Scrushy Jury to Hear FBI Recordings

BIRMINGHAM, Ala. – Prosecutors prepared to play clandestine recordings Wednesday that they say prove former HealthSouth chief Richard Scrushy (search) was behind a conspiracy to inflate earnings of the rehabilitation chain by some $2.7 billion.

Defense lawyers fought to keep the recordings away from jurors, but also contend they prove Scrushy's innocence.

"We do not run from the tapes," one of Scrushy's attorneys, Lewis Gillis, said outside court.

In brief testimony Wednesday morning, former chief financial officer Bill Owens used a diagram of the executive floor at HealthSouth Corp. (search) headquarters to acquaint the jury with locations where he spoke with Scrushy while wearing a hidden FBI microphone and transmitter over two days in March 2003.

Owens is among 15 former HealthSouth executives who pleaded guilty and are expected to testify against Scrushy, the medical rehabilitation company's primary founder in 1984.

The trial was about 1 1/2 hours late resuming as lawyers and the judge worked behind closed doors in advance of jurors listening to the recordings.

The defense repeatedly has objected to the recordings, but U.S. District Judge Karon Bowdre rejected requests to keep them out of court.

In six days of testimony, Owens has described Scrushy as the leader of a scheme to overstate HealthSouth earnings for seven years beginning in 1996. Prosecutors claim Scrushy wanted to keep stock prices high and made millions off the scam.

Scrushy contends Owens and other HealthSouth executives hid the fraud from him, lying to him for years.

Scrushy is charged with conspiracy, fraud, money laundering, obstruction of justice and perjury. He also is accused of false corporate reporting in the first test against a CEO of the Sarbanes-Oxley Act (search), passed in 2002.

If convicted, Scrushy could get what amounts to a life sentence. Prosecutors also are seeking $278 million in assets including waterfront mansions, luxury cars, boats, an airplane, jewelry and art.