ichard M. Scrushy, the founder and former chief
executive of the HealthSouth Corporation, faces new federal charges of
perjury and obstruction of justice in a revised indictment by a grand
jury, Alice H. Martin, the United States attorney in Birmingham, Ala.,
announced yesterday.
The new 58-count indictment consolidates an 85-count indictment
announced in November that portrayed Mr. Scrushy as the mastermind of a
multibillion-dollar scheme to defraud investors by inflating the profits
of HealthSouth, the Justice Department said in the announcement.
Seventeen former employees, including six former senior financial
officers of HealthSouth, the chain of rehabilitation hospitals and
surgical centers, have pleaded guilty and are cooperating with
prosecutors.
Mr. Scrushy, 52, pleaded not guilty at an arraignment hearing
yesterday. His lawyer, Donald Watkins, said, "the government threw out 27
serious felony counts.'' He added: "We don't think there's going to be
much merit to even those 58" remaining.
People who have seen the new indictment, which was not available on the
court Web site yesterday, said the charges still included conspiracy;
mail, wire and securities fraud; and money laundering.
Mr. Scrushy and his lawyers have said that he had no knowledge of the
fraudulent acts that his former lieutenants admitted to.
The perjury charges contend that Mr. Scrushy gave false testimony under
oath when he said that he had not instructed anyone to change numbers that
HealthSouth, based in Birmingham, reported to the Securities and Exchange
Commission and Wall Street during an S.E.C. fraud investigation.
The indictment also claims that Mr. Scrushy attempted to influence the
testimony of an accused co-conspirator in the S.E.C. investigation.
The new indictment is also an effort to obtain a longer prison sentence
in light of a recent Supreme Court ruling. If convicted of all charges,
the announcement said, Mr. Scrushy "faces a maximum sentence of 450 years
in prison and more than $30 million in fines."
Under a new Justice Department policy, revised indictments have been
obtained in other cases, including those involving financial crimes at Enron and WorldCom. John C. Coffee, a specialist in
securities law at Columbia Law School, said the new indictments include a
section headed "sentencing allegations," which prosecutors hope will help
juries deliver sentences based on factors like the financial losses that
defendants are accused of causing.
Prosecutors began adding the sentencing language to indictments after
the Supreme Court ruled in June in a Washington State case that facts
supporting longer sentences must be proved beyond a reasonable doubt.
A New York defense lawyer, Andrew J. Levander, said the Supreme Court
would hear arguments next week on whether that decision applies to federal
cases.
Last week, the United States Court of Appeals for the 11th Circuit in
Atlanta upheld the valuation by prosecutors of $328 million in losses by
HealthSouth investors when share prices fell after the fraud was publicly
disclosed. Prosecutors could argue that those losses should add to the
sentence if Mr. Scrushy is convicted, legal experts
said.
