Former HealthSouth CFO sentenced to five years in financial fraud |

Former HealthSouth CFO sentenced to five years in financial fraud

BIRMINGHAM, Ala. – A main government witness in the failed prosecution of fired HealthSouth Corp. CEO Richard Scrushy was sentenced to five years in prison Friday for his role in a $2.7 billion fraud at the rehabilitation and health services chain.Bill Owens, a one-time HealthSouth chief financial officer who secretly recorded Scrushy for federal agents, had asked for probation, saying he was deeply sorry for a crime that wrecked his marriage, career and personal finances.U.S. District Judge Sharon Lovelace Blackburn said Owens would not be fined, because he would not be able to pay it.He showed no emotion at the sentencing, but earlier choked back tears as he apologized to HealthSouth investors, employees and his family for what he had done. He said he got involved in the plot at the direction of Scrushy and that he would carry the guilt “for the rest of my life.””I do understand that I must pay for my crimes,” said Owens, 47, the last of five CFOs who served under Scrushy to be sentenced in the massive earnings overstatement.Owens pleaded guilty in March 2003 to charges of conspiracy, wire fraud and falsifying a financial report. Prosecutors said he provided invaluable help with the cases against Scrushy, 14 other HealthSouth executives who pleaded guilty and another who was convicted by a jury.Despite the assistance, prosecutors had said Owens could be sentenced to as many as 30 years in prison and deserved jail time for what he had done.Owens wore a hidden FBI microphone to record conversations with Scrushy and testified against Scrushy for 11 days. Like four other former CFOs, Owens said he was pressured into the crime by Scrushy, who was supposedly obsessed with meeting Wall Street earnings estimates.In acquitting Scrushy, jurors rejected all those claims and sided with the defense, which portrayed Owens as the mastermind of the fraud and Scrushy as an unwitting victim. In closing arguments, Scrushy’s lawyer portrayed Owens as “a big rat” who turned on his former boss.An accountant with the Securities and Exchange Commission, Neil Seiden, said the latest evidence showed the earnings overstatement totaled at least $2.7 billion and cost investors about $6.8 billion in lost share and bond value.The defense disputed Seiden’s loss calculations as excessive and said Owens deserved leniency because he admitted his guilt and devoted himself to righting the wrongs he committed by helping prosecutors.Owens’ wife of 30 years divorced him after learning of his role in the fraud, and the defense said Owens is $157,000 in debt despite having $1.8 million in assets, including a $1.4 million home.In court documents, Owens said he owed his lawyer $250,000 and still must repay a $1.3 million executive loan from HealthSouth. He also owes the Internal Revenue Service $400,000 in penalties and interest.Of the four other HealthSouth CFOs who were previously sentenced, whistleblower Weston Smith got the stiffest punishment: 27 months in prison.Aaron Beam, who helped Scrushy found the company, was sentenced to three months in prison; and Mike Martin, who told Owens which numbers to falsify, was sentenced to one week in prison. Tad McVay was sentenced to probation and house arrest.While Scrushy was acquitted of all charges in June, he faces civil lawsuits over the accounting fraud and has been indicted by a federal grand jury in Montgomery for allegedly paying $500,000 to the lottery campaign of ex-Gov. Don Siegelman for a position on a state health regulatory board.Scrushy pleaded innocent and said the charges are government retaliation for the not guilty verdicts in his the HealthSouth fraud trial.

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