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More Guilty Pleas In Healthsouth Fraud

Apr 22, 2003 | BBC

A fourth former chief financial officer of Healthsouth, the latest US company involved in a major accounting scandal, has agreed to plead guilty to fraud charges.

Malcolm McVay is the 10th executive from the company to reach a deal with US federal prosecutors.

The stock market regulator, the Securities and Exchange Commission (SEC), launched an investigation into Healthsouth and its fired chief executive Richard Scrushy last month, claiming it had inflated profits by $1.4bn (£897m; 1.3bn euros) since 1999.

The profits are now thought to have been inflated by $2.5bn since 1995.

Healthsouth claims it is the largest provider of medical rehabilitation services and outpatient surgery in the US, and has operations in the UK and Australia.

The company is now facing bankruptcy and its shares are trading for 15 cents after hitting a high of $18.30 in May 2001.

Massive fraud

Mr McVay signed off Healthsouth's financial report for the third quarter of 2002, knowing that it was not accurate, the US investigators claim.

"He deeply regrets and apologizes for his actions and poor judgment," said Mr McVay's legal representative.

He faces up to 15 years in prison and fines of $1.25m, which could be reduced for co-operating with the authorities.

Healthsouth founder Mr Scrushy claims he had no knowledge of the fraud until two days before the SEC began investigating.

Mr Scrushy faces possible insider trading and other civil charges.

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