Fifth Former HealthSouth C.F.O. Pleads Guilty

Fifth former HealthSouth CFO pleads guilty

Reuters, 05.05.03, 12:32 PM ET

BIRMINGHAM, Ala. (Reuters) - Federal prosecutors completed their sweep of former HealthSouth Corp. chief financial officers on Monday when Aaron Beam pleaded guilty to criminal fraud charges in the company's massive accounting scandal.

Beam, 59, pleaded guilty in U.S. District Court in Birmingham to bank fraud and making false representations to HealthSouth's lenders. The charges carry a maximum penalty of 30 years in prison and a $1 million fine.

Continued.

Beam served as CFO of the Birmingham-based operator of physical therapy and surgical clinics from HealthSouth's creation in 1984 until October 1997.

So far, 11 former HealthSouth executives, including all five men who held the CFO post, have pleaded guilty to criminal charges and agreed to cooperate with government investigations of the company and its fired chief executive, Richard Scrushy.

The government has accused HealthSouth and a group of its former officers of deliberately overstating earnings by $2.5 billion over several years.

Scrushy, who has been sued by securities regulators for insider trading and other civil charges, has not been charged with any criminal wrongdoing. However, he remains the central figure in Justice Department and congressional investigations of accounting practices at the company he founded.

Scrushy's lawyers contend the accounting fraud was carried out by a group of executives in the HealthSouth finance department without Scrushy's knowledge.

The latest charges in the scandal, which has left the company in default on its loans and battling to avoid bankruptcy, allege that from April 1996 to October 1997, Beam and others devised a scheme to obtain loans and credit from a Birmingham bank by filing false and fraudulent financial information with the bank.

The company's four other former CFOs pleaded guilty to conspiracy to commit wire and securities fraud and to filing false financial statements with the government.

Beam was charged with bank fraud, prosecutors said, because the statute of limitations on securities fraud charges ran out after five years. The statute of limitation on the bank fraud charges are 10 years, the U.S. attorney explained.

(Additional reporting by Bill Berkrot in New York)

Copyright 2003, Reuters News Service

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printed from Fifth Former HealthSouth C.F.O. Pleads Guilty on 2004-06-22 16:13:11