BIRMINGHAM, Feb. 14 -- Lawyers defending former HealthSouth Corp. chief executive Richard M. Scrushy sought to portray prosecutors' star witness as "the main man" who engineered a $2.7 billion accounting fraud, then set up Scrushy to save his own hide.
Former finance chief William T. Owens testified under hostile questioning Monday that he, not Scrushy, presided over "family meetings" at which conspirators discussed ways to inflate earnings. Owens conceded that Scrushy, who stands accused of 58 criminal charges including conspiracy and money laundering, did not attend sessions with multiple conspirators.
Rather, Owens told the jury, Scrushy preferred to meet one on one to discuss the long-running scheme as a method to help avoid detection. "I always said he was a co-conspirator; I never said he was anything else," Owens said.
Defense lawyer James W. Parkman III pointed out that Owens had close personal ties to many of the 15 people who already have pleaded guilty to taking part in the scheme. He also insinuated that Owens had a motive to attack Scrushy, who served as chief executive for several years before making way for Owens in 2002. Later, Scrushy unseated Owens and returned to the chief executive perch, successfully batting back a possible "coup" in the ranks of the Birmingham rehabilitation hospital chain, the defense argued.
"You're not mad at Richard Scrushy at this point, coming back and taking over your job that you worked so hard to get?" Parkman asked. Owens denied it.
Undermining Owens's credibility is key to the defense's case because he secretly agreed to an FBI request to tape incriminating statements made by Scrushy in March 2003. In those tapes, played for the jury last week, Scrushy tells Owens to "go down fighting" rather than "go public" with allegations about the fraud.
Neither man uses clear-cut words such as fraud, scheme or illegal in the tapes -- a point that Parkman revisited again and again in his second day of cross-examination Monday. "We had a way of communicating with each other so that we didn't have to say things like 'fraud' and 'illegal,' " Owens explained.
Parkman also asked the witness about a meeting in November 2002 at which the company's finance chief and top lawyer discussed complaints about Scrushy lodged by investors and outside attorneys. The meeting ultimately came to naught, and Scrushy continued at the company's helm.
In his answer, Owens provided support for the prosecution argument that Scrushy ruled the company through fear and intimidation. The witness said the participants in the meeting gathered at the home of a finance official on a Sunday because "they were concerned about listening devices" that had been planted in the office.
The tenor of the questioning Monday was far less contentious than Friday afternoon's session, in which Parkman challenged Owens and the witness repeatedly pushed back. Those exchanges brought frequent murmurs from the defense side of the gallery, which is filled with members of the Scrushy family and local clergy who have befriended Scrushy.
Early Monday, U.S. District Judge Karon O. Bowdre warned people in the courtroom to keep quiet. "This is not a spectator sport," she said.
The trial is expected to last at least four months.
