The former HealthSouth Corp. chief financial officer who was a key prosecution witness in the fraud trial of company founder Richard M. Scrushy was sentenced yesterday to five years in prison for his role in the $2.7 billion accounting fraud.
William T. Owens, 47, manipulated the Birmingham hospital chain's books and instructed subordinates to make phony accounting entries. He turned himself in to authorities in 2003 and testified against Scrushy for 11 days in a criminal trial this year.
Despite Owens's testimony and secret audiotapes of conversations with Scrushy, jurors acquitted Scrushy on three dozen fraud and conspiracy charges in June. Defense lawyers battered Owens's credibility by stressing that he had not paid federal income taxes and baiting him while he appeared on the witness stand.
U.S. Attorney Alice H. Martin had sought an eight-year prison sentence for Owens. But U.S. District Judge Sharon Lovelace Blackburn knocked three years from prosecutors' request.
"I believe you told the truth," the judge said, according to Bloomberg News. She called Scrushy's acquittal "a travesty."
Nonetheless, the judge said white collar criminals merit stiff sentences, if only to send a message of deterrence to other business executives.
"Corporate offenders are nothing more than common thieves wearing suits and wielding pens," Blackburn said.
The judge has yet to determine how much in cash and property Owens must forfeit as part of the sentence. He is scheduled to report to prison on April 3.
"This prison sentence was earned from each false financial report Owens issued for HealthSouth," Martin said in a prepared statement.
In letters and legal briefs on file with the court, Owens is described as a bright man motivated by his troubled upbringing by an alcoholic, abusive father who frequently switched jobs. Owens's wife of nearly three decades divorced him when the fraud came to light.
On a personal balance sheet filed with the court, Owens said he is $157,000 in the hole. His property includes a $1.4 million home and a 2004 Ford F-150 pickup truck. But his debts far outnumber his assets. They include $250,000 in legal fees, hundreds of thousands of dollars in Internal Revenue Service penalties, and nearly $1.3 million in unpaid loans from HealthSouth.
Owens's sentence matches that of former WorldCom Inc. finance official Scott D. Sullivan, whose testimony this year helped federal prosecutors in New York win a fraud conviction of his supervisor, Bernard J. Ebbers.
But Owens got far more time than other HealthSouth executives who pleaded guilty and cooperated with the government investigation. Another judge sentenced Weston L. Smith, the first finance official to blow the whistle on the fraud, to 27 months in prison. Aaron Beam, the company's first finance chief, received three months. Michael Martin served just one week.
Scrushy, who faces new criminal bribery charges for donations he gave former Alabama governor Don Siegleman, yesterday said the judge's comments about him were "totally inappropriate." Once again, he pointed the finger at Owens, with whom in merrier times he had played in a honky-tonk band.
"Bill Owens was the mastermind and architect of the HealthSouth accounting fraud," Scrushy said in a prepared statement. "My family and I are praying for his family and friends during this difficult time."