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2nd HealthSouth Official Pleads Guilty

CFO joins predecessor in agreeing to testify

Mar 27, 2003 | AP

The suspended chief financial officer of HealthSouth Corp. pleaded guilty yesterday to federal fraud and conspiracy charges in a huge accounting fraud that has rocked the health care giant.

William T. Owens, suspended March 20 along with HealthSouth's chief executive, Richard M. Scrushy, was also charged with filing false certification of financial information with the Securities and Exchange Commission.

Owens, 44, of Birmingham, faces a maximum of 30 years in prison and as much as $5.5 million in fines, said prosecutors, who agreed to recommend a lighter penalty in return for his cooperation.

U.S. District Judge Sharon Blackburn said sentencing would be in about four months.

Owens appeared relaxed and stood with a hand in his pants pocket during the hearing. He declined to comment to reporters.

Defense attorney Frederick G. Helmsing said he doubted Owens would avoid jail time. "He regrets the conduct that required today's proceedings," Helmsing said.

Prosecutor Richard N. Wiedis said Owens is cooperating with investigators. Owens was allowed to remain free on $500 bond, and the judge told him not to leave the country.

The criminal charges were filed in a sealed document late Tuesday that was made public yesterday morning.

Owens and Scrushy were suspended a day after the SEC accused Scrushy and the company he founded with overstating profits by at least $1.4 billion since 1999.

Scrushy has not been charged with a crime but is the target of a federal criminal investigation, according to court documents filed by his attorneys.

U.S. Attorney Alice H. Martin said more charges and plea deals were likely for HealthSouth employees who help prosecutors. She declined to comment on whether Scrushy might be indicted.

Last week HealthSouth's board elected director Joel C. Gordon to replace Scrushy as acting chairman and assigned another director, Robert P. May, as acting CEO.

The New York Stock Exchange is seeking permission from the SEC to delist the company.

The stock, which sold for $3.91 a share before trading was suspended, sold over the counter yesterday for 11 cents a share. Its stock had gone as high as $30 a share in the past five years.

Owens' plea agreement is the second reached in the HealthSouth investigation.

On March 19, the Justice Department announced that Weston L. Smith, 42, the company's former chief financial officer, had agreed to plead guilty to criminal charges in exchange for his testimony. The plea bargain calls for him to admit to securities fraud, conspiracy and wire fraud charges, as well as false certification of financial records.

HealthSouth, the largest U.S. provider of outpatient surgery, diagnostic imaging and rehabilitation services, has about 50,000 employees and 1,700 facilities in all 50 states and abroad.

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