Corporate Compliance

Former HealthSouth CFO says Scrushy was aware of finances

Compliance Monitor, March 2, 2005

The prosecution in the fraud trial of former HealthSouth chief executive Richard Scrushy solidified its case on March 1 when a former CFO testified that Scrushy was "heavily involved in corporate finances" so he had to be aware of the company's alleged fraud, the Associated Press (AP) reported.

Former CFO Mike Martin testified under a plea agreement that Scrushy discussed the performance of individual HealthSouth facilities during executive meetings, indicating that Scrushy was familiar with the company's financial status. The defense has claimed that Scrushy was unaware of any fraud, the AP reported.

Martin also said Scrushy edited HealthSouth's earning statements before they were made public and was extremely resistant to lowering Wall Street projections, the AP reported. Scrushy is accused of masterminding a conspiracy to inflate HealthSouth's earnings by $2.7 billion from 1996 to 2002 in an effort to bolster his own wealth.

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