A federal judge who dismissed perjury charges against HealthSouth Corp. founder Richard Scrushy said she did so because the Securities and Exchange Commission engaged in "cloak and dagger activities" that violated his rights.
U.S. District Judge Karon Bowdre in Birmingham, Ala., ruled that the SEC and Justice Department prosecutors improperly merged their civil and criminal investigations of HealthSouth's accounting on March 12, 2003. Two days later, SEC accountant Neal Seiden interviewed Scrushy, accused of directing a $2.7-billion fraud.
Bowdre late Tuesday dismissed three of 58 criminal charges after finding that Seiden should have told Scrushy he was a target of a criminal probe. Bowdre said Seiden knew that two former finance chiefs had told prosecutors about a massive fraud at the company.
"Our justice system cannot function properly in the face of such cloak and dagger activity by those charged with upholding the integrity of the justice system," Bowdre said in her ruling.
