Forensic Accountant: HealthSouth was flat-out making up Numbers

BIRMINGHAM, Ala.(AP) An accountant who examined HealthSouth's books for the government in its case against fired CEO Richard Scrushy testified that earnings were inflated by $2.7 billion dollars from 1996 through 2002.

Accountant Harvey Kelley said the false financial statements were not the result of aggressive accounting practices. He said -- quote -- "it was just flat-out making up numbers."

Kelly's testimony yesterday came after Scrushy's defense tried to damage the credibility of a key witness in the government's criminal case, HealthSouth co-founder Aaron Beam.

Beam told the court Scrushy instigated the fraud with a demand that numbers be fixed so second-quarter earnings in 1996 would not fall below Wall Street expectations.

But under intense cross-examination, Beam testified that Scrushy never explicitly told him to do anything illegal to hide the earnings shortfall.

Beam is among 15 former HealthSouth executives who have agreed to plead guilty in the fraud.

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