The federal probe into fiscal shenanigans at HealthSouth Corp. has expanded beyond the accounting department into the treasury department with the announcement late Tuesday that Vice President of Finance Jason Brown, 34, of Birmingham, Ala., has agreed to plead guilty to fraud charges and cooperate with the ongoing investigation.
Brown is the 12th executive of Birmingham-based HealthSouth to admit to wrongdoing in a multibillion-dollar accounting scandal that has plagued the nation's largest operator of rehabilitation and outpatient surgery centers.
"We will continue to widen the net of our investigation to reach all those individuals who participated in this fraud," U.S. Attorney Alice Martin says in a written statement issued by her Birmingham office.
According to Martin, Brown is charged with following orders to create false documents so HealthSouth would not have to report a $27 million sale of stock in another, unspecified publicly traded company in 2001. Instead, prosecutors say, HealthSouth booked the stock as an asset in its 2001 financial report and did not record the sale until 2002.
They also say Brown has admitted to participating in a conspiracy to hide a decline in HealthSouth's operating performance during the 2002 third quarter by allegedly doctoring revenue numbers for outpatient services.
HealthSouth spokesperson Andy Brimmer says Brown was terminated Tuesday and that the company continues to cooperate with federal investigators.
The company has been accused of 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. Prosecutors have said they suspect the scheme may go back as far as 1986.