HealthSouth Fraud

Posted 22 Jan 2009 Richard Marin Scrushy is the Superstar CEO of HealthSouth, a huge provider of outpatient rehab services.   But, the billionaire falls from grace after federal prosecutors accuse him of masterminding a $2.7 billion dollar fraud."American Greed: HealthSouth" re-airs Sunday, January 25th at 11p | 3a ET.

It's the classic rags to riches story.  Born in the small town of Selma, Alabama and without a silver spoon in his mouth, young Richard Scrushy doesn't seem to indicate he'll one day be worth nearly $300 million.

Source: Aaron Beam Aaron Beam, Richard Scrushy and three others found HealthSouth (then called Amcare) in 1984. The company goes public just two years later and within a decade becomes a $2 billion company.

AP Images Scrushy's vision is simple: taking patient rehabilitation out of hospitals and into more cost-effective outpatient facilities. The idea becomes an almost immediate success

Source: Landov/Bloomberg This yacht, the Chez Soiree, is just one just one extravagancy that Scrushy buys with his extreme wealth garnered from HealthSouth’s success. He also purchases speedboats, classic cars, airplanes, four mansions and a Lamborghini Murcielago.

Source: Kurtis Productions This is one of Scruhsy's four mansions.  It sits on Lake Martin, about 80 miles Southeast of Birmingham. It's by far the biggest house on the lake. And according to former CFO Weston Smith, Scrushy's lakeside neighbors call the mansion the World's Largest La Quinta Inn.

Source: Landov/Bloomberg In March 2003, an accounting scandal at HealthSouth becomes national news.  U.S. Attorney Alice Martin heads up the prosecution.  She nets guilty pleas from all five CFO's in company history, and eventually indicts Scrushy on 85 counts ranging from securities fraud to conspiracy.

Source: Kurtis Productions As trial begins, Scrushy's colorful defense attorney, Jim Parkman, concedes to the jury that a fraud occurred at HealthSouth, but claims that his client had no knowledge of the fraud, which was in fact executed by rogue and dishonest employees.

Source: U.S. Secret Service Weston Smith begins working at HealthSouth in 1987 and eventually becomes CFO. After pleading guilty to government charges, Smith serves 14 months in federal prison, but not before testifying against his former boss, CEO Richard Scrushy.

Source: AP Images Aaron Beam is the first witness to testify at Scrushy's trial, as well as HealthSouth's original Chief Financial Officer. In July of 1996, he also becomes the first CFO at HealthSouth to commit fraud.Beam serves three months in prison.

Source: Kurtis Productions After his release from prison, Aaron Beam had to sell off his $3 million dream home to pay restitution and legal fees for his role in the HealthSouth fraud.  He now mows others people's lawns for a living, taking in $30,000 a year

Source: AP Images Prosecutors believe former CFO Bill Owens' testimony, along with the almost 10 hours of wire recordings Owens secretly captures, will help put the nail in the coffin at Scrushy's trial. Instead, jurors will hand down a surprising verdict.

Source: Jim Parkman In closing arguments, Scrushy's colorful defense attorney, Jim Parkman, leaves a strong impression on jurors by presenting a replica of this rat poster.  His main defense strategy is to discredit the testimony of the five CFOs and other government witnesses by painting them as a pack of rats and liars

Source: NBC News Archives On June 28, 2005, a victorious Richard Scrushy emerges from the Hugo L. Black federal courthouse in Birmingham, AL. Jurors acquit the former CEO on all 36 criminal counts stemming from the $2.7 billion fraud at HealthSouth"American Greed: HealthSouth" re-airs Sunday, January 25th at 11p | 3a ET.Find out more...Replay SlideshowReview the case fileVisit the "American Greed" website