WASHINGTON – The Securities and Exchange Commission (search) will ask a federal judge on Thursday to allow its civil case against Richard Scrushy (search), former chief executive of HealthSouth Corp. (search) , to go forward, an SEC spokesman said on Tuesday.
In March 2003 the SEC filed accounting fraud charges against HealthSouth and Scrushy. A federal judge ended up denying the SEC's civil injunction request to freeze Scrushy's assets but the company agreed last month to pay $100 million to settle with the SEC.
The SEC will argue its case against Scrushy in documents to be filed in a federal court in Alabama in response to a judge who asked last week why the SEC should be allowed to pursue its civil case.
"We intend to pursue our case against Mr. Scrushy," SEC spokesman John Nester said.
If the judge accepts the SEC's argument, it could mark round two for Scrushy who won a major victory in the criminal case against him last week in which a federal jury found him not guilty of orchestrating the $2.7 billion accounting fraud at the medical rehabilitation chain he founded.
He was found not guilty of all 36 charges he faced, including conspiracy, mail fraud, making false statements, securities and wire fraud, and money laundering.
In its March 2003 lawsuit the SEC said the company systemically overstated its earnings at the insistence of Scrushy. The SEC case, which sought to collect monetary penalties and bar Scrushy from serving as an officer or director of a public company, was put on hold pending the outcome of the criminal case.
Scrushy, who was fired from his position and removed from the board after the massive fraud came to light in March of 2003, has maintained that the scheme was carried out by former executives without his knowledge.
HealthSouth's CEO, Jay Grinney (search), said last week that the company would not hire Scrushy.
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