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FBI Expanding Probe to 'Outside Interests' of HealthSouth CEO

A vice president of the health services provider is to plead guilty to fraud as regulators continue looking at financial statements.

March 31, 2003|From Reuters

NEW YORK — The Federal Bureau of Investigation said Sunday that it was investigating all business interests of HealthSouth Corp. Chief Executive Richard Scrushy amid a fraud inquiry at the health services provider.

Another HealthSouth executive, Emery Harris, a vice president and assistant controller, is scheduled to plead guilty to fraud today, according to a report from Bloomberg News.

Calls to Birmingham, Ala.-based HealthSouth, as well as to a phone number in the Birmingham area provided by directory assistance for Emery Harris, were not returned.

J. Stephen Salter, a lawyer for Harris, was not available.

Harris would be the third HealthSouth executive to enter such a plea since the Securities and Exchange Commission said the company and Scrushy inflated earnings by $1.4 billion since 1999 and overstated assets by $800 million.

FBI spokesman Craig Dahle said the bureau was looking at Scrushy's outside interests as part of what he described as an evolving investigation.

"It's only logical you'd look at certain individuals' outside interests that might affect their inside interests," FBI spokesman Craig Dahle said. "We're doing that."

Scrushy's Birmingham-based lawyers, Redden Mills & Clark, and White Dunn & Booker, were not available to comment.

Dahle said he could not comment on reports about Harris, but said, "We had two guilty pleas, and we expect that perhaps there will be more activity forthcoming."

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