In Scrushy Trial, Jurors Chose Defense's Portrait

Ex-CEO Seen as Religious, Popular Figure in Birmingham

The acquittal of former HealthSouth Corp. chief executive Richard M. Scrushy in Birmingham yesterday suggests that jurors in the case embraced the defense portrayal of Scrushy as a deeply religious son of the South and rejected prosecution witnesses as self-serving and untrustworthy, legal experts said.

The verdict also means federal prosecutors will probably think twice before bringing cases in a popular executive's home town, the experts said.

The verdict, which stunned many lawyers and advocates of stronger corporate governance, followed a trial in which five former HealthSouth chief financial officers testified that Scrushy masterminded a scheme to inflate the company's earnings by $2.7 billion.

During the trial, Scrushy appeared on a morning television show in Birmingham called "Viewpoint" in which he and his wife read Bible verses. He began preaching in fundamentalist churches and invited pastors to the trial. Several jurors said in pretrial questionnaires that they attended church.

Robert A. Mintz, head of the white-collar criminal defense practice at New Jersey law firm McCarter & English LLP, said the public relations offensive may have helped Scrushy's cause.

"It's difficult to square this verdict with what appeared to be an overwhelming case going in," he said. "This was an extreme example of a case tried both in the courtroom and in the court of public opinion. That was always the risk when the Justice Department decided to bring this case in Alabama."

If Scrushy's acquittal came as a surprise to outside observers, it did not to many Birmingham residents. Andrea Griffin, 37, a sales representative at a Verizon Wireless store, said many people remember his active role in the community.

"He was a hometown boy," said Griffin, a Birmingham native. "It's hard for people to overlook the good he did. He has touched so many people's lives."

Indeed, the strongest criticism lodged against the government yesterday was not for its performance -- though some described the prosecution as too long and complex -- but for its choice of venue. Many legal observers said the government should have taken note of Scrushy's prominence and philanthropic work in Birmingham and brought the case in New York, site of many successful recent white-collar prosecutions, including cases against former WorldCom Inc. chief executive Bernard J. Ebbers and former Adelphia Communications Corp. executives John J. and Timothy J. Rigas.

"If you compare the evidence in the Ebbers trial to the evidence in the Scrushy trial, Ebbers had the better case," said Jacob S. Frenkel, a former Securities and Exchange Commission enforcement lawyer. "But Ebbers was tried in New York, and Scrushy was tried in Birmingham."

Frenkel added, "I think the government will view this result as an aberration, but where it may affect strategy is in the decision of whether to prosecute these cases outside of New York."

Vanderbilt University law professor Larry D. Soderquist, a close observer of the trial, said defense efforts to highlight Scrushy's connection to predominately black churches in Birmingham may have won points with the seven black members of the jury.