BUSINESS

Former HealthSouth execs get probation, fines

Meanwhile, the company completes an audit to determine the extent of its accounting scandal.

By Katherine Vogt, AMNews staff. June 21, 2004.

Three former HealthSouth executives avoided serving time in jail for their roles in a multibillion-dollar accounting scandal at the outpatient services giant in the same week that the beleaguered company said it had completed a forensic review of its past accounting practices.

Sentences were handed out June 2 and June 3 for former assistant comptroller and chief information officer Kenneth K. Livesay, former chief financial officer Malcolm McVay and former senior vice president for tax Richard Botts. Each was sentenced by a federal judge to six months of home detention, 60 months of probation and ordered to pay fines and forfeit some profits.

All three had pleaded guilty to various fraud and conspiracy charges. They are among the 17 former HealthSouth executives who have faced criminal charges since news of the Justice Dept.'s fraud investigation first broke in March of 2003.

The Birmingham, Ala.-based company has been accused of inflating its earnings by at least $2.7 billion to meet Wall Street expectations. Founder and former chief executive Richard M. Scrushy, who was ousted from the company last year, was alleged to be the mastermind of the fraud. He is awaiting trial.

After the scandal broke, HealthSouth's board ordered a forensic audit of its accounting practices to determine how the fraud was carried out and what controls could be used to prevent it from happening again.

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