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Defense Questions Fairness of Grand Jury in Scrushy Case

By Carrie Johnson
Washington Post Staff Writer
Tuesday, January 27, 2004; Page E02

Lawyers for former HealthSouth Corp. chief executive Richard M. Scrushy yesterday attacked the government's criminal case against him, filing court motions that raise questions about the fairness of the grand jury that indicted Scrushy on fraud and money-laundering charges and demanding more information from prosecutors.

Among other steps, Scrushy's defense team asked a judge to examine whether government lawyers took steps to weed out former HealthSouth employees and shareholders from the grand jury pool. The defense also sought to throw out audiotapes of March 2003 conversations between Scrushy and a former executive who pleaded guilty to fraud and agreed to help investigators.

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Corporate Trials: Executives from companies that were among the brightest stars in the 1990s will be fighting to defend their reputations and to stay out of prison in jury trials scheduled in the next few months.



Yesterday's court filings were the latest steps in an aggressive defense of the founder of the Birmingham rehabilitation hospital chain. Scrushy was indicted last fall for allegedly leading a $2.7 billion accounting fraud that dates to the 1990s. He is scheduled for trial in August.

"A grand jury doesn't provide anything if the grand jurors already have an ax to grind," said Abbe D. Lowell, a lawyer for Scrushy, in a telephone conference with reporters. Lowell, who said a grand jury is supposed to provide fairness, added that thousands of people in the Birmingham area worked for HealthSouth or lost retirement savings when the company's stock price cratered.

Alice H. Martin, the U.S. attorney for the Northern District of Alabama, responded in a statement that "these types of pleadings are to be expected from the defense in criminal cases and the U.S. will file written responses in the near future."

Kirby D. Behre, a former federal prosecutor, said Scrushy's chances of success on yesterday's motions are minimal.

"The chances of getting anywhere are not very good, and frankly, the remedy -- if they were to find some sort of issue with the composition of the grand jury -- is that they'd re-indict him," Behre said.

The back-and-forth, however, could give Scrushy a basis to ask for more time to prepare his defense, legal experts said. The government already has turned over scores of boxes, diskettes, tapes and computer hard drives that contain more than a million pages of documents, Lowell said yesterday.

Scrushy's lawyers are scouring the documents, but they want U.S. District Judge Karon O. Bowdre to force prosecutors to point out the most important papers and provide specifics about how they will argue the accounting fraud was carried out.

To date, 15 former HealthSouth employees have pleaded guilty to fraud or related charges, including all five of the company's former chief financial officers.


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