The Justice Department said it has uncovered new crimes related to the alleged $2.5 billion accounting fraud at HealthSouth and is investigating dozens of individuals and corporations.
More plea agreements are also forthcoming, federal prosecutors say.
The four-month investigation into the health-care giant has expanded to crimes dating back several years that involve witness intimidation, public corruption, money laundering, tax fraud, perjury and obstruction of justice, according to government investigators.
“Some of the crimes are only now coming to light, weeks after the initial allegations of accounting fraud,” U.S. Attorney Alice Martin wrote in court papers. “Several other suspects … are being actively investigated.”
The Justice Department did not provide any more specifics. Martin, based in the U.S. Attorney’s Office in Birmingham, Ala., where HealthSouth is based, could not be immediately reached for comment.
Court documents do note “additional suspects have agreed to plead guilty.”
Until now, criminal charges against 12 former and current HealthSouth executives including five chief financial officers who worked for the company have involved conspiracy to commit securities fraud, falsifying books and records, and wire fraud.
The new development comes as a federal grand jury continues to probe Richard Scrushy, HealthSouth’s fired chief executive officer.
Scrushy built HealthSouth into a nation’s largest provider of rehabilitative centers over the past 15 years. Through his attorneys, he has denied any wrongdoing. The Securities and Exchange Commission filed civil charges against HealthSouth and Scrushy on March 19.
The latest court papers mentioned the investigation involved other corporations but did not provide details. Scrushy ran many side businesses, some of which provided services to HealthSouth. One of them, Marin Air, leased planes to the company.
The Justice Department’s widening probe was revealed in July 9 court documents recently made public. U.S. District Judge Inge Johnson refused to seal them at the request of the government. The Birmingham News first reported the details.
The government’s new front was revealed in a motion to delay the sentencing of four former HealthSouth accounting executives who have pleaded guilty and are cooperating with the investigation.
The defendants — Angela Ayers, Cathy Edwards, Rebecca Kay Morgan and Virginia Valentine — will likely be called to testify “when and if additional suspects are indicted and wish to go to trial,” the government said.
The Justice Department said it has gathered thousands of documents and has arranged to obtain thousands more. It intends to engage each defendant “in an extensive review” of them.
Federal prosecutors expect to complete the process sometime in August.