-- A judge sentenced HealthSouth Corp.'s first finance chief to three months in prison Thursday for his role in a $2.7 billion earnings overstatement at the rehabilitation and medical services chain.
Aaron Beam Jr., who helped Richard M. Scrushy found the company in a one-room office in 1984 and testified against the ousted chief executive earlier this year in his fraud trial, also will forfeit $275,000 under a deal worked out with prosecutors. The judge added a $10,000 fine, plus one year of probation.
Sobbing as he stood before the judge, Beam apologized and said he went along with the fraud out of fear of Scrushy.
"I should have stood up to Richard Scrushy and said 'no,' but I didn't," he said.
A jury found Scrushy innocent of criminal charges in June. But during Thursday's sentencing, U.S. District Judge Robert Propst said he had no reason to doubt the trial testimony of Beam, who said Scrushy ordered the fraud by telling him to "fix the numbers."
"I guess there's somebody out there still looking for the real killer. I don't know," Propst said.
An attorney for Scrushy said, "No one made Aaron Beam break the law."
"I think it's very unfortunate that [he] is trying to shift some blame for his own criminal conduct," said Scrushy lawyer Donald Watkins.
Beam pleaded guilty in 2003 to bank fraud, but prosecutors asked Propst for leniency and suggested the three-month sentence because of the "substantial assistance" Beam provided in the case against Scrushy and others.
The charge carried a maximum sentence of 30 years in prison and a fine of as much as $1 million under the law, but the actual maximum penalty was far less under federal sentencing guidelines.
In his plea, Beam admitted signing fraudulent financial statements to obtain loans and credit from AmSouth Bank before leaving HealthSouth. He retired in October 1997 as the overstatement scheme grew.
Assistant U.S. Attorney George Martin said AmSouth lost no money because HealthSouth repaid the entire $55 million loan.
Of 10 former HealthSouth executives previously sentenced, only one was sent to prison, and that was for just five months. The nine others received combinations of probation, house arrest, fines and forfeitures.
Four more former HealthSouth workers await sentencing, including two more chief financial officers.
During Scrushy's trial, Beam testified that his longtime associate instigated the fraud with a demand that he "fix the numbers," so earnings would not fall below Wall Street forecasts in 1996. But Beam also said Scrushy never explicitly told him to do anything illegal.
While jurors acquitted Scrushy of all criminal charges, the Securities and Exchange Commission is pushing ahead with a lawsuit against him seeking $785 million in civil penalties.
The judge allowed Beam to remain free on bond until Nov. 1 since he is scheduled to auction his Baldwin County home in October and plans to pay the fine and forfeiture with proceeds from the sale.