Judge orders Scrushy to Alabama to answer questions about assets as lawyers seek $2.9B

Scrushy ordered to answer questions about assets

BIRMINGHAM, Ala. — Imprisoned HealthSouth Corp. founder Richard Scrushy must return to Alabama to answer questions from lawyers trying to collect an almost $2.9 billion judgment against the one-time executive, a judge ruled Thursday.

Circuit Judge Allwin Horn ordered Scrushy to submit to the sworn testimony after ruling him in contempt of court last week for failing to disclose his financial assets.

Scrushy, who is serving nearly seven years in prison in Texas for a federal bribery conviction, could face penalties including additional jail time if he refuses to talk during the deposition, said John W. Haley, an attorney for HealthSouth shareholders who sued Scrushy.

“There are serious implications to Mr. Scrushy if he fails to respond,” said Haley.

The $2.9 billion judgment stems from the huge accounting fraud that occurred while Scrushy ran the Birmingham-based rehabilitation company. Former executives admitted inflating assets and earnings to meet Wall Street expectations, although Scrushy denied taking part.

A lawyer for Scrushy did not immediately return a message seeking comment Thursday.

Horn didn’t set a date for Scrushy’s deposition, but Haley said it could occur in Birmingham within a month.

Authorities already have seized Scrushy’s suburban estate, his sprawling mansion on Lake Martin and his collection of luxury automobiles. But Haley estimated that property is worth only $10 million at most, leaving the vast majority of the civil verdict unpaid.

“We asked Richard Scrushy to tell us where his assets were and what he had bought and sold over the past few years … and he hasn’t answered,” Haley said.

While Scrushy’s dwindling fortune is nowhere near $2.9 billion, Haley has described him as a man of “substantial means” who earned more than $200 million during the six-year period of the accounting fraud.

Scrushy’s 92-foot yacht could be seized and sold for millions, but his lawyers have argued that the boat really is owned by one of Scrushy’s private corporations and not him personally, potentially protecting it from confiscation.

Judge Horn earlier this year ordered Scrushy to pay $2.87 billion in a civil suit filed over the accounting scheme that nearly drove HealthSouth into bankruptcy, calling him the “CEO of the fraud.” He was acquitted on criminal fraud and conspiracy charges in 2005.

His wife Leslie has left the family’s Birmingham estate and moved to the Houston area to be nearer the prison where Scrushy is held.