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Former VP At HealthSouth To Plead Guilty

Officials: Fowler says she faked stock sale

Sep 27, 2003 | Birmingham News Another former HealthSouth executive has agreed to plead guilty in the expanding financial fraud investigation, acknowledging she falsified records in a $27 million stock sale, authorities said Friday.

Catherine Fowler, a former vice president of treasury and cash manager, admitted that she participated in a conspiracy to make it appear that HealthSouth had sold its stock in a publicly traded company in 2002, when the stock had been sold for more than $27 million in 2001, according to court papers filed Friday in Birmingham's federal court. The filings did not identify the company.

Prosecutors said Fowler, 36, sent a series of wire transfers from the company's investment account in New York to another operating account in Birmingham to create a paper trail for company auditors. Fowler attended a meeting with senior officers where the stock manipulation was discussed, prosecutors said.

Fowler's attorney, David Leon Ashford of Birmingham, declined to comment on the plea agreement other than to say in a written statement that Fowler will continue to fully cooperate in the investigation.

Fowler would be the 15th former HealthSouth executive to plead guilty in the scandal, including all five of the company's chief financial officers. Fowler agreed to plead guilty to charges of conspiracy to deceive auditors and maintain false books and records. She could receive a maximum penalty of five years in prison and a $250,000 fine.

Fowler worked for HealthSouth from May 1994 until April 3 when she was let go during a series of layoffs at the corporate headquarters, according to a HealthSouth spokesman. Fowler reported to former CFOs Michael Martin and Tadd McVay.

Former Chief Executive Officer Richard Scrushy, fired in March, has not been charged and denies any wrongdoing. Scrushy's lawyers blame the fraud on former CFO Bill Owens and several subordinates.

U.S. Attorney Alice H. Martin said the government's investigation continues and has benefited from cooperation from HealthSouth and tips from the public.

The Securities and Exchange Commission sued HealthSouth and Scrushy in March, accusing the two of inflating earnings. Federal investigators have identified $2.5 billion in falsified profits at the company, the nation's largest operator of outpatient surgery and rehabilitation centers.

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