Saturday, February 5, 2005
Former HealthSouth CFO Bill Owens has now spent four days on the witness stand describing the construction and operation of the accounting fraud at the company. His testimony on Friday, Feb. 4, supplied a motive for Scrushy's involvement in the inflation of revenues: selling his shares. Scrushy appeared on CNBC in 2002 touting the HealthSouth as an undervalued company, stating that its shares were worth $20, shortly before he exercised stock options and sold the shares for $74 million. A short time later, the CEO/CFO certification requirements of Sarbanes-Oxley became effective, leading to the alleged false certifications charged against Scrushy.
The defense has not gotten the chance to cross-examine Owens yet, and I would expect that process to take at least as long as his direct testimony, if not longer. An AP story (here) describes the day's proceedings. (ph)