Friday, June 19, 2009

Richard Scrushy Hit With $2.88 Billion Civil Judgement

Richard Scrushy, former CEO of HealthSouth, was hit with a $2.88 billion civil judgement, the largest financial penalty ever leveled against a single executive.  Mr. Scrushy was accused of inflating HealthSouth's earnings for more than six years and enjoying $40 million paydays for all of his hard work building the company.  While Mr. Scrushy doesn't appear to have billions of dollars, hopefully the size of the judgement will ultimately bankrupt the man who pilfered money from shareholders so he could host parties on his 92-foot yacht and arrange to pay for breast augmentation for a member of the company-sponsored singing group.

The fraud was originally uncovered in 2003 but Mr. Scrushy was miraculously acquitted in a five-month jury trial in 2005, despite the fact that five former CFOs who had all pleaded guilty, testified against him in the trial.  I don't use the term miraculous lightly.  Before the criminal trial began, Mr. Scrushy left the church he'd been attending in his affluent suburb and began attending services and donating heavily to a predominantly Africa American church, which was more representative of the 70% pool of African Americans in the city of Birmingham from which the jury would be plucked.  Then Mr. Scrushy paid to have his own bible show on local TV, that conveniently lasted the length of the trial, which more than likely swayed the god-fearing Christian jurors into believing his version of the story.  Ladies and gentleman, this is how to get acquitted of accounting fraud in the Bible Belt.  

Mr. Scrushy's luck ran out the following year when he was found guilty of bribery charges for paying half a million dollars to former governor Dan Siegelman in exchange for a seat on a state healthcare board.  He is currently in his second year of a seven year sentence for the bribery case.  Although Mr. Scrushy has spent much of his estimated $300 million fortune over the years in legal fees, fines, and paid television air time, he still owns a few houses and the aforementioned yacht.  HealthSouth shareholders might not be left with much after the liquidations, but rest assured, they'll be happy with every penny they retrieve from this huckster.

In more recent huckster news, Alan Stanford, who actually may be a billionaire, was indicted and charged with orchestrating a fraud through his Caribbean-based financial firm and has surrendered to federal agents.  Let's hope the Justice Department nails this guy the first time around and doesn't need to dig up bribery charges in the future to land him in jail.     

1 comment:

Mr Wrightwood said...

Just shows that when big dollars are at stake, spending a few hundred million isn't out of the question. Sounds very SAC. Anyone want to bet that's where Scrushy ends up? Seems like a perfect fit.