Former HealthSouth Corp. CFO and Treasurer Malcolm McVay has agreed to plead guilty to charges of conspiracy to commit securities and wire fraud in the ongoing investigation of financial irregularities of the Birmingham, Ala.-based operator of rehabilitation clinics and ambulatory surgery centers, federal officials say.
McVay, 41, of Birmingham, is the fourth former CFO and 10th executive overall to admit to wrongdoing at HealthSouth, which has been charged with overstating profits by $2.5 billion between 1997 and 2002 and with inflating the value of company assets by $800 million in public financial reports.
Federal officials have told Modern Physician that they suspect the wrongdoing dates to 1986.
According to a three-count information filed Monday in U.S. district court in Birmingham, McVay was among a group of senior HealthSouth officers that conspired to falsify financial reports and report the bogus results in official filings with the Securities and Exchange Commission.
He also is charged with certifying a false financial statement under the Sarbanes-Oxley corporate responsibility law adopted last year.
McVay served as CFO from August 2002 until January 2003, but remained treasurer until he was terminated last week, according to HealthSouth spokesperson Andy Brimmer. Brimmer would not say why McVay was terminated, nor would he comment on the criminal charges.
In a statement released Monday afternoon, Alice Martin, the U.S. attorney in Birmingham, says McVay has agreed to plead guilty to all three counts and that he will cooperate in the ongoing investigation.
"HealthSouth has had five chief financial officers since its incorporation. (Monday's) filing brings to four the number of former CFOs that have been charged with conspiracy to commit wire and securities fraud and have pled guilty or entered agreements with the United States to plead guilty," Martin says. "Their knowledge of how the fraud was perpetrated and perpetuated make this a very focused search for the truth about this vast accounting fraud."
The U.S. attorney's office says additional charges "are expected."