Accounting & Tax

Ex-HealthSouth Finance Exec Found Guilty

Onetime chief financial officer Weston Smith testified that ''Sonny'' Crumpler identified outpatient facilities where improper accounting could be ...
Stephen TaubNovember 21, 2005

A former finance executive has become the first former HealthSouth Corp. official to be found guilty by a jury in connection with the company’s $2.7 billion accounting scandal.

Hannibal “Sonny” Crumpler — the former controller of the company’s outpatient rehabilitation division and later the finance chief of HealthSouth spin-off Source Medical Solutions — was convicted Friday of conspiracy and making false statements to auditors, according to published reports. Jurors rejected defense claims that Crumpler was a scapegoat in the company’s accounting shenanigans, according to the Associated Press.

Onetime chief financial officer Weston Smith was one of four former HealthSouth executives who took the stand against Crumpler. According to The New York Times, Smith testified that Crumpler identified outpatient facilities where improper accounting could be concealed, stating that “he would leave with a homework assignment to find where to put fraudulent postings.”

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The trial lasted two weeks and the jury deliberated for three hours before returning its verdict, added the Times.

Although 15 other former executives have pleaded guilty in the fraud, noted the AP, most have been able to avoid prison time. In June, the only other individual to go to trial — HealthSouth founder, former chairman, and former chief executive officer Richard Scrushy — was acquitted of all charges.

Prosecutors are seeking a sentence of 15 years in prison and nearly $1.3 million in fines, according to reports, and want Crumpler to relinquish $2.2 million in assets that they claim he made from the earnings overstatement.