Richard Scrushy: The Healthsouth Fraud Case

Most people in the state of Alabama are aware of the HealthSouth scandal due to former Alabama Governor Don Siegelman being convicted of crimes of bribery, and honest services fraud along with former CEO Richard Scrushy. The HealthSouth fraud case was also one of the first fraud cases tried under the Sarbanes Oxley Act of 2002.

HealthSouth officers were cooking-books and shell games trying to mask the fraud that was occurring by acquiring companies, overstating cash balances, falsifying financial statements earnings releases as well as annual reports. The fraud also involved booking the accounts receivable amounts as income instead of collectable income, fictitious fixed assets such as office equipment, recording the sale of shares in another

Beam was aware of the fraud when it first began; however, he went along with it in order to avoid being on Scrushy’s bad side as Scrushy was known to get angry and threaten people. Beam knew what he was doing was wrong and his conscious started weighing so heavily upon him and could no longer go along with the charade that he decided to leave the company. Others with knowledge of the fraud could have also helped to stop it by reporting it to the authorities, or reporting the correct numbers on the reports. The fraudulent activities could have been detected earlier if there had been a trend or ratio analysis in place. Beam also confided the wrongdoing to his wife; therefore, she also could have also reported it. After reading Healthsouth: The Wagon to Disaster by Aaron Beam, I feel that Richard Scrushy is narcissistic, a compulsive liar, and childish at times. I am perplexed that people still pay to hear him speak and buy his book on how he was such a successful businessman, entrepreneur, and risk taker that has such a “great track record”. Scrushy was indeed a risk taker, but look at what he had to risk becoming a billionaire. But then again, to this day, Scrushy still feels he did nothing