Ex-CEO of HealthSouth Gives Few Answers

HealthSouth Corp. founder Richard Scrushy, making his first public appearance since U.S. regulators accused him of inflating earnings by $1.4 billion, refused Wednesday to answer questions in court about his assets.

Scrushy, the fired HealthSouth chief executive, invoked his constitutional right against self-incrimination at least 30 times during a hearing before U.S. District Judge Inge Johnson.

The judge is weighing whether to extend a freeze on Scrushy’s assets that she imposed after the Securities and Exchange Commission last month sued him and HealthSouth, the largest U.S. operator of rehabilitation hospitals, for fraud.

Johnson had limited Scrushy to $15,000 in living expenses for a two-week period ending today. Scrushy, 50, has asked for the right to spend $70 million, including $10 million in living expenses, $20 million in attorney fees, and $33 million for taxes, court papers filed by the SEC show.

“It’s kind of absurd to file a motion for $10 million in living expenses and not say what they’re for,” SEC attorney William Hicks said at the hearing.

Scrushy’s attorney Thomas Sjoblom told the judge that his client, also charged with insider trading by the SEC, wouldn’t answer questions about his sale of $175 million in HealthSouth stock. The ex-CEO, who has not been charged with a crime, also would not provide information about the number of boats, cars and planes he owns, Sjoblom told the judge.

Among other questions, Hicks asked Scrushy whether he owns 40 cars. Scrushy owns three mansions and 11 private businesses. These businesses develop real estate, own Scrushy’s boats and planes, and invest his money, according to property records and the SEC. The judge’s freeze permits Scrushy to spend $300,000 on his 11 businesses.

When the judge ordered Scrushy to answer whether documents refreshed his memory of the stock sales, he said: “I can’t recall exactly.” Hicks showed other documents to Scrushy, who said: “I can’t speak to the accuracy of this.”

Eight former employees have pleaded guilty to accounting fraud, implicating Scrushy in a conspiracy to inflate earnings by $2.5 billion since 1997. A ninth employee, former Chief Financial Officer Michael Martin, agreed to plead guilty to conspiracy. Scrushy has denied wrongdoing.