Tuesday, February 8, 2005

CFOs on the Witness Stand in HealthSouth & WorldCom Trials

The HealthSouth and WorldCom trials continue along their parallel paths as former WorldCom CFO Scott Sullivan took the witness stand on Monday, Feb. 7, to begin what promises to be a long engagement testifying against Bernie Ebbers.  On his first day of testimony, Sullivan -- the government's star witness because he is the principle link between Ebbers and the multi-billion dollar accounting fraud -- stated that Ebbers had a "hands on grasp of financial information." (AP story here) At the HealthSouth trial, former CFO Bill Owens admitted on Friday, Feb. 4, that he had not filed income taxes for the period from 1995 through 2002, and had not repaid loans totaling $1 million from HealthSouth. Sullivan made his own admissions, stating that he used marijuana and cocaine over a two decades and, perhaps more tellingly, lied to the Department of Defense about his drug use as part of a security clearance check.  Being an admitted liar is not helpful to the government's case that hinges largely on the testimony of Sullivan.

Once the government's direct examination ends, expect the defense to mount significant attacks on Owens and Sullivan, both of whom entered into plea agreements with the government and will be open to questions regarding their veracity (the always-effective "Which time were you lying?" question). (Birmingham News story here (Owens) and Wall Street Journal story here (Sullivan)). (ph)


Fraud, HealthSouth, Prosecutions, WorldCom | Permalink

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