Reversing a previous decision, a federal judge in Birmingham, Ala., yesterday delayed the sentencing of five former HealthSouth Corp. executives who have pleaded guilty to fraud in the alleged $2.7 billion accounting scandal at the company until the size of shareholders' loss can be estimated. U.S. District Court Judge Inge Johnson said she needed additional time to determine the executives' punishment based on an updated dollar figure of $2.8 billion in shareholder loss presented in court Thursday, about $1 billion higher than previously computed. Earlier this week, Johnson rejected requests from the executives' attorneys and U.S. Justice Department attorneys to postpone sentencing until after the trial of former CEO Richard Scrushy, who was indicted on 85 counts of fraud last week.
In court yesterday, Emery Harris, a former assistant who faces a maximum penalty of 15 years imprisonment and $1.5 million in fines, testified that he kept silent out of fear after realizing HealthSouth was buying guns, grenades and spy equipment, according to the Associated Press. The fear intensified as he and other executives saw invoices coming in for weapons, small cameras hidden in plants, car-tracking devices and disguises, the AP said. Responding on his personal Web site, richardmscrushy.com, Scrushy said, "The government's claims that weapons of mass destruction were bought by HealthSouth are not only demonstrably false; they are downright comical." Government prosecutors are attempting to "taint public opinion" by portraying Scrushy -- "a family man, a religious man, and a philanthropic man -- as no more than a common street thug," he said. Scrushy called the "personal attacks and attempts to poison the jury pool" the "stuff of tawdry fiction" and said, "They must cease." -- by Julie Piotrowski