Accounting & Tax

Ex-HealthSouth COO Has Charges Dropped

Former president and chief operating officer James P. Bennett was reportedly the only former employee formally charged with insider trading in conn...
Stephen TaubJuly 20, 2005

Federal prosecutors moved to dismiss the indictment of former HealthSouth Corp. president and chief operating officer James P. Bennett for his role in the company’s $2.7 billion accounting scandal, according to press reports.

The one-sentence motion did not provide a reason for the request, according to the Associated Press.

Bennett was indicted in February — shortly after former chief executive officer Richard Scrushy went on trial — on 39 counts of insider trading; conspiracy to commit wire, mail, and securities fraud; making false statements to HealthSouth’s auditor, Ernst & Young; money laundering; and lying to the Federal Bureau of Investigation, reported the Birmingham Business Journal.

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According to the Journal, Bennett was the only former employee formally charged with insider trading in connection with the HealthSouth scandal. Knowing that fraud was taking place, the government alleged, Bennett sold 960,000 shares of HealthSouth stock, for $17.4 million, the newspaper reported.

In June, of course, Scrushy was acquitted on all 36 criminal counts against him; last week, prosecutors said they won’t retry him on three perjury charges that were dismissed during his trial, according to The Wall Street Journal. That decision ended the federal government’s attempt to find Scrushy criminally responsible, though he still faces a civil suit by the Securities and Exchange Commission as well as a number of shareholder lawsuits.

Meanwhile, former chief financial officer Aaron Beam — one of five ex-CFOs who testified against Scrushy — and former vice president of investments Will Hicks are scheduled be sentenced July 25. Altogether, 15 former HealthSouth executives have agreed to plea guilty.