An Alabama jury Wednesday failed again to reach a verdict in the corporate fraud trial of former HealthSouth Corp. chief executive Richard Scrushy, ending a shortened fourth week of deliberations still in deadlock.
The jurors, who have acknowledged that they cannot agree on any of the U.S. government’s 36 charges against the flamboyant Alabama businessman, will not resume their work until next week because of a scheduling conflict.
Scrushy, 52, is accused of orchestrating a $2.7 billion accounting fraud at HealthSouth between 1996 and 2002 in a bid to inflate the medical rehabilitation company’s profits and stock price and, in so doing, enrich himself.
He claims the massive conspiracy was carried out by former executives without his knowledge.
Although ridiculed as a fantasy by prosecutors, Scrushy’s line of defense appears to have gained traction with some jurors, who have deliberated for 12 days since getting the case on May 19.
Defense attorneys say they are increasingly confident that the prosecution’s case has unraveled in the jury room.
“I feel better with each passing day,” said Donald Watkins, one of Scrushy’s attorneys. “I think the longer it goes, the better chance we get for a full acquittal.” U.S. Attorney Alice Martin, the lead prosecutor, declined to comment Wednesday.
U.S. District Judge Karon Bowdre, who is presiding over the case, could eventually declare a mistrial if she concludes there is no hope of a verdict, or issue another “Allen charge,” ordering jurors to work harder to break the impasse. She has already issued one such order to the jury.
Scrushy, who is charged with conspiracy, mail and wire fraud, money laundering and other wrongdoing in connection with the fraud, faces life in prison and forfeiture of much of his vast wealth if convicted.
Scrushy’s trial has attracted national attention because he is the first major figure charged with violating the 2002 Sarbanes-Oxley Act, the corporate reform law passed by Congress requiring, among other things, that chief executives certify the accuracy of their financial statements.
He did so before stepping down in 2002 as CEO of HealthSouth, which he had built into the nation’s largest chain of rehabilitation and outpatient surgery clinics. He was ousted as the company’s chairman the following year.
Prosecutors say Scrushy directed the fraud to inflate the value of his stock options and fund an extravagant lifestyle. He sold more than $200 million worth of stock between 1996 and 2002.
HealthSouth’s stock fell from a high of $30.56 a share in 1998 to 8 cents a share after the fraud came to light in 2003. Shares closed at $5.77 on Wednesday.
