Scrushy Nixes Deal as Divided Jury Deliberates

Former HealthSouth Corp. (search) chief executive Richard Scrushy (search) will not cut any deals with prosecutors in his corporate fraud trial and is ready for a retrial if necessary, his lawyers said Monday as a deadlocked jury began a fourth week of deliberations.

Scrushy, 52, has denied any involvement in a $2.7 billion accounting fraud at the medical rehabilitation group, claiming the massive conspiracy was carried out by former executives without his knowledge.

Although ridiculed as a fantasy by prosecutors, Scrushy's line of defense appears to have gained some tra charges against the flamboyant multimillionaire.

The jury adjourned without reaching a verdict Monday, its 11th day of deliberations. A federal court official later announced the seven male and five female jurors would not work Tuesday, Thursday or Friday.

Sharon Harris, chief deputy of Birmingham's federal court, where Scrushy is being tried, cited juror scheduling and vacation conflicts for the abrupt changes.

But with a mistrial looming in the five-month trial, Scrushy's defense team says there is no possibility their client will consider a plea bargain.

Scrushy is charged with conspiracy, mail and wire fraud, money laundering and other wrongdoing in connection with a scheme to inflate HealthSouth's profits and stock price and allegedly enrich himself between 1996 and 2002.

He faces life in prison if convicted.

"We have absolutely no interest in making a deal with the government," Donald Watkins, a Scrushy attorney, said when asked if defense attorneys had discussed a plea deal with prosecutors.

"We can go round for round as many times as they want. We've seen the government's entire hand," Watkins said.

Prosecutors agreed that a deal was unlikely at this point in the trial. "Why would a man who looks like he has a hung jury make a deal?" said U.S. Attorney Alice Martin, the lead prosecutor in the case.

She refused to say whether the government would retry Scrushy if the trial ended with a hung jury. Her predecessor, however, said prosecutors had little choice but to proceed with a retrial if that occurred.

"I think for the government to back off at this stage would send a very bad message across the country," said Doug Jones, a lawyer who served as U.S. Attorney for the Northern District of Alabama prior to Martin's appointment.

"Stockholders would go ballistic," Jones added.

The two sides' disavowal of interest in a deal came amid growing signs that the prosecution's case was unraveling. Since beginning deliberations on May 19, the jury has told U.S. District Judge Karon Bowdre four times that it is divided.

It has also asked her for help on several occasions.

Bowdre could eventually declare a mistrial if she concludes there is no hope the jury can reach a verdict. But Friday she issued a so-called "Allen charge (search)," ordering jurors to work harder to break the impasse.

Scrushy's trial has attracted attention because he is the first major figure charged with violating the 2002 Sarbanes-Oxley Act (search), the corporate reform law passed by Congress requiring, among other things, that chief executives certify the accuracy of their financial statements.

He did so before stepping down in 2002 as CEO of HealthSouth, which he had built into the nation's largest chain of rehabilitation and outpatient surgery clinics. He was ousted as the company's chairman the following year.

Prosecutors say Scrushy, who hosts a religion-inspired television show and regularly preaches in Christian churches in this Bible-Belt city, directed the fraud to inflate the value of his stock options and fund an extravagant lifestyle. He sold more than $200 million worth of stock.

Scrushy's defense team has admitted it wanted as many religious believers as possible sitting on the jury. Alabama has a large population of fundamentalist Christians and a high church attendance rate.

The government had hoped jurors would be offended by tales of Scrushy's lavish spending, which outraged many investors. HealthSouth's stock fell from a high of $30.56 a share in 1998 to 8 cents a share after the fraud came to light in 2003.