A federal judge indicated Tuesday that she would dismiss three perjury charges from the 58 total counts against Richard Scrushy as jurors got an in-depth look at the vast fortune prosecutors say the former HealthSouth Corp. chief executive made because of a huge fraud.
Opening court after a weeklong break for jurors, U.S. District Judge Karon Bowdre granted a defense motion to bar jurors from hearing evidence about Scrushy's sworn statement to an investigator from the Securities and Exchange Commission. Scrushy was charged with three counts of perjury for allegedly lying during the statement, given in 2003.
Bowdre told jurors they would have "three fewer charges to deal with" because of her ruling, which gutted the government's perjury case.
Outside the Birmingham, Ala., courthouse, Scrushy lawyer Lewis Gillis said Bowdre's ruling marked "a great day for the defense," which claimed that civil investigators with the SEC improperly assisted the Justice Department in its criminal probe of Scrushy.
"The defense has been able to knock out three other major counts in this case," Gillis said.
Prosecutors had no immediate comment.
Scrushy was initially named in an 85-count indictment in 2003, but that was replaced last year with a 58-count indictment that consolidated some of the original charges and added new ones, including perjury.
Besides perjury, Scrushy was charged with conspiracy, fraud, money laundering, obstruction of justice and false corporate reporting in the first case of a CEO being accused of violating the Sarbanes-Oxley Act, passed in 2002.
Scrushy could get what amounts to a life term and be ordered to forfeit as much as $278 million in assets if convicted, even without the perjury counts.
As testimony resumed on the money-laundering charge, a government consultant testified that Scrushy received bonuses of $13.5 million from early 1996 through 2002 for meeting financial targets set in HealthSouth's business plan. Scrushy got $34.5 million more under a bonus plan for management, he said.
The expert, William Bavis of Clifton Gunderson in Baltimore, testified that Scrushy wouldn't have been due any of the bonuses without the fraud, which evidence showed began in 1996. And, he said, Scrushy made about $163 million in profit from cashing in stock options from 1996 through 2002 and still owns more than 1 million shares of HealthSouth.
But Scrushy was rich even without that money: Bavis said Scrushy -- a respiratory therapist who began HealthSouth in 1984 -- already had a net worth of $38 million before the fraud began.
Fifteen former HealthSouth executives have pleaded guilty in the fraud, including five finance chiefs who testified that Scrushy was in on the scheme.