HealthSouth Corp. founder Richard M. Scrushy, making his first public appearance since federal regulators accused him of inflating the company's earnings by $1.4 billion, declined to answer questions in court about his assets.
Scrushy, the fired HealthSouth chief executive, invoked his constitutional right against self-incrimination at least 30 times today during a hearing before U.S. District Judge Inge Johnson. She is considering whether to extend a freeze on Scrushy's assets that she imposed after the Securities and Exchange Commission filed a civil lawsuit March 19 accusing him and HealthSouth of fraud.
Johnson had limited Scrushy to $15,000 in living expenses for a two-week period that ended today. Scrushy, 50, has asked for $10 million in living expenses and at least $30 million to cover his taxes and legal fees, SEC lawyer William Hicks said in court.
"It's kind of absurd to file a motion for $10 million in living expenses and not say what they're for," Hicks said at the hearing.
Scrushy, who hasn't been charged with a crime, declined to answer questions about his sale of $175 million in HealthSouth stock and the number of boats, cars and planes he owns. Hicks asked Scrushy, who built HealthSouth into the largest U.S. operator of rehabilitation hospitals, whether he owns 40 cars.
Hicks also asked Scrushy if he would fire someone who he knew was falsifying records. "Yes," Scrushy replied.
When the judge ordered Scrushy to say whether documents refreshed his memory of the stock sales, he said, "I can't recall exactly." Hicks showed other documents to Scrushy, who said, "I can't speak to the accuracy of this."
Eight ex-employees have pleaded guilty to accounting fraud, implicating Scrushy in a conspiracy to inflate earnings by $2.5 billion since 1997. A ninth employee, former chief financial officer Michael D. Martin, agreed to plead guilty to conspiracy.
Scrushy has denied wrongdoing and blamed the fraud on his subordinates, according to his attorney, Donald V. Watkins.
HealthSouth defaulted on $367 million in bond payments and is trying to avert bankruptcy. It wants lenders to restructure more than $3 billion in debt payments and unfreeze a $1.25 billion credit line.