Friday, March 7, 2025

Former HealthSouth CEO Richard Scrushy has served his time in prison, but he is launching an inquiry to reverse his conviction and shine light on rogue prosecutors who put innocent people behind bars

Richard Scrushy and attorney Tommy Gallion (left) (CBS 42)

In September 2020, the National Registry of Exonerations (NRE) issued a report about the role of official misconduct in the conviction of innocent people. What amounts to an exoneration? The NRE report includes this statement:

We classify a case as an “exoneration” if a person who was convicted of a crime is officially and completely cleared based on new evidence of innocence. . . . The report is limited to misconduct by government officials that contributed to the false convictions of defendants who were later exonerated—misconduct that distorts the evidence used to determine guilt or innocence. Concretely, that means misconduct that produces unreliable, misleading or false evidence of guilt, or that conceals, distorts or undercuts true evidence of innocence.

What kind of government misconduct draws the attention of the NRE? Here is a description from the report:

The report organizes the myriad types of misconduct into five general categories, roughly in the chronological order of a criminal case, from initial investigation to conviction: (1) Witness Tampering; (2) Misconduct in Interrogations of Suspects; (3) Fabricating Evidence; (4) Concealing Exculpatory Evidence; (5) Misconduct at Trial.

Most of the misconduct we discuss was committed by police officers and by prosecutors.

Do those words hit home for Richard M. Scrushy? The former chairman and CEO of Birmingham-based HealthSouth Corporation (now Encompass Health) stood in front of the Frank M. Johnson Jr.  Federal Building and U.S. Courthouse in Montgomery yesterday and announced that he has launched a personal investigation, which he hopes will result in his 2006 conviction, along with that of former Governor Don Siegelman, being reversed. 

Along with attorney Tommy Gallion, Scrushy said he has uncovered evidence that appears to match at least four of the five categories outlined above -- with No. 3, Fabricating Evidence, being the only one that might not be present -- yet. Scrushy, however, was quick to tell the assembled friends, family, and members of the press: "The prosecution withheld exculpatory evidence that caused the wrongful convictions and imprisonment of Don Siegelman and me. This is unconstitutional and criminal. At trial, Judge (Mark) Fuller told prosecutors they had to turn over all discoverable information, but the prosecutors said, "We don't have any more." We knew then they had lied to the judge, but now we have the evidence to prove it. If we had received the documents we were supposed to get, it would have changed the outcome of the trial. It resulted in denial of due process. The prosecution was corrupt, and the convictions should be reversed. I've lived under a black cloud for 20 years, and I want this off of me." 

 In Scrushy's case he gave "honorable mention" for unethical behavior to two unidentified "horrible plaintiffs' attorneys" who won't leave me alone." (Hint: The two attorneys have connections to a former Republican Alabama governor of particularly ill repute.). Also, the lawyers stood to make a windfall from their share of attorney fees in a lawsuit against HealthSouth and related entities. As of March 31, 2009, Ernst & Young had made a $109-million payment toward settling, while HealthSouth officers and directors had settled for $445 million. That means at least $554 million was waiting to be dispersed to multiple shareholders and plaintiffs' attorneys. The case file at that time included almost 1,600 documents, and roughly 150 plaintiffs' lawyers. That's a lot of hands in a pie overflowing with attorney fees.

Documents show that the two lawyers were named co-liaison counsel, and our research indicates they were likely to take a much bigger chunk of the pie than most of the lawyers in the case. One of the lawyers was involved in the HealthSouth civil case while also representing Don Siegelman, Scrushy's co-defendant in the criminal case. Does that sound like a conflict of interest? No wonder Scrushy considers these guys to be "horrible." 

On June 29, 2006, Scrushy was convicted of giving Siegelman $500,000 for an appointment to the state's certificate of need board, which regulated health-care companies. At the time, Scrushy was CEO of HealthSouth, a billion-dollar health-care corporation -- one of three such companies he founded, including a Fortune 500 company.

The court convicted Scrushy on six counts, including bribery, conspiracy to commit honest services wire fraud, and four counts of honest services wire fraud. He was given a $150,000 fine and a sentence of seven years in federal prison. He served almost five years of that sentence.

Siegelman was convicted on seven counts, including bribery, conspiracy to commit honest services wire fraud, four counts of honest services wire fraud, and obstruction of justice. He was given a $50,000 fine and a seven-year sentence.

Scrushy alleges that the government met with as many as 20 potential witnesses in his case, but only disclosed contact with one witness who testified. By law, the prosecution must disclose all evidence before trial. There is evidence of "... corruption, widespread fraud, lawfare and weaponization of the DOJ in the politically motivated prosecution brought against me," Scrushy said.

That one witness was Nick Bailey, who provided the government with damaging testimony against the defendants but since has recanted. An employer, Tuscaloosa businessman Stan Pate, later stated prosecutors had intimidated Bailey about an alleged sex scandal, coercing him to provide testimony in a form they desired.

"Nick bailey was the only witness to testify against me," Scrushy said. "He has apologized, and we talk regularly. There was no check, no quid pro quo (as required by controlling case law in McCormick v. United States, 500 U.S. 257 (1991). They only had one witness against me."

What was it like for Scrushy to go from CEO to federal inmate? Harsh does not seem to adequately describe it. "They took us out of the courthouse in chains and put us in the federal pen in Atlanta, which is the most awful place you can imagine. We were put in solitary confinement and placed behind a glass shield, as if we were hardened criminals. They ultimately sent me 600 miles to Texas. 

Scrushy became emotional when talking about how the incarceration affected his family. “My little girl right here was 4-years-old, Gracie, when they put me in chains and pulled her out of my arms,” Scrushy said as he pointed to his daughter who accompanied him to the press conference. “He (1 of Scrushy’s sons also in attendance) was 2-years-old, they sent me off to prison, 5 years they locked me up. It states, if you read the information, they’re supposed to put me within 500 miles of my home. They sent me over 600 miles away to Texas, that was wrong.”

Scrushy and Gallion plan to file a motion to vacate the conviction, and Scrushy hopes the Trump administration, including Attorney General Pam Bondi, will see his case as an injustice that demands correction.

A reporter asked why Scrushy is pushing for justice at this point, given that he already has served his sentence. "What do you want to come from this?" was the question.

"I've served my time, but it has affected my family, my children, and it's affected my ability to earn a living. I served on that health-care board under three governors. I gave Siegelman one year, and I got off. I didn't like being on that board because it took too much of my time. Also, people don't want to deal with a felon. They are very careful about it, and I want to get out from under that cloud.

"It’s important because of my family. My children are living a life with a cloud over them that their dad was a federal criminal. That’s a lie. That needs to be overturned. It’s affected my ability to earn money, to make a living. That needs to be off of me. Nobody wants to die with some kind of black cloud and some kind of lie on them. I don’t want that marking on my back because it’s just not true.”

"Over 15-20 years, I built three billion-dollar companies, two of them were Fortune 500 companies. I don't know too many people who have done that, yet I haven't been able to work since the conviction here. I'm not guilty on all the HealthSouth charges (in a case of alleged accounting fraud, brought by the U.S. Securities and Exchange Commission; Scrushy was charged in 2003, and the trial was held in Birmingham). They started with 85 counts and got it down to 36. I was found not guilty on all 36. Many believe that motivated the federal government to come after me again, and I believe that's probably true. I think they said, "Let's get him with Don Siegelman."

As for Siegelman, he did not attend the press conference, but Scrushy said the former governor is supportive of his actions. Siegelman released the following statement yesterday:

1 comment:

James Greek said...

I would not hold my breath. I do not trust Trump and his mi ions as far as I can kick them.