Government lawyers set a "perjury trap" for Richard Scrushy in his March 2003 Securities and Exchange Commission testimony and inappropriately influenced the SEC's questioning of the former HealthSouth Corp. chief executive officer, a U.S. District judge in Birmingham, Ala., ruled. Judge Karon Bowdre dismissed three perjury counts against Scrushy in his ongoing criminal trial for allegedly orchestrating some $2.6 billion in accounting fraud at HealthSouth. Lawyers from the U.S. attorney's office in Birmingham erred by giving the SEC investigator, Neil Seiden, information about the office's ongoing criminal investigation of Scrushy, while instructing Seiden not to inform Scrushy of the investigation, Bowdre ruled. In addition, Seiden testified that the U.S. attorney's office requested that the SEC questioning be moved to Birmingham from Atlanta so the office could file perjury charges if Scrushy lied. The government had told the court the questioning was moved at the request of Scrushy's counsel, but Bowdre said she did not believe attorneys intentionally misrepresented the facts. Scrushy now faces 55 criminal counts.
Meanwhile, Scrushy's replacement at HealthSouth, CEO Jay Grinney, received a $500,000 bonus in 2004 for helping the company achieve performance goals, according to an SEC filing. Bonuses of $150,000 to $240,000 each were awarded to the company's chief operating officer, chief financial officer, chief compliance officer and general counsel. HealthSouth has not filed a quarterly or annual securities report since its 2002 third quarter because of the fraud. -- by Joseph Mantone