Scrushy Must Repay $25 Million Loan to HealthSouth

Upholding a lower court ruling, the Delaware Supreme Court ruled on Thursday that HealthSouth’s founder and former chief executive Richard Scrushy must pay back a $25 million loan to the company.

In July 2002, Scrushy repaid the loan using HealthSouth shares, which tanked just after the repayment when he warned of lower-than-expected profits and said he planned to reorganize the company, Reuters reported.

The stock decline was the reason the company sued him after he was accused of being behind a $2.7 billion fraud, which he denies even though he faces 85 federal counts of fraud and conspiracy.

The Securities and Exchange Commission has also accused Scrushy and HealthSouth of accounting fraud. The case has resulted in numerous executives pleading guilty, including all five of the company’s chief financial officers. It is believed that many of these executives are assisting the government as it makes its case against Scrushy.

"We appreciate the fact that the Delaware Supreme Court operated on the same premise as the Chancery Court, which was that Mr. Scrushy had no knowledge about a financial fraud or other wrongdoing at HealthSouth," said Thomas Sjoblom of Chadbourne & Parke, one of Scrushy's attorneys, in a statement. "However, we are obviously disappointed by the court's decision, in which they summarily affirmed the Chancery Court decision without addressing any of our arguments. We are evaluating our options, including whether to seek a rehearing."

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