BIRMINGHAM, Feb. 11 -- Lawyers defending former HealthSouth Corp. chief executive Richard M. Scrushy attacked the credibility of the prosecutors' star witness Friday, painting him as an egomaniac and an opportunist who grew cozy with the FBI to try to save himself from a long prison term.
In a two-hour cross-examination that sometimes turned combative, defense lawyer James W. Parkman III hammered away at former finance chief William T. Owens, accusing the witness of passing a "$1.2 million phony check" and asking when he got on a first-name basis with the lead FBI agent investigating Scrushy.
Owens, who has testified for the government for the past eight days at Scrushy's trial on fraud charges, secretly agreed to record conversations with Scrushy at the FBI's behest in March 2003, with the goal of capturing incriminating information on audiotape. The tapes -- and Owens's credibility -- are particularly important because federal prosecutors have not produced e-mails or other documentary evidence tying Scrushy to the $2.7 billion scheme.
"Is there any document, standing by itself, standing on its own, that indicates Mr. Scrushy was involved in fraud?" Parkman asked Friday afternoon.
Owens replied, "I believe the tapes do." That launched an extensive series of questions from Parkman about why in nearly three hours of audiotape Scrushy never used the words "fraud," "scheme" or "illegal." Owens explained that he and more than a dozen other HealthSouth officials who have pleaded guilty to taking part in earnings inflation employed code words to avoid detection while the scheme ran from 1996 to 2003.
Parkman also asked the witness to read several passages from the tapes that appeared to bolster the defense argument that Scrushy was misled by subordinates and that Owens had masterminded the fraud. Among them was a comment from Scrushy instructing Owens, "You ought to be able to engineer your way out of what you engineered your way into."
The defense team also drew attention to a taped statement by Owens to his lawyer that "we didn't get anything this morning," in which he referred to one stretch of conversation with Scrushy. But Owens confidently replied that the tapes were "clear" and that when heard in context, they prove damaging to Scrushy.
In a tape played Thursday, Scrushy was heard warning Owens that both the company and Owens's livelihood were in danger. On Friday morning, jurors heard Scrushy on tape reminding Owens of the company they had built together. "Look at all these people," Scrushy said. "Do we really want to trash all this?"
Every time Parkman pushed Owens, the witness shoved back. He demanded to see court transcripts, requested that the defense lawyer rephrase questions, and once even asked that Parkman look at him when he asked questions instead of playing to the jury.
At one point, after Owens challenged the premise of a defense question, U.S. District Judge Karon O. Bowdre jumped in to remind him, "Your role is to answer questions you are asked."
Owens pleaded guilty in 2003 to conspiracy, fraud, and filing false financial statements under the Sarbanes-Oxley Act. He also told the FBI about a million-dollar corporate loan that he never repaid, an issue Parkman briefly raised Friday. Owens hopes to receive a reduction in his prison sentence in exchange for his testimony, a point that the defense is likely to exploit when cross-examination resumes next week.
"I did what the government told me to do," Owens insisted Friday under hostile questioning. "I did not volunteer to wear the tape. I did not suggest that we tape. They asked me to do it and I agreed." But for all of Owens's confident recall of times, dates and conversations, what may linger in jurors' minds over the weekend was his last statement of the day.
Immediately before the session broke Friday evening, defense lawyer Parkman asked Owens to recount a statement he made about himself at his wife's 40th birthday party.
"I believe that I'm the smartest person alive," Owens began, as prosecutors objected in vain. "But the reason I believe this is because, in a competitive situation, I want my competitor to believe that. . . . It's all a matter of self-confidence." With that, jurors for the first time may have seen the quality that propelled Owens from a middling position in the accounting department into a job as temporary chief executive of the Birmingham rehabilitation hospital chain.
