BIRMINGHAM, Ala. – A federal judge indicated Tuesday she would throw out three perjury charges against fired HealthSouth Corp. (search) CEO Richard Scrushy (search) but said she would let his corporate fraud trial move ahead on 55 additional counts.
Ruling after a weeklong break, U.S. District Judge Karon Bowdre said she was granting a defense motion to bar jurors from hearing evidence about Scrushy's sworn statement to an investigator from the Securities and Exchange Commission (search).
Bowdre told jurors they would have "three fewer charges to deal with" because of her ruling, but she did not elaborate. She said she would issue a written order later.
Scrushy was charged with three counts of perjury for allegedly lying during the statement, given in 2003.
Besides perjury, Scrushy was charged with conspiracy, fraud, money laundering, obstruction of justice and false corporate reporting in the first case of a CEO being accused of violating the Sarbanes-Oxley Act (search), passed in 2002.
Scrushy could get what amounts to a life term and be ordered to pay fines up to $278 million in assets if convicted even without the perjury charges.
As testimony resumed, prosecutors called an accounting specialist who said his firm was hired by the Justice Department to determine whether Scrushy and other HealthSouth executives had benefited from the fraud at the rehabilitation and medical services chain.
William Bavis of Clifton Gunderson in Baltimore said his company was paid $1.6 million for two years worth of work that included poring through more than 200,000 documents and 34,000 financial transactions.
Prosecutors contend Scrushy made millions in salary, bonuses and stock sales by leading a conspiracy to overstate HealthSouth earnings by some $2.7 billion for seven years beginning in 1996.
The defense contends subordinates committed the fraud on their own and lied to Scrushy to cover it up.
Fifteen former HealthSouth executives have pleaded guilty in the fraud, including five finance chiefs who testified that Scrushy was in on the scheme.