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Excerpts of HealthSouth Conversation

Apr 11, 2003 | AP

Excerpts of an FBI monitored conversation held March 18 between Richard Scrushy, HealthSouth Corp.'s then-CEO, and William T. Owens, its chief financial officer at the time. Prosecutors released the tape of the conversation Friday.

FBI agents had already been to the company's headquarters once when the discussion took place. The two were secretly recorded a day before the government filed suit accusing HealthSouth and Scrushy of accounting fraud.

Owens, who was wearing a concealed recording device for the FBI, has pleaded guilty to fraud and is cooperating with investigators. Scrushy has not been charged with any crime.

Owens: ... I need to update you on my talks with my spouse. (Unintelligible) She said, "I'm afraid if you keep signing these phony financial statements" — and that was her term — she says, "I've been reading about Enron and I've been reading about WorldCom," and she said "I'm afraid that if you keep this up you may end up in prison." And she said, "If you end up in prison what's going to happen to me? You know, who's going, I'm not capable, I haven't made a living for myself in 25 years." And I said "Kaye, I don't have any answers for you."

Scrushy: Is that where y'all left it?

Owens: I told her here we'd talk about it again.

Scrushy: Well, it seems to me that if we don't try . ... What do you want to do about it? What would you like to do? I mean, I'm listening to you.

Owens: You know, ideally it would be great to, to solve our problems. That's going to take time.

Scrushy: Yeah.

Owens: What would you recommend I do with it?

Scrushy: I think every one of those people in that room are at risk, their jobs and this whole company and everything is, is not . ... I think we've got good numbers quarter to quarter from here on out. We'll have good, solid numbers. I think that, you know, we're going to come out of here with some damn good income statements. (Unintelligible).

We've taken a major writeoff last quarter. And I think you've written off everything. People think the deck's clean. And I think that, I think people are saying, `They've cleaned it all up.' And, uh, I think if there's other things that bother you about the balance sheet that you need to fix them over time. Or either if there's a way you can fix them now, but I think you'd get killed. I think that you've already signed the documents so if you go to, you know, I mean, ...

Scrushy: ... See, what I was saying, it seems to me you're already in it, Bill, and I don't see getting out of it. You know what I mean?

Owens: Oh yeah. I mean ...

Scrushy: So, I mean, I don't think .... I think what your wife is telling you is right, but I think you're already ... I wish that ... I don't know what to tell you. I just wish we could just run it and get it to where we want to be and just buckle down on everything. You're a bright guy and I believe you can (unintelligible). You ought to be able to help us. You ought to be able to engineer yourself out of what you engineered your way into. Does that make sense? I don't know how, I mean, but I think your mind's not clear.

Owens: ... I'm sure by Thursday I'll have this thing solved. But I know you're worried about it and I didn't want you to go home tonight and me not tell you where everything's going. (Unintelligible)

Scrushy: I mean hell, yeah, I can't sleep at night. (Unintelligible) I got my little babies, I got my little boy. I got a ball game I got to go to. I got I'm sitting there watching him playing ball and I'm thinking, `Hell,' you know. Look at, Look at everything. Look at all these people. And you know what reality is? Look at how profitable this company is. Do we really want to trash all this?

Owens: No.

Scrushy, discussing banks: When they get you is when you go into bankruptcy. That's when they come in on you. They don't come in on a company that's paying their bank debt down. They don't come in on a company that's doing good. They come in on a company that's screwed up. And we're, we're seeing a healthy day right now in stock. We're seeing that. I just hate to go down there and just give the keys to them.

Owens: I don't want to do that, either.

Scrushy: If you think that's what we ought to do, come back and tell me.

Owens: I will.

Scrushy: I sure as hell hate to see it.

Owens: Uh huh, I agree.

Scrushy: 'Cause then you're going to take all those other people down with you. I mean there's a lot of people (unintelligible). It's worth fighting for them. We're just fighting for them. And, the reality is(unintelligible). Bill, I know you got a lot on your mind. I'm praying for you. I prayed for you last night and this morning. (unintelligible) We're so close. We're so close to getting on the other side of this.


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