MONTGOMERY, Ala. — A state judge on Thursday ordered former HealthSouth chief executive Richard Scrushy to pay nearly $2.9 billion to shareholders who sued over a massive accounting fraud that nearly sent the rehabilitation chain into bankruptcy.
Circuit Judge Allwin E. Horn, who heard the case in Birmingham without a jury, ruled in favor of HealthSouth shareholders who filed a lawsuit claiming Scrushy was involved in years of overstating the company’s earnings and assets to make it appear the company was meeting Wall Street forecasts.
Horn wrote in his ruling that Scrushy “knew of and participated in” the faked reports filed with regulators from 1996 to 2002. He said the HealthSouth founder also “consciously and willfully” violated his financial responsibilities as CEO.
Scrushy was acquitted in a federal criminal case over related charges and testified in the state civil case that he knew nothing about any fraud. He is serving a nearly seven-year sentence for a 2006 conviction in a separate state- government bribery case.
The Alabama suit accused Scrushy of unethical dealings with the company while it was going broke and complicity in $2.6 billion in fraudulent reports it filed with regulators. The amount shareholders sought included money they claimed he pocketed through sweetheart deals.
While Scrushy is a multimillionaire, it was not immediately clear how he could pay the judgment.
Scrushy attorney Jack McNamee of Birmingham wouldn’t speculate on how much money Scrushy has but said Horn’s final judgment totaling $2.88 billion “is totally out of line — more than anything he could ever have.”
McNamee said Scrushy plans to appeal to the Alabama Supreme Court.
