BIRMINGHAM, Ala. – Former HealthSouth (search) CEO Richard Scrushy (search) told his finance chief to "go down fighting" right before an FBI raid that resulted in fraud charges against a string of executives from the rehabilitation giant, according to evidence Friday at Scrushy's trial.
Unknown to Scrushy when he made the comment, then-CFO Bill Owens already had quit fighting: He was cooperating with prosecutors and wearing a hidden recorder that captured Scrushy's words.
Jurors listened to a digital recording of the conversation during Owens' eighth day of testimony. In all, prosecutors played six secretly made recordings that they say prove Scrushy was the director of a scheme to overstate HealthSouth earnings by some $2.7 billion.
Scrushy claims Owens and other aides lied to him for years while committing the fraud on their own.
After prosecutors played the final tape, defense lawyers began cross-examining Owens, whom they described as the "godfather" of a group that ran the scheme.
"Is there any one (document) ... that indicates on its own that Richard Scrushy was involved in this fraud?" Scrushy attorney Jim Parkman asked.
"I believe the tapes do," answered Owens.
"That was good," Parkman said with a smile. Parkman then asked if there were any letters, e-mails, memos or other documents linking Scrushy to the scheme.
"No, there's not," said Owens.
Parkman repeatedly suggested Owens was lying about his own actions and Scrushy's role in the fraud. At one point, Owens asked Parkman to look at him, not jurors, when asking a question.
Owens, who is among 15 former HealthSouth executives who reached plea deals, said the conversation was recorded as he and Scrushy talked in a private hallway of HealthSouth headquarters on March 18, 2003, shortly before agents arrived with warrants to begin searching the building.
In the recording, Owens told Scrushy his wife, Kaye, was mad about him signing "phony financial statements" and feared he would end up in prison, leaving her without an income. In questioning, prosecutors brought out that Scrushy continued with the conversation without pause.
Suggesting his wife wanted him to go to prosecutors, Owens told Scrushy he was trying to decide what to do.
Lowering his voice, Scrushy said: "You've got accountants signing off on all this. You've got everything set up. You're smart, Bill, but you've got to lead your troops. I'll do whatever you want me to. I think you ought to go down fighting, Bill. You ought to go down fighting."
Apparently trying to encourage Owens, Scrushy said banks weren't "coming in" on HealthSouth, a reference to keeping the company out of bankruptcy.
"And we're seeing a healthy day every now and then in the stock. We are seeing that. I just hate to go down there and just give the keys to them," Scrushy said.
"Well, I don't want to do that," Owens replied.
"But if you think that's what we ought to do, then tell me. But I sure as hell would hate to see us do that," Scrushy said.
In cross-examination, Parkman suggested Scrushy didn't realize what was really going on with HealthSouth finances when he was being recorded. He repeatedly asked why Owens didn't use explicit terms like "fraud" or "illegal" in talking with Scrushy while the recorder was on.
"I didn't have to," answered Owens, saying he and Scrushy had a "way of communicating" after years of scheming.
Owens is awaiting sentencing; his attorney has said he expects him to serve time in prison.
Scrushy is on trial on a 58-count indictment accusing him of conspiracy, fraud, money laundering, obstruction of justice, perjury and false corporate reporting in the first test against a CEO of the Sarbanes-Oxley Act (search).
Scrushy could receive what amounts to a life sentence if convicted, and prosecutors are seeking $278 million in personal property and accounts.
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