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Prosecutors Net 15th Plea Deal In HealthSouth Probe

Sep 27, 2003 | AP

A 15th former executive at HealthSouth Corp. agreed to plead guilty in a massive fraud Friday, admitting she faked records on a $27 million stock sale.

Prosecutors said Catherine Fowler, a former vice president and cash manager with the rehabilitation giant, admitted being part of a conspiracy to make it appear stock had been sold in 2002, when it really was sold in 2001.

Fowler, 46, admitted sending a series of wire transfers to generate a paper trail on the bogus transactions, and she attended a meeting with senior officers where the scam was discussed.

Authorities did not disclose the name of the company whose stock was sold.

Fowler, who is cooperating with investigators, could receive a maximum penalty of five years imprisonment and a $250,000 fine, but she could also get probation.

Fowler worked for HealthSouth from May 1994 until March 19, the day the Securities and Exchange Commission filed suit accusing the company and former CEO Richard Scrushy of scheming to overstate earnings to make it appear the company was meeting Wall Street expectations.

Authorities say the company inflated earnings by at least $2.5 billion, an amount that increased by more than $1 billion from investigators' initial estimate as they dug further into records and gathered more guilty pleas.

U.S. Attorney Alice Martin said HealthSouth is cooperating with the investigation, which also is getting tips from the public.

The string of guilty pleas has included admissions of wrongdoing by all five of HealthSouth's chief financial officers.

HealthSouth directors removed Scrushy, who has denied any wrongdoing and has blamed the conspiracy on subordinates.

Refusing a request by Scrushy, a congressional panel investigating HealthSouth refused this week to delay its review until the criminal case is complete.

Scrushy is expected to appear before the House Energy and Commerce Committee next month, but he will likely invoke his Fifth Amendment right against self-incrimination to avoid answering questions.

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