HealthSouth Whistle-Blower Sentenced in Fraud

From Reuters

Former HealthSouth Corp. finance chief Weston Smith, who blew the whistle on the accounting scandal that rocked the company, on Thursday was given 27 months in prison -- the stiffest sentence for any executive involved in the fraud.

Smith, one of five former HealthSouth chief financial officers who pleaded guilty to fraud charges, was also ordered to forfeit $1.5 million in ill-gotten gains and will spend one year on probation after his release.

Before Smith’s sentencing, former assistant controller Emery Harris, who spent five months in jail, had received the longest prison term for involvement in the multibillion-dollar accounting scandal.

Earlier Thursday, U.S. Circuit Court Judge Robert Propst sentenced Will Hicks, HealthSouth’s former vice president of investment, to three months of home detention, along with a $2,500 fine and forfeiture of $50,000. Hicks had pleaded guilty to conspiracy to make false statements to auditors and maintain false books and records.


Three other former finance chiefs, who were sentenced by other judges, received little or no jail time for their parts in the conspiracy at the Birmingham-based operator of rehabilitation hospitals and surgical centers.

One of Smith’s lawyers expressed deep frustration at the prison term given his client’s participation in helping the government uncover the years of bogus accounting at HealthSouth.

“I believe with all my heart that if [former Chief Executive] Richard Scrushy had been convicted, I wouldn’t be here today,” Bill Baxley said.

Scrushy, who was accused of directing the $2.7-billion fraud, in June was found not guilty on all counts by a Birmingham jury.