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SEC Files Fraud Charges Against HealthSouth Alleging $1.4 billion overstatement of earnings Mar. 20, 2003 (Associated Press) The Securities and Exchange Commission filed fraud charges against rehabilitation giant HealthSouth Corp. and its chairman Wednesday, accusing the company of overstating earnings by at least $1.4 billion since 1999. The SEC also suspended trading in the company for two days. The commission said that HealthSouth's earnings were inflated at chairman Richard Scrushy's insistence to make the results appear to meet or exceed Wall Street expectations. The company's assets were overstated by at least $800 million - or about 10 percent - by the third quarter of last year, the SEC said. The company had no immediate response to the charges. It has denied wrongdoing in the past. The Justice Department said the company's former chief financial officer, Weston Smith, has agreed to plead guilty to securities fraud, conspiracy and wire fraud charges, as well as false certification of financial records. Weston, 42, has agreed to cooperate with the investigation, the Justice Department said. HealthSouth is the nation's largest provider of outpatient surgery, diagnostic imaging and rehabilitation services. |
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