Judge orders Scrushy to pay $2.9B to shareholders

A state judge on Thursday ordered former HealthSouth Corp. Chief Executive Richard Scrushy to pay nearly $2.9 billion to shareholders who sued over a massive accounting fraud that nearly sent the rehabilitation chain into bankruptcy.

Circuit Judge Allwin E. Horn, who heard the case without a jury, ruled in favor of HealthSouth shareholders who filed a lawsuit claiming Scrushy was involved in years of overstating the company’s earnings and assets to make it appear that the company was meeting Wall Street forecasts.

Horn wrote in his ruling that Scrushy “knew of and participated in” the faked reports filed with regulators from 1996 to 2002.

Scrushy was acquitted in a federal criminal case over related charges and testified in the state civil case that he knew nothing about any fraud. He is serving a nearly seven-year sentence for a 2006 conviction in a separate state government bribery case.

The final judgment from Horn totaled $2.88 billion.

Scrushy’s lawyers did not immediately comment.

Scrushy denied getting millions from the company in improper deals or having any role in cooking the books.