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Friday, June 19, 2009

Who are the Biggest Fraudsters in Scrushy Civil Cases?

It's been a rough week on the legal front for former HealthSouth CEO Richard Scrushy, who was the codefendant in the Don Siegelman criminal case.

In a decision released yesterday, a Jefferson County judge ordered Scrushy to pay HealthSouth $2.87 billion, finding that he had orchestrated a massive financial fraud at the company.

Just one day earlier, a federal appeals court rejected Scrushy's challenge to a $445-million settlement between HealthSouth and some of its investors.

If you look beneath the surface in both of these cases, they are about more than huge financial obligations for Scrushy. They also are about a troubled justice system that cannot be trusted to handle small matters correctly, much less cases involving billions of dollars.

Why is this subplot important in the Scrushy cases? It's because public documents indicate there are reasons to question the integrity of key decision-makers in both cases.

In the state-court case, Jefferson County Circuit Judge Allwin Horn oversaw a bench trial, without a jury. We already have shown here at Legal Schnauzer that Horn is corrupt.

How do I know Horn is corrupt? I've seen it with my own eyes. If you want to see if with your own eyes, go to the clerk's office in the Jefferson County Courthouse and call up the following case on one of the public computers: Roger Shuler v. Richard Poff, CV 05-3826.

That is my legal malpractice claim against Birmingham lawyer Richard Poff. Documents in the file will clearly show how Horn butchered the case and cheated me in order to protect a member of the legal community. Poff, by the way, has gone through an ugly divorce, a bankruptcy, and has faced other legal malpractice claims besides mine. Public documents indicate that gambling debts were major issues in both the divorce and bankruptcy cases.

How did Horn conduct the Shuler v. Poff case? Here is how we described it in an earlier post:

Remember, Horn is the judge who was too lazy to look up the actual law in my legal malpractice case against Birmingham attorney Richard Poff. Horn said that if I didn't like the way he ruled, "you can appeal me," never mind the taxpayer dollars that would be wasted on an issue that didn't need to be appealed.

To top it off, Horn showed that he was too lazy to read documents that had been put under his nose, and he couldn't even manage to follow his own orders. Horn ordered Poff to present a certified copy of his bankruptcy case to prove that I had not been included as a creditor in that case. That, of course, was unnecessary because Poff had already admitted in documents submitted to Horn that I wasn't listed as a creditor in the bankruptcy case.

Then when Poff failed to appear for a hearing in Horn's office, and failed to produce the documents he had been ordered to produce, Horn let him get away with it and dismissed my case--even though, by law, it could not be dismissed.

In terms of the law, how did Horn screw up my case? Here's our report:

The law in my legal-malpractice case could not have been more clear or more easy to follow. Horn insisted that I had to go to bankruptcy court and get permission to proceed with my legal-malpractice claim in state court. But Poff had not included me as a creditor in his bankruptcy case, so I had no standing to do anything in that court.

In fact, as we showed in a post about one year ago, Horn stood the actual law on its head. The controlling case law can be found at Watson v. Parker (264 B.R., 685, 2001). Under Watson, the burden was on Poff, not me, to reopen his case in bankruptcy court if he wanted to try to have my claim discharged. If Poff didn't do that, under the law, my case was to proceed in state court.

Want some irony? Here is a quote from Horn about his findings in the Scrushy case:

"Scrushy knew about the fraud and was an active participant in the fraud and consciously and willfully breached his fiduciary duties as CEO. Scrushy was the CEO of the fraud."

That's an interesting choice of words. In my legal-malpractice case, Horn was "the CEO of a fraud." Specifically, he consciously and willfully ruled contrary to law and used the U.S. mail in furtherance of a scheme to breach his duties as a judge. That's a classic definition of honest-services mail fraud.

Speaking of fraud, that's exactly what a whistleblower says is going on at Performance Group LLC, a company partly owned by Homewood attorney Rob Riley (the son of Alabama Governor Bob Riley).

Why does that matter in the Scrushy cases? Riley is co-liaison counsel for stockholder lead plaintiffs in the federal HealthSouth/Scrushy case. The other liaison counsel in that case is Birmingham lawyer and former Clinton-era U.S. attorney G. Douglas Jones.

We have raised questions about apparent conflicts Jones and Riley had because of their connections to both the Scrushy federal lawsuit and the criminal case involving Scrushy and Siegelman.

Do Riley and Jones stand to benefit financially from those possible conflicts? Sure looks like it, based on a motion for attorney fees they recently helped file in the federal HealthSouth litigation.

Here is an interesting connection between the state and federal Scrushy cases. The lead plaintiffs' firm in the state case was the Birmingham firm of Hare Wynn Newell & Newton. A source tells us that just happens to be the firm where Rob Riley began his legal career before going on to start his own firm, Riley & Jackson.

Was there some note-swapping going on between lawyers in the two cases? Did inside information from the Siegelman/Scrushy criminal case contribute to the $2.87 billion judgment in the state Scrushy case? Good questions.

So let's review:

* Is Richard Scrushy a major scoundrel who knowingly engineered a massive fraud at HealthSouth? It's possible. But he was not a public official, and I'm not aware of any oaths he took to uphold the law.

* Allwin Horn is an elected public official who has taken an oath to uphold the law. He also is an officer of the court. He has demonstrably committed a federal crime, honest-services mail fraud.

* Rob Riley is an officer of the court, and as son of the governor, has unusual access to our state's highest public office. A whistleblower has charged that a company Riley owns has engaged in health-care fraud.

* Doug Jones is an officer of the court and a former appointed public official. His behavior in recent years raises this important question: Did Jones parlay his inside knowledge of the Siegelman/Scrushy criminal case into a massive payday in the HealthSouth/Scrushy civil case?

The HealthSouth fraud was a serious matter, without question. But who in this crowd is doing the greatest harm to the overall public welfare?


DavidW said...

If you read the first 4 pages or so of horns order and the last few pages where lays out his conclusions and final order of the case, it becomes clear that some else wrote most if not all of this forty something page document. THEN TO reads it all raises all kinds of questions. For one - he says that he not an accountant and launches into a recitation protracted corporate financial data
as a way to demonstrate that he knew that Schrusy
was involved in the fraud. I do not know if Schrusy is innocent or guilty, but that cannot be determined from reading what Horn has written.

Anonymous said...

Dallas-based Trammell Crow will purchase HealthSouth's 200,000-square-foot headquarters and an adjacent property that includes an unfinished, 13-story hospital.


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Ranked among the 100 wealthiest Americans, Rainwater backed George W. Bush in four separate business ventures, including the Texas Rangers baseball team from which Bush, who had been drilling “dry holes” until then, profited handsomely. In a heated 1994 Governor’s race, Texas Democratic Governor Ann Richards charged Rainwater “owned" her Republican opponent Bush.- Daniel Hopsicker, www.madcowprod.com

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gorden said...

There are too many questions are rising in my mind so please make your post more descriptive.

Criminal law firms

Anonymous said...

Before you go around accusing anyone of being involved in a "health-care fraud," I think it would be wise to check your sources first. Just identifying them as a "whistle-blower" doesn't seem very credible to me. As far as I can tell, Performance Group is a perfectly legitimate small business. I just think that you should be a little more informed before you go around making any type of accusations about anybody.

legalschnauzer said...

I've seen the court file, which is public record. You can go to the federal courthouse in downtown Bham and check it out yourself. I know who the whistleblower, and I will be writing much more about her and the case. I've only skimmed the surface so far. You might want to check the court file before you decide that Performance Group LLC is clean as snow. A woman who worked there and knows how they operate would beg to differ.