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4/10/2003

Scrushy, ex-CEO of HealthSouth, invokes Fifth Amendment on allegations of fraud

The Associated Press

BIRMINGHAM, Ala. — Fired HealthSouth CEO Richard Scrushy refused to answer questions in federal court Wednesday about claims that the company overstated earnings by $2.5 billion to meet Wall Street expectations.

Scrushy faced more than 50 questions from Bill Hicks of the Securities and Exchange Commission but repeatedly invoked his Fifth Amendment right to avoid self-incrimination.

The SEC filed a lawsuit last month accusing Scrushy and the health care giant he founded of overstating earnings to meet Wall Street expectations.

The hearing was to determine whether Scrushy’s personal assets should remain frozen while the government investigates what it calls a massive accounting fraud at HealthSouth.

Scrushy will be charged in a criminal indictment “that is about to drop,” defense attorney Tom Sjoblom told the judge. He has denied wrongdoing.

Eight former HealthSouth executives already have pleaded guilty and a ninth has agreed to do so.

Scrushy’s lawyers said he needs about $60 million in living expenses, plus another $60 million for attorneys fees and tax payments.

Sjoblom wouldn’t let Scrushy say why he needed that amount to get by.

U.S. District Judge Inge Johnson issued no immediate ruling.

HealthSouth calls itself the nation’s largest provider of outpatient surgery, diagnostic and imaging and rehabilitative health care services, with almost 1,700 facilities in all 50 states and abroad.

Founded in 1984, HealthSouth employs more than 51,000 people.