MONTGOMERY, Ala., May 25, 2007 -- The government has filed its sentencing memorandum with regard to businessman Richard Scrushy outlining the sentence it believes appropriate for Scrushy as a result of his conviction on bribery, conspiracy and mail fraud charges in June 2006.
Note: Scrushy has until May 29, 2007 to present information concerning differences not settled in the sentencing objection conferences.
In the filing, filed between 7:30 and 8 p.m, May 25, the government says, "The United States asserts that twenty-five years imprisonment, a fine of $7,274,109.24, and an order of restitution of $628,000 is the most appropriate sentence in this case."
The United States objected to the Presentence Report calculations of "$500,000 based on the value of the payments. The United States objects to this amount as the value of the payments for the offense conduct because it does not include the value of all payments received as bribes. In addition to the $500,000 bribe received by Defendant Siegelman, Defendant Scrushy paid at least $11,0003 in bribes to Tim Adams as part of the conspiracy and honest services fraud scheme for which Defendant Scrushy and Defendant Siegelman were convicted in Counts 5, and Counts 6-9, respectively..."
"The amount of benefits received in return for the payments is as follows: Defendant Siegelman received $500,000 in benefits because the IHS check for $250,000 and the HealthSouth check for $250,000 were both used to pay off a loan for which he was personally liable. In addition, IHS received $17,000 in benefit because UBS Warburg forgave $267,000 in debt owed to it by IHS in return for IHS issuing the $250,000 check that Defendant Scrushy used to bribe Defendant Siegelman ($250,000 of this $267,000 amount has already been counted as a benefit received by Defendant Siegelman)."
"Tim Adams received at least $11,000 in benefits from Defendant Scrushy and Defendant Siegelman as part of the offense conduct. In addition, the United States submits that HealthSouth received $3,109,054.62 of benefit from the construction and operation of the Phenix City hospital - a project for which Defendant Scrushy paid a $3,000 bribe to Adams for Adams to attend the July 2002 CON Board meeting, establish a quorum, and vote in favor of HealthSouth's CON application for the hospital. Adding these sums together provides a total amount of benefit received of $3,637,054.62..."
Attorneys for Scrushy in a recent motion, which was denied by Judge Fuller say Scrushy "will argue at sentencing, there was no evidence presented at trial connecting him to either of the alleged bribes paid to Mr. Adams. Moreover, and in any event, any "benefit" that might have accrued to HealthSouth did not "result from" the payment of any monies or the provision of any thing of value to Tim Adams. "
The government's filing goes on to assert the following:
"...More importantly, the United States objects to the PSR's use of the value of payments as the The Court should impose a fine on Defendant Scrushy in the amount of $7,274,109.24. The United States avers that a reasonable amount for Defendant Scrushy to pay as a fine is the amount of loss caused to the victims of his crime plus the amount of ill gotten gain he expected to receive from his illegal acts."
" As discussed supra, the total benefit received from Defendant Scrushy's criminal conduct provides the best measure of the amount of loss and expected gain from his criminal actions and is conservatively assessed at $3,637,054.24. Considering Defendant Scrushy's financial condition, an amount that is double the loss and expected gain, or $7,274,109.24, is an appropriate and reasonable fine. This amount will not only punish Defendant Scrushy for his role in corrupting the Office of Governor and the CON Board, but will also deter him and others from engaging in similar actions in the future."
" The United States urges the court to impose this amount, the statutory maximum, because the most effective method to ensure no recidivism by Defendant Scrushy and to deter others from corrupting State government is to signal clearly that those who engage in public corruption offenses shall not profit from such activity."
"...The Probation Officer correctly enhances Defendant Scrushy's offense level by four-levels under Section 3B1.1 because he was an organizer/leader of the criminal activity. PSR at ¶ 36. The PSR expressly states that Defendant Scrushy "organized the activities relating to and surrounding the circumstances of the federal funds bribery and there are at least five participants." The United States asserts, however, that the Court should also find that Defendant Scrushy qualifies for the four level enhancement because the criminal activity was "otherwise extensive."
"The CON Board criminal activity was certainly otherwise extensive given that it involved numerous corporations, professionals, government offices, and individuals, including many unsuspecting accomplices, (e.g., numerous personnel from Integrated Health Services, HealthSouth, UBS Warburg, First Commercial Bank, and the Alabama Secretary of State's Office, David Kassouf, Darrin Cline, and Jabbo Wagoner). The CON Board criminal activity was replete with instances of each Defendant trying to hide his participation in the crimes (e.g., Defendant Scrushy told Mike Martin that he [Scrushy] did not want his fingerprints on the IHS check, Defendants Siegelman and Scrushy never disclosed publicly that Defendant Scrushy was the source of the $250,000 IHS check)."
"...The government objects to ¶ 34 of the PSR insofar as it does not include a two level increase for the specific offense characteristic of "more than one bribe" under Section 2C1.1(b)(1). In the course of the offense conduct for which he stands convicted, Defendant Scrushy paid at least two bribes. Specifically, Defendant Scrushy paid (1) a bribe of $500,000 to Defendant Siegelman, and (2) at least one bribe to CON Board Member Timothy Adams. The bribes identified above are offense conduct specifically identified in the indictment.
Defendant Scrushy's bribe payment to Defendant Siegelman is specifically charged in Count 4, which states that "defendant Scrushy gave, offered, and agreed to give $500,000 to DON EUGENE SIEGELMAN ... ." The jury found Defendant Scrushy guilty of Count 4. The $500,000 bribe in Count 4, together with further, different bribes, are all charged as integral parts of Count 5. Count 5 charges a mail fraud conspiracy to deprive the State of Alabama of the honest services of both Defendant Siegelman "as well as other members of the CON Board."
"Count 5 goes on to specifically state as one manner and means of the conspiracy the same bribe identified in Count 4, i.e., that "RICHARD M. SCRUSHY would and did pay $500,000 to DON EUGENE SIEGELMAN ..." Indictment, at ¶ 55a. Count 5, however, goes on to specifically state as a separate manner and means of the conspiracy that "RICHARD M. SCRUSHY would and did offer things of value to another CON Board member..." Id. at ¶ 55e. Moreover, the indictment specifically charged two payments to the "CON Board Member," separate and apart from the $500,000 paid to Defendant Siegelman. In particular, ¶ 56 charges as one overt act a "payment of $3,000" on August 2, 2002, for creating a CON Board quorum for action on a proposed hospital.
Further, ¶ 56 charges a February 6, 2002, "payment of $8,000" concerning a certain PET scan application as another overt act. At trial, the testimony of Loree Skelton both identified Timothy Adams as the CON Board member receiving these two separate payments, and highlighted their separation from the $500,000 bribe to Defendant Siegelman, of which she had no knowledge. The jury found Defendant Scrushy guilty of Count 5. Further, all of the same bribes identified in the Count 5 conspiracy were also charged as substantive mail fraud in Counts 6 through 9. Specifically, Counts 6 through 9 charged the very same manner and means as Count 5, i.e., that "RICHARD M. SCRUSHY would and did pay $500,000 to DON EUGENE SIEGELMAN ...", id. at ¶ 59a, and that "RICHARD M. SCRUSHY would and did offer things of value to another CON Board member..." Id. at ¶ 59e. "
"Moreover, and more importantly, Counts 6 through 9 proceed to charge aspects of all the various bribes as separate mailings in furtherance of the scheme. Specifically, Counts Six and Seven charge mailings of CON Board appointment letters that furthered the $500,000 bribe of Defendant Siegelman by giving HealthSouth membership on and influence over the CON Board. Count 8, in contrast with Counts 6 and 7, charges a mailing in furtherance of the $3,000 bribe to Timothy Adams to facilitate a Certificate of Need for a HealthSouth hospital in Phenix City, Alabama. Count Nine, in further contrast with Counts 6 through 8, charges a mailing that furthered the $8,000 bribe in connection with the PET scanner application. The jury found Defendant Scrushy guilty of each of Counts 6 through 9, thereby specifically finding that each of the multiple bribes at issue did occur."
"...Defendant Scrushy has willfully attempted to obstruct justice in the course of his sentencing proceedings in this case. Specifically, under Section 3C1.1, Defendant Scrushy has attempted to obstruct the revocation of release proceedings concerning his travel aboard his yacht in Florida without the knowledge of his probation officer."
"Further, as noted by the PSR at ¶ 66, Defendant Scrushy might also have attempted to obstruct justice by providing false information on his financial condition, a matter that remains under review and subject to further investigation. In the course of the probation revocation proceedings against Defendant Scrushy that came to a hearing on April 9, 2007, Defendant Scrushy attempted to obstruct justice in two ways. First, Defendant Scrushy willfully attempted to prevent a witness from communicating information to the Federal Bureau of Investigation in its investigation of Defendant Scrushy's movements in Florida."
"More specifically, Defendant Scrushy at the very least engaged in misleading conduct by instructing William Kurtz, captain of Defendant Scrushy's yacht, to inform the FBI, when approached by an agent, that Kurtz was unwilling to speak to the FBI and that he was represented by Art Leach, one of Defendant Scrushy's defense attorneys. Defendant Scrushy gave Kurtz these instructions knowing that Mr. Leach did not then, and had never, represented Kurtz. (The government notes that Mr. Leach has directly communicated that fact to government counsel by e-mail on his own initiative)."
"Defendant Scrushy advised Kurtz to invoke this spurious representation by counsel as a means to avoid providing information to the government about Defendant Scrushy's movements in Florida."
"As a result, FBI Special Agent Keith Baker was prevented from interviewing Kurtz on or about April 4, 2007. Further, Defendant Scrushy perjured himself during the Court's revocation hearing.
"Specifically, Defendant Scrushy falsely stated under oath (1) that he had advised a United States Probation Officer of his intended movements in Florida, (2) that a United States Probation Officer had approved his movements in Florida, and (3) that he had not instructed Kurtz to invoke nonexistent representation of counsel and to refuse to cooperate with the FBI."
"As to the last false statement, at the revocation hearing, Defendant Scrushy's testimony under oath was as follows:
Q. Okay. And you heard Special Agent Baker testify that the boat captain told him that you had told him, the boat captain - you had told the boat captain to tell Agent Baker that he was represented by Art Leach.
A. I did. Yes, sir. I heard that.
Q. And you also heard the testimony about the boat captain feeling loyal to you because of what had been done; and therefore, he was going to do what you told him to do. I think Agent Baker said he said when he says jump, I jump; is that right?
A. I heard him say that.
Q. Okay. And the fact of the matter is that he didn't cooperate with law enforcement when they came down there to try to find out about where you had been and where you were, right?
A. If he - are you saying he didn't meet with them?
Q. Did you tell him not to cooperate with law enforcement?
A. No, sir. I didn't say -
Q. Am I - am I asking the question the wrong way? Let me ask it another way. Did you tell him not to talk to the FBI?
A. I told him that we had a lawyer and to have them call the lawyer.
Moreover, Defendant Scrushy remains subject to further investigation for obstruction of justice in his representations about his financial condition for inclusion in the PSR..."
"The PSR states that "[t]here is no identifiable victim who incurred a . . . financial loss as a result of the counts of conviction," PSR at ¶ 27, and that "[r]estitution is not an issue in this case." PSR at ¶ 79.
"The United States objects to this statement because HealthSouth, UBS Warburg, and Brookwood Hospital are identifiable victims of Defendant Scrushy's criminal conduct for which he was convicted. In particular, UBS Warburg lost at least $267,000 by forgiving that amount in indebtedness to Integrated Health Services, which gave a $250,000 check to Defendant Scrushy as part of Defendant Scrushy's $500,000 bribe to Defendant Siegelman. Similarly, Defendant Scrushy illegally expended at least $261,000 of funds from HealthSouth as part of his paying bribes to Defendant Siegelman and Tim Adams. Brookwood Hospital lost at least $100,000 in expenses and income associated with the CON Board's denial of its application for a MRI at its meeting in January 2001 - the night before which Defendant Scrushy improperly contacted Margie Sellers, Chairperson of the CON Board, at home ex parte to criticize Brookwood's proposal."
The government misidentifies the defendant as Siegelman in this paragraph but the information pertains to defendant Scrushy. "The United States asserts that Defendant Siegelman should therefore be ordered to pay restitution as follows: $261,000 to HealthSouth, $267,000 to UBS Warburg, and at least $100,000 to Brookwood, for a total amount of restitution of $628,000."
The government wraps up its argument as follows:
"...The United States asserts that Defendant Scrushy should receive a sentence of 300 months, or 25 years, a fine of $7,274,109.24, and an order to pay restitution of $628,000 for the offenses for which the jury convicted him. A sentence of 25 years is a reasonable sentence given that the jury convicted Defendant Scrushy for public corruption offenses that spanned at least a four year time frame, including a period while he was CEO and Chairman of HealthSouth, involved his corruption of the office of Governor and the CON Board, caused a heightened distrust of State government, and abused his position of trust as the chief fiduciary at HealthSouth. If ever a defendant was deserving of being held accountable to the maximum extent for his criminal wrongdoing, Defendant Scrushy is that defendant, especially given the complete lack of remorse and acceptance of responsibility he has shown for his crimes. The United States, therefore, respectfully urges this Court to punish Defendant Scrushy to the fullest extent permitted under the law."