Scrushy civil case far cry from criminal trial

May 18, 2009 6:18:03 AM PDT
Richard Scrushy's federal criminal trial, which ended in his acquittal, was an entertaining, white-collar whodunit with everything from a courtroom prayer circle to a big cartoon rat. Four years later, the civil trial of a shareholder lawsuit seeking $2.6 billion from the disgraced HealthSouth Corp. chief executive isn't making nearly the same splash. There are few fireworks and no crowds this time, despite the huge amount of money at stake in the trial that started last week.

Part of the difference is a change in the times and financial environment: Wall Street's meltdown, bailouts and the recession are bigger news than an immense corporate scam that ended six years ago.

Scrushy still says he did nothing wrong and is the victim of corrupt underlings. But the cases are being handled very differently, keeping the drama that marked the first trial in 2005 to a minimum.

Now, Scrushy's fate is being decided by a state court judge without jurors, making for fewer theatrics for a jury's benefit. The judge also issued a gag order on attorneys outside of court, eliminating the daily news conferences that helped make the criminal trial such a show.

Much of the evidence in the civil trial is being presented through video depositions rather than live witnesses, keeping high-pressure confrontations to a minimum and giving the trial the feel of a TV rerun.

And the star of the case - Scrushy - hasn't even been in the courtroom yet. That's because the once-flamboyant executive is two years into a nearly seven-year federal prison sentence for a bribery conviction. He is scheduled to give his first public testimony about the fraud this week.

The contrast between the two trials came into focus last week as Judge Allwin E. Horn watched video testimony that was recorded months before. The lights were dim in his two-story, art deco courtroom; there were plenty of empty seats in the gallery.

A pastor who preaches at a TV church funded by Scrushy nodded off on one bench; cardboard boxes full of documents filled another. The jury box was empty save for a few lawyers for shareholders who sued Scrushy on behalf of HealthSouth.

Back in 2005, Scrushy and his wife Leslie were accompanied by a contingent of preachers and supporters who held prayer sessions during breaks in the testimony. Scrushy proclaimed himself an ordained minister amid it all, adding to the surreal feeling.

It wouldn't be hard to mistake the current trial for a dispute over some arcane contract clause rather than a trial over one of the largest corporate scandals in U.S. history.

A law professor who has followed Scrushy's legal troubles for years, Donald Cochran, said there's not much precedent for comparing big criminal and civil trials that focus on the same issues, save for one such case: O.J. Simpson.

The former NFL great was famously acquitted of murdering his wife and another man in 1995, but jurors in a later civil trial ordered him to pay $33 million.

Shareholders who filed suit on behalf of HealthSouth are asking Horn to make Scrushy pay $2.6 billion, the amount of fictitious earnings that were filed. They argue he put the fraud into motion in 1996 when HealthSouth's earnings fell below Wall Street estimates.

In a businesslike, restrained opening statement that matched the judge's courtroom demeanor, plaintiff's lawyer John W. Haley dismissed Scrushy's claim that he was unaware the company had been overstating revenues and assets until after the bogus accounting was uncovered by the FBI.

"We say it was Scrushy's job to know," Haley said last week.

An equally buttoned-down attorney for Scrushy, Jack McNamee, argued that it defied common sense for Scrushy to have had any role or knowledge of the fraud since there are no documents linking him to it.

"If he was involved in the fraud, he never let it slip. Not once," McNamee said.

As McNamee spoke, Scrushy attorney Jim Parkman sat silently at a table beside him. Parkman had a starring role in the federal criminal trial in 2005, pulling out a cartoon drawing of a rat during closing arguments to depict a former HealthSouth finance chief, Bill Owens.

Shareholders finished presenting their case last week, yielding to the defense.

The civil trial will likely get a spark this week. Temporarily free from federal prison and jailed in a county lockup near Birmingham, Scrushy will take the stand to testify in his own defense.

Scrushy, who was convicted with former Gov. Don Siegelman in a state bribery scheme in 2006, will deny any role in the HealthSouth fraud, his lawyers have said. He will blame it all on the 15 former HealthSouth executives who pleaded guilty in the scandal.

But true to form for the case, Scrushy's testimony will make a limited splash. The judge plans to temporarily shift the trial from the county courthouse to the nearby federal courthouse while Scrushy is on the stand, a move that will prevent TV cameras from filming the shackled former executive because the entrance used for prisoners is shielded from public view.

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