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How Did Richard Scrushy Get Out of a $2.7 Billion Fraud Case?

Richard Marin Scrushy, the founder of an international healthcare company called HealthSouth Corporation, claims to be innocent until proven guilty with 36 counts of money laundering, extortion, obstruction of justice, and racketeering. But how was he acquitted of all the charges? 

HealthSouth founder and CEO Richard Scrushy was accused of masterminding a $2.7 billion fraud scheme. During his trial, Scrushy was ordained and became a televangelist. He was later acquitted of all the charges.

HealthSouth

Healthsouth, formerly known as Amcare, was created in 1984. Richard Scrushy, Aaron Beam, and three other individuals founded the company with a simple vision: taking patient rehabilitation out of hospitals and more cost-effective outpatient facilities. (Source: CNBC)

In just a few years, HealthSouth quickly grew and became a publicly-traded company. It also expanded services to different fields such as worker’s compensation and sports medicine. The expansion helped HealthSouth’s growth further. In the early nineties, the company had facilities in 50 states and earned more than $181 million in revenue.

HealthSouth continued to grow, establishing over 2,000 facilities in the US, Puerto Rico, Australia, and the UK. It employed more than 50,000 physicians and was the nation’s largest provider of outpatient surgery and rehabilitative and diagnostic healthcare services. It was even endorsed by famous athletes like Michael Jordan, Shaquille O’Neal, and Jack Nicklaus.

HealthSouth made CEO Richard Scrushy the third highest-paid CEO in the US in 1997. (Source: People Pill)

The Fraud Case

As the company grew, several ethical and financial questions came to light, but in March 2003, the US Securities and Exchange Commission filed a civil suit against Scrushy and HealthSouth. The SEC alleged that the company falsified at least $2.7 billion worth of profit from 1996 to 2002.

It was also alleged that HealthSouth billed Medicare for services it never provided, delivering poor care, treating patients without a formal plan of care, and even using unlicensed therapists. The group also attempted to hide false earnings by illegally inflating accounts balances such as fixed assets and estimated insurance reimbursements.

The group faced many counts of conspiracy, money laundering, securities fraud, and mail fraud. CEO Scrushy was also accused of intimidating, threatening, and bribing HealthSouth’s top executives to commit fraud. (Source: People Pill)

Scrushy’s Religion Card

In 2005, former HealthSouth CEO Richard Scrushy was acquitted of the 36 indictments he faced. After 21 days of deliberations, the jurors ruled that Scrushy was not guilty. Some of the jurors who agreed to be interviewed claimed that their decision was partly based on the prosecution’s failure to present substantial evidence and that the key witnesses were not credible. (Source: NBC News)

Larry Soderquist, the director of the Corporate and Securities Law Institute at Vanderbilt University, noted that Scrushy had a very high reputation in the African American community even though he was a white businessman. Soderquist that this was due to Scrushy’s increased visibility in African American churches during his indictment.


Numerous people claim that Scrushy’s visibility in the black churches was a move to sway the jury, composed of eleven African Americans and seven whites. It was noted that during Scrushy’s trial, he and his wife began hosting a Christian television show and supported a city-wide 40-day prayer movement while joining the African American Guiding Light Church. (Source: People Pill)

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