Lawyers: Scrushy OK to Testify if Called

Defense lawyers for Richard Scrushy (search) say the fired HealthSouth Corp. (search) CEO is ready to take the stand — but they aren't sure yet whether he will.

Defense attorney Jim Parkman said Tuesday that Scrushy has been prepped for possible questions and exhibits if he opts to testify. The defense team has already decided whether Scrushy will take the stand, Parkman said to reporters outside court. But Parkman was evasive about specifics.

"It's all subject to change," he said.

Parkman's comments came as jurors heard defense team members read aloud from transcripts of a hearing two years ago. In that testimony, former executives talked about their roles at HealthSouth during the time of the fraud.

Scrushy is accused of directing a scheme to overstate earnings by $2.7 billion over seven years to make it appear HealthSouth was meeting Wall Street forecasts. Evidence showed the company's compliance office failed to prevent the fraud.

The defense blames the accounting scheme on former HealthSouth executives, including 15 who pleaded guilty in the fraud and agreed to cooperate with investigators.

In testimony meant to show Scrushy's multimillion-dollar compensation packages weren't out of line, defense expert Wayne Guay said Scrushy's income often appeared related to HealthSouth's stock prices from 1996 through 2002, the years of the fraud.

But Guay's numbers also showed Scrushy made roughly $16 million in 1999 and 2000, despite big drops in HealthSouth's share prices the previous year. And Guay's testimony revealed that Scrushy often received far more than CEOs of other top corporations.

In 1996, for example, Guay's graphs showed the average CEO of an S&P 500 company received $4.2 million, while Scrushy got around $25 million. In 2002, when a CEO's average annual compensation was $8 million, Guay showed Scrushy was still making about $17 million.

Earlier Tuesday, in the transcribed testimony from 2003, former HealthSouth division president Pat Foster told about workers being given cards with a toll-free phone number to report fraud. Scrushy once told managers about the cards, which were discussed during a mass meeting for executives.

"I think it was to reinforce the program. I think the program had already been in place," Foster said during the hearing.

Jurors also heard one of Scrushy's son-in-laws, Mike Plaia, read testimony given by another former HealthSouth executive, Larry Taylor, who claimed he never saw evidence of the fraud. Plaia is the majority owner of a Birmingham TV station airing a nightly show about the trial.

Members of Scrushy's defense team read aloud the testimony because Foster and Taylor are among several former HealthSouth executives who cited their right against self-incrimination as they balked at taking the stand during Scrushy's trial.

While Foster and Taylor testified during the 2003 hearing that they were unaware of any inflated numbers, a prosecution witness said both asked about bogus figures that showed up in reports on their divisions.

Neither Foster nor Taylor has been charged, but court documents filed by attorneys representing the two of them and other one-time HealthSouth workers said they all could be considered targets of a continuing investigation.

U.S. District Judge Karon Bowdre didn't tell jurors why the men were not in court, only that they were unavailable to testify.

With Scrushy lawyer Martin Adams playing the part of a questioning attorney, and defense team member Blake Lancaster reading Foster's answer, the session was comical at times. The two repeatedly mangled the name of another former HealthSouth worker, just as happened during the hearing in 2003.

Adams, like Plaia, is one of Scrushy's son-in-laws.

Scrushy is the first chief executive charged under the Sarbanes-Oxley (search) corporate reporting law, passed in 2002 in response to a string of corporate frauds. He also is accused of conspiracy, fraud, money laundering and obstruction of justice.

He could receive what amounts to a life sentence and be ordered to forfeit some $278 million in assets if convicted.