Judge Penalizes Prosecution In Scrushy Trial

Enron References Bring Rebuke, End Questioning

BIRMINGHAM, May 5 -- A red-faced judge halted prosecutors' questioning of a key defense witness at the fraud trial of former HealthSouth Corp. chief executive Richard M. Scrushy on Thursday after a government lawyer repeatedly mentioned the Enron fraud before jurors.

A former HealthSouth director called as a defense witness turned the tables on Scrushy, meanwhile, describing him as a "financial genius" who knew everything about the company -- just the opposite of defense claims.

The testimony came in the 15th week of Scrushy's trial.

In a tense exchange, U.S. District Judge Karon Bowdre said she was cutting off cross-examination of former Scrushy bodyguard Jim Goodreau because prosecutor Richard Wiedis "asked a series of improper questions" about a "delicate" subject.

Bowdre, who repeatedly has told lawyers to avoid mentioning other high-profile corporate fraud cases in court, didn't specify what she was talking about.

But moments earlier, Bowdre shouted in anger when the prosecutor kept referring to Enron as he questioned Goodreau about a conversation Goodreau had with former HealthSouth finance chief William T. Owens, whom the defense blames for the fraud.

Goodreau had mentioned Enron during defense questioning, saying Owens had confided that HealthSouth had "accounting problems" and also told him: "It's not Enron, but the number's significant."

Goodreau, the former head of security at HealthSouth who is on the defense payroll, said he never told Scrushy about Owens's remarks -- a claim Wiedis used to bear down on Goodreau by saying people lost money and lost their jobs because of the fraud at Enron Corp.

"Mr. Goodreau, people went to jail," Wiedis said over defense objections.

With that, Bowdre slammed down her gavel for the first time in the trial and yelled "Mr. Wiedis!"

Following a lengthy conference away from jurors, Bowdre said she was sanctioning the prosecution because of Wiedis's questions. As a penalty, she said, government lawyers wouldn't be allowed additional cross-examination of Goodreau.

Defense lawyers grinned broadly with the decision, but the impact of the ruling wasn't immediately clear since the prosecutor had failed to shake Goodreau from his claim that Owens knew of the fraud and Scrushy didn't.

Scrushy, who was fired as chief executive after the accounting fraud was exposed, is charged with directing a $2.7 billion earnings overstatement at the rehabilitation chain. Prosecutors claim he got rich off stock sales, bonuses and salary he made because of the scheme.

The defense blames the fraud on Owens and the 14 other onetime HealthSouth executives who pleaded guilty and agreed to cooperate with prosecutors. Scrushy's most trusted aides lied to him for years, according to the defense.

In earlier cross-examination, Goodreau agreed that Scrushy once told him he was surrounded by "a lot of 'yes men' " and needed someone who would always tell him the truth.

"What Mr. Scrushy said was that he'd always do the same for me -- be honest, tell me the truth, shoot straight," said Goodreau.