CEO of HealthSouth, Richard Scrushy Acquitted.|
Corp. ("HealthSouth") founder Richard Scrushy walked away a free man
after a jury panel acquitted Scrushy of all 36 counts of fraud, false corporate
reporting and making false statements to regulators. Scrushy still faces civil
charges by the Securities and Exchange Commission.
With 5 former CFOs
of HealthSouth pleading guilty and testifying that Scrushy led the fraudulent
scheme to inflate earnings by $2.7 billion, this case should have been an open
and shut case. Witnesses testified the conspiracy began in 1996, when they said
Scrushy ordered HealthSouth to switch from "aggressive accounting" to outright
fraudulent figures. Yet, amazingly, 8 jurors who met with reporters after the
verdict said key witnesses were not believable and the prosecution failed to present
evidence linking the fraud to Scrushy.
Since his acquittal, Scrushy has
been publicly stating that he would like to return to HealthSouth as Chairman
and CEO. Although,
I was surprised at the outcome, I do respect the jury's decision. Some guys just
don't know when to quit while they are ahead. What are the odds that 5 different
CFOs all decided to inflate earnings without his knowledge? Even if one were to
believe he was truly innocent, Scrushy just proved that he was completely incompetent
by not knowing what was going on with a company he founded.
Scrushy's defense team reminding the jury in closing arguments of the struggles
of the civil rights era in Alabama and how juries helped the movement succeed,
many questioned the "race" strategy considering that Scrushy is Caucasian
while the jury was composed of 7 "blacks" and 5 "whites".
I personally do not believe race was an issue. However, Scrushy was known
to contribute heavily to his local hometown in Alabama including several churches
attended by African-Americans. If
anything, the trial was about economics.
Scrushy was a hometown hero in
these communities. There was no way Scrushy was going to get convicted in the
state of Alabama. If this trial were to be held in New York, Scrushy would have
been facing 25 years in prison.
the CEOs found guilty of corporate fraud, (Worldcom's Bernie Ebbers, Tyco's Dennis
Kozlowski and Adelphia's John Rigas), all were tried and convicted in New York.
Something government prosecutors should take note of when the trial begins against
Kenneth Lay, the former Chairman and CEO of the Houston, Texas based Enron Corporation.
2005 Nelson Chin.
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