The jury is scheduled to begin deliberations Thursday in the criminal fraud trial of Richard Scrushy, founder and former chief executive officer of HealthSouth Corp., Birmingham, Ala. In closing arguments today, federal prosecutors contended that Scrushy ordered other executives to inflate HealthSouth's earnings to maintain high stock prices and that he used profits from sales of HealthSouth stock to support more than $200 million in personal spending from 1996 to 2002. HealthSouth, now under new management, has said its earnings were overstated by some $2.6 billion from 1996 to 2003. Defense attorney Art Leach said other HealthSouth executives had, in fact, committed the fraud and there was no definitive evidence Scrushy knew of the illegal activity. Leach, in his closing statements, accused the government of "botching" the case by not thoroughly exploring the motives of two former HealthSouth chief financial officers, Weston Smith and Bill Owens, who cooperated with the investigation in hopes of lighter sentences.
The jury first will deliberate on 36 charges, including one under the Sarbanes-Oxley Act, alleging that Scrushy knowingly participated in the fraud. If Scrushy is found guilty, the jury will consider 10 counts of money-laundering. Scrushy initially faced some 85 criminal counts, but the prosecution subsequently consolidated several charges and several more have been dismissed since the trial began in January. -- by Joseph Mantone