In 1984, Richard Scrushy and I founded HealthSouth Corp., Birmingham, Ala., with the help of venture capitalists. Richard was a licensed respiratory therapist, and I was a certified public accountant. Our timing could not have been better because the healthcare market was ready for a major shift to outpatient services
Learned the hard way
HealthSouth co-founder lives lesson about complacency on fraud, ethics
Within 10 years, we were operating a billion-dollar company that had a presence in all 50 states. We operated more rehabilitation hospitals, surgery centers and outpatient rehabilitation centers than any other company.
I retired as chief financial officer of HealthSouth in the fall of 1997. I had taken part in the fraud that began in the summer of 1996. I am sorry to admit that the fraud began on my watch. It has taken me years to really understand why I let myself be a part of such a horrible act of mistrust. To help explain my actions and to document a significant historical event, as sad as it may be, I have written a book, HealthSouth: The Wagon to Disaster.
After losing possessions, serving prison time and fully coming to terms with what happened, I understand that I have committed a terrible white-collar crime that hurt many people. Because of my lack of conviction, I will always be remembered as the guy who committed the fraud instead of the co-founder of one America's most successful healthcare companies.
Friends and colleagues had encouraged me to write a book, and it was something that I had strongly considered, as this story is larger than any individual. Corporate fraud is an ongoing problem in modern American business. A pervasive greed—as evidenced by the sagas of companies such as Enron Corp., Tyco International and WorldCom, and more recently in the subprime mortgage debacle—is threatening the health of our economy and the public's trust in it.
The book is my opportunity to help the business world understand how and why the fraud at HealthSouth happened, and how it can happen to them if they aren't careful. Since the fraud became public, HealthSouth has paid restitution and rebounded; it is traded once again on the New York Stock Exchange, and it remains a viable healthcare provider throughout the U.S.
The title of the book has particular meaning for those familiar with the inner workings of HealthSouth. In meetings, Richard often used the motivating mantra “pulling the wagon” to remind everyone of the importance of pulling his or her weight for the HealthSouth “team.” Richard had T-shirts and posters printed with a sketch of several stick figures pulling a wagon, and he even had a fancy sculpture along those lines erected in front of the company's headquarters. For those of us “pulling the wagon,” we soon realized it was all for Richard, and in the end he was leading all of us to a sure disaster.
After serving in prison for a fraud conviction, I completed a two-year course in turf management at a local community college. I now earn a living operating a one-man lawn service business, Green Beam Lawn Service.
It is hard but honest work. My life is very different than what it was at HealthSouth. Even before the fraud began, there were times I felt I was overpaid. There were 40,000 other employees working very hard so that I could draw a $500,000 salary. This has made me think a lot about how Wall Street at times seems to be driven by excessive greed.
Late in 2007, I called the dean of the business school at Louisiana State University to see if they would consider having me speak to their students. I earned a degree in economics at LSU in 1967, and I have been an active alumnus ever since. I think he was a little surprised by the call. Within a week, however, he called back and said the school would like to have me as a guest speaker, and they were actually excited about the idea. I spoke to several combined classes of MBAs and senior accounting students. I simply told the story of how I met Richard, started HealthSouth, the success HealthSouth became and, of course, how it all went so catastrophically wrong.
The initial speech was well-received, and I have been invited back to LSU more than a dozen times in the past few years. I have begun speaking at other universities, including Bradley University, Florida State University, Kent State University, Penn State University and Tulane University. I have also presented or will present to the Arkansas, Florida, Georgia and Tennessee hospital associations.
I truly believe that speaking to students and other business people is important. I always try to explain how you can become involved in a fraud when you never thought you would.
When you work for a company that stresses profits at all costs, it is a potentially destructive situation. I explain that you must seriously consider the company's values when taking a job. Above all else, be prepared to walk away from an otherwise good job if you are asked to commit or be a party to fraud.
Speaking to college students has greatly helped me deal with the shame and pain I feel because of my actions and inactions while I was CFO at HealthSouth. I have received many e-mails and letters from those I've addressed, and they tell me what I am doing is worthwhile. This helps, but I will always be a felon.
Editor's note: In 2005, Scrushy was acquitted by a jury on 36 counts related to the HealthSouth fraud.
Aaron Beam co-founded HealthSouth Corp., Birmingham, Ala., served as its chief financial officer and is the author of HealthSouth: The Wagon to Disaster.
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