Sunrise Says Ex-CFO Had Porn on Laptop

By Zachary A. Goldfarb
Washington Post Staff Writer
Wednesday, January 9, 2008

Sunrise Senior Living disclosed in court filings that it had discovered "more than 25,000 unique pornographic images" on a company-owned computer used by a former chief financial officer now suing for breach of contract and defamation.

In response, the executive, Bradley B. Rush, has said in filings that Sunrise is trying to intimidate him into dropping the lawsuit with "irrelevant, salacious and harassing allegations."

The exchange marks an acrimonious turn in the court battle between Rush and Sunrise, the country's largest provider of assisted-living services. The case grows out of a $130 million accounting restatement that has bedeviled Sunrise, which is based in McLean, for nearly two years.

Rush was suspended and then terminated in the spring after he failed to adhere to Sunrise's document retention directives, according to a company statement. The company said it asked employees on two occasions to retain documents about specific accounting issues in anticipation of an accounting review. Rush was suspended April 23 and fired May 2.

In September, Rush sued Sunrise, saying that the company "initiated a public and private campaign" to defame him "directly and through innuendo" by making it appear he was responsible for the accounting troubles.

Rush said senior management pressured him to complete a review of the company's accounting irregularities because Sunrise was looking to be acquired. His suit asks for $13.5 million in lost compensation and other damages.

Commenting on the lawsuit the day it was filed, a Sunrise spokeswoman did not mention the pornography allegation. The issue also was not discussed publicly when Sunrise dismissed Rush.

Since then, Sunrise has filed a formal response to Rush's charges, denying his allegations. The company's response said the board "had several reasons to suspend Rush and to terminate his employment for cause," including his failure to cooperate with an inquiry undertaken by a special committee of the board of directors; the deletion of files on a company laptop computer issued to him; and the pornographic material on that laptop, which it said violated the company's information security policy.

In his lawsuit, Rush acknowledged that he had deleted all the files on the computer, one of two laptops he had been issued, saying that the company already had all his work-related files. Everything else on the machine -- his tax returns, personal passwords, music and photos -- was personal, the lawsuit says. He claimed that the company had told him that he did not have to turn over personal files and materials.

Sunrise alleged that Rush returned the computer on March 19 after deleting all active electronic files. The company said a forensics exam found evidence of pornography on parts of the hard drive that had not been wiped clean. "There were more than 25,000 unique pornographic images retrieved from this computer, including pornographic movies, and references to webpage addresses and cached copies of webpages viewed, which showed that it had also been used to gain access to pornographic websites on thousands of occasions," according to the company's formal response.

Rush's attorneys have asked the court to strike the references to pornography from the case, and a hearing is scheduled for Friday.

"The directives required the retention of materials related to accounting activities under investigation and, by their plain terms, did not require the retention of personal material and did not prohibit, or in fact even refer to, the use of Sunrise's computers to view or access adult materials on the Internet," according to court papers filed on Rush's behalf. "Upon suspending and then terminating Mr. Rush, Sunrise never stated that it was doing so because of the adult material allegedly discovered on Mr. Rush's computers."

Rush's attorneys pointed to a deposition in which Sunrise general counsel John Gaul said he did not believe deleting adult material from a Sunrise computer would violate the company's document retention directives.

In its filings, the company said a special board committee told the company's independent board directors about the presence of the pornography on April 23, before the board decided to suspend Rush.

The company said the board " did consider the large quantities of pornography on Rush's computer, in violation of the Company policy, along with a number of other factors -- such as Rush's deletion of documents and his non-cooperation with the [special committee] investigation -- when it made the decision to suspend him."

A copy of the minutes of that meeting obtained by The Washington Post makes no mention of pornography, though it mentions that the board considered "other things" before deciding to suspend him.

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