Scrushy Jury Possibly Deadlocked

BIRMINGHAM, Ala. – Jurors deliberating the fraud case against fired HealthSouth Corp. (search) CEO Richard Scrushy (search) asked about the possibility of a deadlock Friday in only their second day of talks.

The question came in a handwritten note delivered to U.S. District Judge Karon Bowdre moments after the jury arrived to start the day.

They requested clarification of a key conspiracy charge against Scrushy, and asked: "If we can not decide unanimously one way or another, what happens."

Jurors must answer as many as 52 separate questions to decide the conspiracy count, one of 36 they are to review in the first phase of deliberations.

After consulting with both sides, Bowdre told the panel she was "confident that with some more discussion you can reach a verdict."

The judge's comments came during a hearing where jurors listened to clandestine FBI recordings of Scrushy, accused of leading a $2.7 billion earnings overstatement at HealthSouth. The jury asked to hear the recordings shortly after deliberations began Thursday.

Outside court, prosecutor Richard Smith said "you can't read anything" into the jury's note about a possible deadlock.

"They're asking the right questions. They're on the right track," he said.

Defense attorneys came out of court smiling, even though they said they are hoping for an acquittal of Scrushy, not a hung jury and mistrial.

"I like the note," said Scrushy attorney Donald Watkins.

One of the four FBI recordings played for jurors showed that Scrushy badly misjudged the scope of a federal investigation into the corporation.

Speaking with finance chief Bill Owens just hours before agents raided HealthSouth headquarters on March 18, 2003, Scrushy said he had "verified my source" and was sure the government was only reviewing allegations of insider trading by Scrushy.

"The FBI is not looking at anything else, just trading," said Scrushy.

With the raid, federal investigators went after what prosecutors describe as a massive accounting fraud.

Elsewhere in the lengthy conversation with Owens — who was wearing an FBI bug — Scrushy gave details about his sworn testimony to the Securities and Exchange Commission (search), after stating: "We can't talk about the SEC thing, so this didn't take place."

Later that same day, agents swooped down on the rehabilitation and medical services chain. Owens and 14 others have since pleaded guilty in a massive accounting scheme, and jurors are deciding whether Scrushy is guilty, too.

Jurors also asked to listen to a tape of a speech Scrushy gave before HealthSouth managers in 1988. In the speech, Scrushy talked about finances in depth and threatened to fire anyone who ever hired a convicted felon.

Scrushy is the first CEO charged under the Sarbanes-Oxley (search) corporate reporting law for allegedly directing a $2.7 billion earnings overstatement at HealthSouth. He also is accused of fraud, false reporting to the Securities and Exchange Commission and money laundering.

Scrushy, 52, faces the equivalent of a life sentence if convicted, plus millions of dollars in fines and the forfeiture of as much as $278 million in assets. The exact range of his possible punishment is unclear because of uncertainty in federal sentencing rules.