Accounting & Tax

Former HealthSouth CFO Settles with SEC

Although he wore a wire to tape conversations with Richard Scrushy, William Owens still faces five years in prison.
Stephen TaubJune 2, 2006

Former HealthSouth chief financial officer William Owens has agreed to settle Securities and Exchange Commission charges regarding his former company’s $2.7 billion accounting scandal.

He was one of five ex-CFOs of the failed company who pleaded guilty and testified against their onetime boss, former chief executive officer Richard Scrushy; Owens even agreed to wear a wire to tape their conversations. Nonetheless, Scrushy was acquitted last year on all 36 criminal counts against him.

Despite his cooperation, Owens was sentenced to five years in prison, a sentence he still hopes to have reduced. In addition, HealthSouth won a $1.4 million judgment against Owens, based on a $1 million loan he acknowledged receiving but never repaid.

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The commission’s complaint alleged that Owens and other HealthSouth executives engaged in a fraudulent scheme, which resulted in the company’s filing materially false and misleading financial statements in its quarterly and annual reports from 1997 through 2002. The SEC accused Owens of directing other employees to make entries in the company’s books that fraudulently overstated income and that were designed to avoid detection by HealthSouth’s independent auditors.

Without admitting or denying the findings, Owens agreed to be suspended from appearing or practicing before the SEC as an accountant. An SEC statement made no mention of whether he could eventually apply for reinstatement.