US government loses first Sarbox prosecution

Richard Scrushy, the CEO of healthcare company HealthSouth, was acquitted on
36 charges yesterday, as the first ever Sarbanes-Oxley corporate disclosure
prosecution ended in defeat for the US government.

His prosecution failed despite guilty pleas by 15 former HeathSouth
executives, including five former chief financial officers who testified against
their former boss.

Scrushy, who was cleared of organising a £1.5bn fraud after a four-month
trial, was openly ecstatic about the outcome.

Scrushy reportedly said after the trial: ‘God is good. We went from 85 counts
to zero. There are a lot of wrongs that need to be made right and I look forward
to seeing that happen.’

Prosecutors alleged that Scrushy had ordered fake profits and assets to be
added to HealthSouth’s books from 1996 to 2002, but jurors accepted the
defence’s arguments that Scrushy was not aware of the fraudulent transactions.

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