Judge bars HealthSouth founder from public company

Judge bars HealthSouth founder Scrushy from leading new public company

Associated Press

BIRMINGHAM, Ala. (AP) -- HealthSouth Corp. founder Richard Scrushy isn't fit to lead a new corporation and shouldn't be allowed out of a Securities and Exchange Commission settlement in which he agreed to stay away from publicly traded companies, a federal judge ruled.

The decision, released by U.S. District Judge Inge Johnson and reported Thursday by al.com, was a setback for the one-time executive in his quest to start a new company focused on health care.

Out of prison after serving time for trying to bribe former Alabama Gov. Don Siegelman, Scrushy several months ago asked permission to leave an agreement he reached with the SEC in 2007 to settle charges over a massive fraud that occurred at HealthSouth while he was chief executive.

Scrushy blamed the entire $2.7 billion HealthSouth scam on underlings and federal jurors in Birmingham acquitted him on criminal charges. But a state court judge in a civil case later held him responsible for the fraud and ordered Scrushy to pay almost $3 billion in damages.

Scrushy still owes HealthSouth most of the money, and the company opposed his request to get back into the health care business with a public company.

The judge, in a 36-page order, agreed that Scrushy must abide by his agreement with the SEC.

"While the court has every confidence in Scrushy that he can once again create an empire out of nothing, the court also remains convinced that the temptation of personal enrichment is too much for him to bear ...," Johnson wrote.

Johnson refused to hear testimony on Scrushy's bid to get back into the health business, ruling that he "remains unfit" to serve as an officer or director of a public corporation.

Scrushy, who grew up in Alabama and now lives in Texas, has said he wanted to form a new company to take advantage of opportunities under the new federal health law.

Scrushy and Siegelman were convicted on charges that Scrushy arranged $500,000 in donations to Siegelman's 1999 campaign for a state lottery in return for Siegelman appointing him to a state hospital regulatory board. The lottery campaign failed, but Scrushy served on the hospital board.

Siegelman is currently in prison, while Scrushy was released last year.

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