Scrushy Accused Of Bribery, Surrenders

HealthSouth founder Richard M. Scrushy, shown with his wife, Leslie, in January, was acquitted in June of three dozen counts related to a fraud at his former company.
HealthSouth founder Richard M. Scrushy, shown with his wife, Leslie, in January, was acquitted in June of three dozen counts related to a fraud at his former company. (By Jan Michael Stump -- Associated Press)

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By Carrie Johnson
Washington Post Staff Writer
Friday, October 28, 2005

HealthSouth Corp. founder Richard M. Scrushy surrendered yesterday in Montgomery, Ala., to federal authorities who accused him of bribing former Alabama governor Don Siegelman to win a seat on an influential state board.

The afternoon surrender by the controversial former chief executive, who maintains his innocence, came four months after a federal jury acquitted Scrushy on separate accounting fraud charges related to his rehabilitation hospital company.

In an indictment unsealed Wednesday, Scrushy faces bribery and mail fraud counts. Prosecutors allege that he improperly funneled $500,000 to a campaign fund created by Siegelman, a Democrat and Alabama's governor from 1999 to 2003, in exchange for a position on the state board that authorizes hospital expansions.

Scrushy denounced the charges, which a grand jury approved in May but were kept under wraps until this week, in a news conference at a Birmingham television station yesterday. His attorneys argued that the government is unfairly hounding their client.

Defense lawyer Arthur W. Leach said that Scrushy "is not guilty and will be fully vindicated at trial," in a statement posted on the http://www.richardmscrushy.com Web site. "A check which is delivered to a political entity is not illegal under the law."

The latest charges stem from two $250,000 checks HealthSouth delivered to the Alabama Educational Lottery Foundation in 1999 and 2000. Prosecutors say Scrushy initiated the payments to influence the work of the Alabama Certificate of Need Review Board, which oversees hospital construction.

Scrushy faces a maximum of 10 years in prison on the bribery charge alone if he is convicted.

Siegelman and two other associates named in the 40-page indictment denied wrongdoing, according to lawyers and news accounts. A previous criminal case against Siegelman involving improper dealings over Medicaid contracts fell apart in October 2004, when a federal judge dismissed the charges for lack of evidence.

Scrushy's June acquittal on more than three dozen charges was a blow to government prosecutions of accounting fraud. Federal prosecutors had secured the cooperation of five former HealthSouth finance chiefs who testified that Scrushy knew about a $2.7 billion fraud. But jurors said they did not believe the former finance executives and soundly rejected the government's case.

A Securities and Exchange Commission lawsuit charging Scrushy with civil violations of securities law over HealthSouth's finances continues.


© 2005 The Washington Post Company

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