Final Judgment Order Issued in Scrushy/SEC Case - WSFA.com Montgomery Alabama news.

Final Judgment Order Issued in Scrushy/SEC Case

April 23, 2007 --  A Final Judgement Order has been rendered in the Securities and Exchange Commission case against businessman Richard Scrushy and according to the Judge Inge P. Johnson's order Scrushy "consented to entry of this Final Judgment without admitting or denying allegations of the Complaint (except to jurisdiction); waived findings of fact and conclusions of law, and waived any right to appeal from this Final Judgment."

Furthermore according to the court judgment, "Defendant is prohibited from acting as an officer or director of any issuer that has a class of securities registered pursuant to Section 12 of the Exchange Act...or that is required to file reports pursuant to Section 15(d) of the Exchange Act...Beginning five years from the date of the entry of this Final Judgment, but not before, the Defendant, upon Notice to the Commission, may petition this Court for a modification or removal of the prohibitions in this paragraph."

"IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant is assessed a disgorgement of $77,500,000 and a civil penalty in the amount of $3,500,000 pursuant to Section 20(d) of the Securities Act...and 21(d)(3) of the Exchange Act...Defendant shall satisfy this assessment:

(1) by depositing $1,500,000 of the penalty with the Clerk of this Court within twelve months of the date of entry of this Final Judgment;

(2) by depositing the remaining $2,000,000 of the penalty with the Clerk of this Court within twenty-four months of the entry of this Final Judgment; and

(3) by depositing $77,500,000 in disgorgement with the Clerk of this Court within twenty-four months of the date of the last judicial order or judgment (1) assigning the Defendant an obligation to pay a judgment or satisfy a settlement in any of the "Disgorgement Cases"  - as defined in Paragraph VIII below, or (2) providing a dismissal with prejudice as to the Defendant in any of the Disgorgement Cases.

Provided, however, that the Defendant may satisfy his obligation to pay the $77,500,000 in disgorgement assessed in this case through an offset, on a dollar for dollar basis, for amounts that he has paid or pays in the future in judgments or settlements in the Disgorgement Cases, by establishing with the Commission or this Court that the Defendant has paid such amounts in judgments or settlements in the Disgorgement Cases...."

NOTE in a Stipulated Order "the parties hereby stipulate, and the Court hereby orders, that Defendant Richard M. Scrushy receive the following offsets and/or credits in partial satisfaction of the $77,500,000 in disgorgement assessed in this case: $17,139, 860.55 in the "Delaware Case"; $52,877,928.68 in the "Tucker" case; and $1,500,000.00 in In re: HealthSouth ERISA Litigation, for a total offset and/or credit of $71,517,789.23."

So Scrushy ends up paying approximately $5,982,210.77. (Plus the $3,500,000 civil penalty.)

Later on in the ruling, "To preserve the deterrent effect of the civil penalties, Defendant shall not argue that he is entitled to, nor shall he further benefit by, any offset or reduction of any compensatory damages award in any of the Disgorgement Cases by the amount of the Defendant's payment of a civil penalty in this acting ("Penalty Offset").   If the court in any Disgorgement Case grants such a Penalty Offset, Defendant shall, within 30 days after entry of a final order granting the Penalty Offset....Such a payment shall not be deemed an additional civil penalty and shall not be deemed to change the amount of the civil penalty imposed in this Judgment."

The cases the court refers to are (1) HealthSouth Corp. Shareholders' Litigation (the "Delaware Case"), (2) Wade Tucker, et al. v. Richard Scrushy, et al., in the Circuit Court of Jefferson County, Alabama...,(3)HealthSouth ERISA Litigation, (4) HealthSouth Corporation Securities Litigation, (5) Richard M. Scrushy v. HealthSouth Corporation, in the Circuit Court of Jefferson County, Alabama..."

Finally the judge says, "if the Defendant asserts that he is unable to pay any of the above amounts in disgorgement or civil penalty upon the due dates, Defendant will have ninety days to establish with the Commission, or with this Court in a contempt proceeding, that he is unable to pay the required amounts.  In proving his inability to pay, Defendant may exclude the value of any retirement accounts existing as of January 3, 2007, and the value of his principal residence...which accounts and residence shall be exempt from any judgment collection efforts by the Commission."

In the Scrushy's Consent document also mentioned, "Defendant agrees (1) not to take any action or to make or permit to be made any public statement denying, directly or indirectly, any allegation in the Complaint or creating the impression that the Complaint is without factual basis; and (ii) that upon the filing of this Consent, Defendant hereby withdraws any papers filed in this action to the extent that they deny any allegation in the Complaint.  If Defendant breaches this agreement, the Commission may petition the Court to vacate the Final Judgment and restore this action to its active docket.  Nothing in this paragraph affects Defendant's: (i) testimonial obligations; or (ii) right to take legal or factual positions in, and make statements regarding, litigation or other legal proceedings in which the Commission is not a party."

The Consent also says Scrushy waives any rights to "seek from the United States, or any agency, or any official of the United States acting in his or her official capacity, directly or indirectly, reimbursement of attorney's fees or other fees, expense, or costs expended by Defendant to defend against this action..."

Reported by: Helen Hammons

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