, Leslie during a lunch break in the sentencing phase of his federal corruptions trial on Thursday. Scrushy was sentenced to nearly 7 years in federal prison on Thursday in a bribery and corruption case that the judge said damaged public trust in state government.
Scrushy's long fall from success to prison
2 years after fraud acquittal,
Scrushy faces prison
By Jay Reeves
Associated Press Writer
BIRMINGHAM — Richard Scrushy, the rehabilitation king turned TV preacher, is trading his 92-foot yacht for a jailhouse bunk.
The former HealthSouth Corp. chief executive — cleared in a landmark corporate fraud trial in Birmingham but convicted on unrelated federal bribery charges in Montgomery — was sentenced Thursday night to nearly seven years in prison.
Scrushy's third wife, Leslie, a former HealthSouth secretary, cried as U.S. marshals took him into custody in the courtroom. The millionaire with nine children was not allowed to speak to his family when led away.
2 years ago
The term was imposed two years after Scrushy beat federal charges in Birmingham that he presided over a $2.6 billion accounting fraud at HealthSouth, a sweeping acquittal in sharp contrast to high-profile corporate convictions won against Enron Corp., WorldCom Inc. and Tyco International Ltd. executives.
After losing the case
involving false earnings reports at the rehabilitation company Scrushy founded, federal
prosecutors targeted his dealings in 1999 with then-Gov. Don Siegelman, who also was convicted and sentenced to seven years and four months in prison.
So Scrushy — the brash guy from small-town Alabama who most recently has cast himself as a minister trying to save lost souls — is being sent far away from his big boat, the Chez Soiree, and his estate in metro Birmingham, where HealthSouth is based.
A judge ordered him to serve six years and 10 months in federal prison, where there is no chance of parole. He also was ordered to pay $417,000 in fines and restitution, serve three years on probation, and perform 500 hours of service work once he is freed.
It's a long fall for a man who once dwelled in imperial heights, hobnobbing with celebrities and politicians and seeing his name on buildings and signs all over town.
In asking U.S. District Judge Mark Fuller to spare him from prison, the 54-year-old Scrushy portrayed himself as a humble man of God who did nothing wrong.
HealthSouth's first CEO, Aaron Beam, served three months in prison for his role in the fraud and is now a paid public speaker discussing his time at HealthSouth. Scrushy is the central villain in Beam's tale, a greedy smooth-talker with no feelings for others, no moral compass.
"He would say anything to accomplish what he's trying to accomplish," Beam, who pleaded guilty to bank fraud, said in a speech posted online.
Scrushy had simple beginnings in Selma, where he cut grass and worked at a service station as a child. He studied respiratory therapy before coming up with the idea in the early 1980s for a company that focused on rehabilitation in outpatient clinics rather than hospitals.
Pooling money from Beam and three other investors, Scrushy launched what eventually became HealthSouth, which at its height billed itself as the nation's largest rehabilitation company with nearly 2,000 locations worldwide. Reported revenues exceeded $3.5 billion.
But something sinister was going on inside HealthSouth's luxurious headquarters, where Scrushy named a huge conference hall for himself.
Evidence during Scrushy's first trial showed that a group of executives who called themselves "the family" began fudging earnings in a bid to bolster sagging stock prices. In all, the company overstated earnings by some $2.6 billion from 1996 through 2002.
Fifteen former executives pleaded guilty, including Beam and four more finance chiefs who served under Scrushy. Former HealthSouth executives testified that Scrushy directed the fraud, and prosecutors tried to strip him of $278 million in cash, cars, mansions, boats and art.
But jurors sided with defense lawyers who claimed underlings hatched the plot and hid it from Scrushy. The first CEO tried under the Sarbanes-Oxley corporate responsibility law was found not guilty in a stunning defeat for the government.
Scrushy — with supporters who often prayed with him in court — walked out of the courthouse a free man after being acquitted on 36 counts of fraud, false corporate reporting and making false statements to regulators.
"Thank God for this," he said after the verdict in Birmingham.
The scene was completely different last year. Scrushy left court in Montgomery convicted on charges of arranging $500,000 in payments in exchange for a seat on a state board that regulates hospitals in Alabama.
"It's a sad day in this country," Scrushy said at the time, continuing to maintain his innocence.
Now, Scrushy faces years in custody without his riches, without his nine children and without his wife, who co-pastors a church they operate in a television studio. It's uncertain what will become of the local TV ministry Scrushy began as his legal troubles mounted.
Scrushy's name already was stripped from HealthSouth, where new CEO Jay Grinney has moved to distance the company from the past and refused to use Scrushy's old office.
The sprawling campus where Scrushy once presided is being sold for $60 million — money needed to help pay long-term debt stemming in part from the fraud.
Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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