Birmingham, Ala.(AP) HealthSouth's first chief financial officer testified Wednesday that then-CEO Richard Scrushy told him and a colleague to "fix the numbers" when quarterly earnings were below analyst expectations in mid-1996.
Aaron Beam, who co-founded the medical rehabilitation company with Scrushy in 1984, told federal jurors that a false financial report was created at Scrushy's insistence. In a 58-count indictment, the government contends Scrushy conspired to inflate earnings by $2.7 billion from 1996 to 2002.
Scrushy's defense contends the fraud was carried out by a group of executives without his knowledge. Beam, who was CFO when he retired in 1997, has pleaded guilty in the fraud case and awaits sentencing.
In his second day of testimony, he said the company began having trouble meeting Wall Street expectations a few years after HealthSouth went public in 1986. Testimony continues in Birmingham federal court.
Beam told a federal court jury in his first testimony Tuesday that Richard Scrushy was a micromanager who built the company into a rehabilitation giant with a hands-on style. Beam's testimony was aimed at backing up the government's claim that Scrushy knew the company's earnings reports were being inflated to meet Wall Street expectations. Beam was the final witness yesterday (Tuesday) on the first day of testimony at Scrushy's trial on charges accusing him of conspiring with a circle of executives to overstate earnings by about $2.7 billiion from 1996 to 2002 to enrich himself.
Defense attorney Jim Parkman blamed the fraud on the group of executives -- Beam is among 15 who have agreed to plead guilty in the scandal. Beam is expected to return to the witness stand Wednesday.
As Scrushy's case began in Alabama, former executives from two other companies face trial in New York. Former WorldCom CEO Bernard Ebbers is accused of orchestrating an $11 billion corporate fraud and opening statements are expected today in the retrial of former Tyco CEO Dennis Kozlowski and former finance chief Mark Swartz.