Scrushy guilty, ordered to pay billions

File photo
File photo

BIRMINGHAM, AL (WSFA) - Former HealthSouth CEO Richard Scrushy just suffered a legal setback to the tune of nearly $3 billion.

A Circuit Judge in Birmingham found Scrushy guilty of fraud and ordered the former CEO of HealthSouth to pay $2.8 billion to HealthSouth stockholders in an accounting fraud scheme at the company.

Jefferson County Circuit Judge Allwin E. Horn III issued the opinion Thursday morning in favor of derivative plaintiffs Wade C. Tucker and the Wendell H. Cook, Sr. Testamentary Trust, John P. Cook Trustee. The shareholders filed a civil suit claiming Scrushy was involved in the fraudulent actions. The company was nearly pushed into bankruptcy.

Scrushy was previously acquitted in a federal criminal case over the fraud and testified in the state civil suit that he knew nothing about the crime.

However, some evidence that wasn't allowed in the federal case made its way into the civil case including Scrushy's handwritten notes on documents linked to the fraud. The plaintiff's attorneys claim he made more than $266 million during the time of the accounting fraud.

John W. Haley, lead counsel for the plaintiff's firm Hare, Wynn, Newell & Newton said, "The ruling in this historic case is a shot across the bow for those who engage in corporate greed and fraud in our country. In fact, this is much more than a shot across the bow... it is a full broadside and a tremendous victory for the shareholders of HealthSouth."

Because of the type of litigation, the $2.8 billion will have to go to the HealthSouth company and not individual stockholders.

Judge Horn wrote in his ruling that Scrushy "Knew of and participated in" the faked reports filed with regulators from 1996 through 2002. He also added that the company's founder "Consciously and willfully" violated his financial responsibilities as CEO.

Scrushy's attorney says he will appeal the multi-billion judgement.

Scrushy is currently serving seven years in prison in Beaumont, Texas on fraud and public corruption convictions from 2007.