Friday, June 30, 2006

The Beat Goes On for Scrushy

The conviction of former HealthSouth CEO Richard Scrushy on conspiracy and corruption charges is but one step in a line of cases that may well stretch through the rest of the decade.  The guilty verdict in Montgomery, Alabama, on charges related to a $500,000 payment to then-Governor Don Siegelman, came 366 days after his acquittal on securities fraud charges related to accounting misconduct at HealthSouth; a grand jury in the Middle District of Alabama returned the corruption indictment indictment during that trial, and it was sealed until a few weeks after the first jury verdict.

The HealthSouth-related cases are not nearly finished.  The SEC still has books-and-records claims outstanding in a civil suit that is scheduled for trial in April 2007, and Scrushy will be deposed during discovery in that matter.  There are numerous shareholder lawsuits pending, and an earlier order directing him to return a portion of his bonuses and stock awards during the period of the accounting fraud at HealthSouth will likely be litigated along with the fraud claims.  Scrushy still has a claim against the company for payment of his legal fees from the 2005 trial, and reports are that he is seeking upwards of $20 million.  Depending on how the SEC action turns out, he may seek indemnification of his attorney's fees in that action, too. 

Of course, there remains the appeal of the convictions, and Scrushy is quoted as stating after the verdict, "We intend to continue the legal process until we're fully vindicated and cleared on all these charges. We believe that our day will come."  Don't look for Scrushy's appearances in court to end any time soon, barring an unforeseen settlement of the civil claims.  An AP story (here) discusses the verdict and other legal proceedings. (ph)

Civil Enforcement, Corruption, Fraud, Securities | Permalink

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