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More Pleas To Come From HealthSouth Employees

Apr 3, 2003 | Birmingham Business Journal The U.S. Attorney's Office in Birmingham says "several" HealthSouth Corp. employees will be making pleas Thursday morning in federal court.

No more details were given by the office, and calls were not immediately returned Wednesday afternoon.

Three high-ranking HealthSouth employees already have pleaded guilty to various charges following the March 19 charge by the Securities and Exchange Commission that the company and its founder, Richard Scrushy, orchestrated a $1.4 billion accounting fraud since 1999 to meet or exceed Wall Street expectations

HealthSouth vice president of finance and assistant controller Emery Harris pleaded guilty Monday in U.S. District Court to "conspiracy to commit wire fraud and securities fraud and to falsifying financial information," according to the U.S. District Attorney's office.

Chief financial officer William Owens pleaded guilty March 26 to charges of wire fraud and securities fraud and to filing false financial certifications. Weston Smith, another former HealthSouth CFO, pleaded guilty March 19 to fraud and conspiracy charges.

All three men face prison time and hefty fines. The SEC also wants to bar Harris, Owens and Smith from ever serving as officers or directors of a public company.

The three men, who promised to work with prosecutors, also were fired from HealthSouth after making their pleas.

The SEC on Monday filed additional charges against Harris, Owens and Smith, alleging various violations of federal securities law. Owens also is charged with violating management certification provisions, which require senior corporate officers to swear by their financial results.

HealthSouth's board this week fired Scrushy as CEO and is seeking his resignation from the board. Scrushy has not been criminally charged by the government.

The company has been pelted with several lawsuits by investors and shareholders and is under scrutiny for alleged Medicare violations. HealthSouth also was booted from the New York Stock Exchange and is now trading on the "pink sheets" exchange and was declared in default of a loan by bank lender JP Morgan Chase.

On Wednesday, HealthSouth's stock closed down 5.98 percent at 11 cents per share.

HealthSouth bills itself as the nation's largest provider of outpatient surgery, diagnostic imaging and rehabilitative health-care services, with nearly 1,700 locations in all 50 states and several foreign nations.

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