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HealthSouth Execs Charged

Department of Justice files criminal charges against 5 more employees as part of accounting fraud

Apr 3, 2003 | CNN/Money

The Department of Justice filed criminal charges against five HealthSouth Corp. executives Thursday in connection with the company's accounting fraud scandal, the U.S. attorney's office in Birmingham, Ala., said.

The five who were to appear in court Thursday were identified as Chief Information Officer Kenneth Livesay, Vice President Angela Ayers, Vice President Cathy Edwards, Group Vice President Rebecca Morgan, and Assistant Vice President Virginia Valentine.

The U.S. attorney's office said Livesay expected to plead guilty.

Should the five plead guilty, it will bring the number of HealthSouth employees and former employees who have admitted to criminal wrongdoing in the scandal to eight.

Former chief financial officers Weston Smith and William Owens and former assistant controller Emery Harris previously pleaded guilty to criminal fraud and conspiracy charges for their part in a scheme to artificially inflate HealthSouth earnings and assets over the past several years.

Securities regulators have accused HealthSouth and its founder and former CEO Richard Scrushy of deliberately overstating earnings by $1.4 billion since 1999, and of inflating the value of assets by $800 million. The U.S. attorney's office in Birmingham has said the fraudulent accounting scheme goes back to 1996.

In addition, HealthSouth said Thursday it will cut about 165 nonclinical jobs at its Birmingham headquarters. HealthSouth employs about 3,500 people in Birmingham, including 830 on the corporate campus.

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