Posted on 02/03/2005 11:13:56 AM PST by NormsRevenge
BIRMINGHAM, Ala. - Former HealthSouth Corp. president and director James P. Bennett has been indicted in a massive fraud at the rehabilitation giant, prosecutors announced Thursday amid the fraud trial of former CEO Richard Scrushy.
Bennett, 47, was accused of fraud, conspiracy, insider trading, money laundering and lying to the FBI (news - web sites) in a scheme in which he sold company stock worth about $17.4 million, according to a statement from prosecutors.
Testimony in Scrushy's trial has indicated that Bennett knew of the scam, in which 18 people have now been charged. Fifteen have reached plea deals and are expected to testify in Scrushy's trial.
Besides prison time and $33 million in fines if convicted on all 39 counts, prosecutors are seeking $28 million in assets that they claim Bennett made from the alleged conspiracy.
Defense attorney Jim Henry said Bennett "was not involved, in any form or fashion, with any fraud of other wrongdoing at HealthSouth."
"He will plead not guilty, and is looking forward to the opportunity to clear his name," Henry said.
Bennett, who worked at HealthSouth from 1991 until 2000, was president and chief operating officer from 1995 until he left. He joined the HealthSouth board in 1993.
Bennett's indictment was announced as a one-time colleague, former HealthSouth controller and chief financial officer Bill Owens, began a third day on the stand.
Using a marker and easel, Owens told jurors about the company's various financial statements. He also described a once-close relationship with Scrushy, saying he played drums in rock and country bands fronted by Scrushy.
"(We) started out as a garage band," said Owens, one of five HealthSouth CFOs who admitted participating in the fraud while working under Scrushy. "We became, I think, pretty good over time."
Wednesday, Owens testified that Scrushy feared a shareholder lawsuit and encouraged employees to continue the fraud after it began in 1996 so he'd be able to sell $100 million of company shares.
Jurors have yet to hear recordings that Owens secretly made for the FBI of his talks with Scrushy in March 2003 shortly before the raid that ultimately resulted in Scrushy's indictment.
Prosecutors allege Scrushy, 52, got rich from stock sales, bonuses and salary by directing a fraud that led to the overstatement of HealthSouth earnings from 1996 through 2002.
The defense contends Owens and other subordinates in HealthSouth's corporate accounting offices lied to Scrushy for years, leaving him unaware of the conspiracy.
Scrushy, HealthSouth's primary founder in 1984, is charged with conspiracy, fraud, money laundering, obstruction of justice and perjury. He also is accused of false corporate reporting in the first test against a CEO of the Sarbanes-Oxley Act, passed in 2002.
If convicted, he could receive what amounts to a life sentence. Prosecutors also are seeking $278 million in assets.
made me a lot of money in Summer/Fall of '03....
Bennett's attorney Jim Henry and I worked together at BellSouth. He decided at 40 to go to law school, I didn't.
Ping Laura Earl. See who Bennett's attorney is?
The Henry!
I went to a HealthSouth clinic once and they tried to charge me for a generic drug as though it was the high priced one. I confronted them and told them I would only pay my co-pay for the drug.
Then .. I called the druggist and ask about the difference in color for the real drug versus the generic. I was right - they gave me generic and not the real one.
Then .. I called my medical provider and told them about the situation with the drugs (and the confirmation from the druggist), and the lousy treatment I had received.
These people were a fraud from top to bottom.
Yep
I'm glad Andrews/Lemak & company are getting the heck out of dodge.
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