Risk & Compliance

Judge Orders Scrushy, SEC to Mediate

HealthSouth's former chairman and CEO has been campaigning for his old job; if the SEC prevails, Scrushy would likely face a permanent bar from ser...
Stephen TaubSeptember 20, 2005

U.S. District Judge Inge Johnson has ordered mediation for the Securities and Exchange Commission’s lawsuit against HealthSouth Corp.’s co-founder, former chairman, and former chief executive officer, Richard Scrushy.

The SEC’s civil case was put on hold in November 2003, when federal prosecutors pursued criminal charges against Scrushy stemming from HealthSouth ‘s $2.7 billion accounting fraud. In June of this year, Scrushy was found not guilty on all counts, and the SEC requested permission to continue its case.

The civil lawsuit seeks $785 million in fines and restitution plus interest. Art Leach, Scrushy’s lawyer, estimates his current assets at $75 million, according to Bloomberg.

Scrushy, who still sits on HealthSouth’s board of directors, is campaigning to get his old job back, or at least to win a key role in helping to revitalize the health-care company. If the SEC wins its lawsuit, however, it is very likely that Scrushy would be permanently barred from serving as a director or officer of a publicly traded company.

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