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HealthSouth Treasury Department Under Fire

Jul 9, 2003 | AP

A 12th executive at HealthSouth Corp. agreed to plead guilty as prosecutors said Tuesday their probe of a massive accounting scam had widened into the company's treasury department.

Jason Brown, vice president of finance, was charged with conspiracy to commit securities fraud in a scheme that has the medical services giant struggling to avoid bankruptcy.

Prosecutors said Brown, 34, was cooperating with investigators, just like the 11 previous executives who pleaded guilty.

An attorney for Brown did not immediately return a telephone call seeking comment.

U.S. Attorney Alice Martin said the government's probe was expanding beyond HealthSouth's accounting department into its treasury department.

"We will continue to widen the net of our investigation to reach all those individuals who participated in this fraud," Martin said in a statement.

The government has accused HealthSouth of overstating earnings by some $2.5 billion to make it appear the Birmingham-based company was meeting the forecasts of Wall Street analysts.

The Securities and Exchange Commission filed suit against HealthSouth in March, when a parallel investigation by the Justice Department resulted in the first of a string of plea agreements by one-time HealthSouth executives.

All five of the company's chief financial officers have pleaded guilty, and chief executive officer Richard Scrushy was fired.


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