BIRMINGHAM, March 29 -- HealthSouth Corp. Vice President Emery Harris plans to plead guilty to fraud Monday, becoming the third executive to admit accounting-related charges and help a federal probe of chief executive Richard Scrushy.
Harris, 33, an assistant controller, is to admit that he began conspiring in 1997 to inflate earnings at HealthSouth, his lawyer, J. Stephen Salter said. "He's pleading guilty because he is guilty," Salter said.
HealthSouth, the biggest U.S. operator of rehabilitation hospitals, is trying to avoid bankruptcy.
The plea would strengthen the case prosecutors are building against Scrushy, who has been accused along with HealthSouth by the Securities and Exchange Commission of inflating earnings by $1.4 billion.
Harris plans to admit that he attended sessions with accounting employees known as "family meetings" to discuss how to inflate earnings, Salter said. Former chief financial officers Weston Smith and William Owens have made similar admissions.
The SEC alleged that Scrushy began telling workers to inflate earnings to match Wall Street expectations shortly after HealthSouth went public in 1986. Smith said fraudulent earnings were known as "dirt," which filled the "gap" or "hole" in desired earnings.
Separately, the FBI said it expanded its probe to include an examination of Scrushy's private investments, including facts surrounding the suicide of an accountant who worked for one of those ventures; and whether HealthSouth overbilled Medicare.