Legal analysts and experts have been trying to explain the government’s complete failure to successfully prosecute former HealthSouth CEO Richard Scrushy.
It’s the CSI Effect. It was the wrong place to prosecute the crime. It was a lack of perceived credibility regarding the prosecution witnesses.
With a string of 15 former executive witnesses testifying, five of them former chief financial officers, the US Attorney, Alice Martin, seemed to have plenty of muscle in the government’s $2.7 billion USD accounting fraud case against founder and ex-CEO Richard Scrushy.
Even after reducing the number of counts against Mr. Scrushy from 85 to 36, the government case still looked like it was going to find a place for him within the federal penal system.
And somehow, the government blew it. Mr. Scrushy found himself acquitted on all counts. Even though Ms. Martin has pledged to bring him back into court to face perjury charges, she may not get the chance.
Superiors at the Justice Department have to be furious about losing this test of the Sarbanes-Oxley act in court. After a long string of victories against the like of Bernie Ebbers and John Rigas, the government may have been overconfident.
They threw Mr. Scrushy a lifeline by filing in the District Court of Birmingham, right in Mr. Scrushy’s backyard. His legal counsel leapt on that like a cat on a feather. All of the government’s high profile victories had been in New York.
With a local jury in place, and the government case plagued by problems and gaps in the wire recordings it believed would destroy his credibility, the feds never could build their case beyond circumstantial evidence.
So Mr. Scrushy goes home, to his gated estate near Birmingham, and will keep the bulk of his $300 million fortune. He says the government case was a “web of deception” and praised jurors for seeing through it.
David Utter is a staff writer for murdok covering technology and business. Email him here.
