Corporate Compliance

SEC questions judge in Scrushy's criminal trial

Compliance Monitor, August 10, 2005

The Securities and Exchange Commission [SEC] is questioning key rulings by the judge in the criminal trial of former HealthSouth Chief Executive Officer Richard Scrushy, the Associated Press (AP) reported Friday.

The SEC criticized U.S. District Judge Karon Bowdre's ruling to accept the defense's assertion that the SEC and the Justice Department improperly collaborated when investigating fraud at HealthSouth, according to the AP.

The SEC was the agency that initially sued Scrushy and HealthSouth in 2003, alleging that Scrushy masterminded a $2.7 billion fraud scheme. Scrushy was acquitted of criminal charges in June, after 15 former HealthSouth executives pleaded guilty to fraud allegations.

The SEC is criticizing the judge in Scrushy's criminal case in order to keep alive a civil case against the former executive, according to the AP.

"Obviously, the SEC could pursue its enforcement role without ever consulting Justice. In like fashion, Justice could pursue its job without consulting the SEC. But Congress had determined that both agencies could do a better job . if they worked together," the SEC argued, according to the AP.

In other HealthSouth news, Thomas Carman, another former HelathSouth executive has been sentenced to three years probation and fined $500 on charges he lied about an alleged attempted bribery scheme.

Carman plead guilty on charges he made false statements to the FBI when asked about allegations executives at HealthSouth plotted to pay $1 million in return for a $50 million deal to run a hospital. The two other former HealthSouth executives who were originally indicted in the bribery scheme were acquitted of charges in May.

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