Friday, April 22, 2005
The defense in the prosecution of Richard Scrushy began -- after more rounds of legal wrangling -- by focusing on the lack of any documentary evidence showing that he was aware of the fraud at HealthSouth, with the first witness being an FBI agent, who would have to be considered hostile. This is the consistent theme underlying the "honest but ignorant CEO" defense, and the first issue raised by defense lawyer James Parkman was whether the FBI found any of Scrushy's fingerprints on documents related to the fraud. That type of forensic evidence is usually not an issue in white collar crime prosecutions, but it presents an avenue for the defense to emphasize that there is no physical evidence of Scrushy's involvement, and no damning e-mails or memoranda from him regarding the fraud.
Before the defense began its case, Judge Karon Bowdre refused to dismiss most of the charges, but did grant the defense motion by dismissing five charges, including one of the Sarbanes-Oxley Act certification counts that alleged Scrushy forced two HealthSouth officers, including former CFO Bill Owens, to sign false certifications. She also reserved ruling on 12 other counts relating to money laundering and obstruction, including one of the other Sarbanes-Oxley Act counts, but did not dismiss the count regarding the one certification Scrushy signed. In addition, the judge's frustration with the prosecutors rose to the surface again when she said the government's 155 page brief on the Rule 29 dismissal motion "makes the unabridged edition of `Les Miserables' an easy read" -- I guess War and Peace in the original will come with the jury instructions.
The court also dismissed the three perjury charges arising from the SEC deposition (bringing the total number of charges to 50 from the original 58), although the government has appealed that decision to the Eleventh Circuit. If the appellate court overrules the judge's ruling that the transcript is inadmissible (see prior post with ruling here), then the government will have to re-open its case-in-chief and present the evidence. That makes for some procedural difficulties, and no doubt would be an issue on appeal should Scrushy be convicted. Articles in the Birmingham News (here) and AP (here) discuss the beginning of the defense case and the judge's rulings. (ph)