Scrushy Seeks Court Action on Three Counts, Challenges SOX | AccountingWEB

Scrushy Seeks Court Action on Three Counts, Challenges SOX

HealthSouth Corp. founder and former chief executive Richard Scrushy is trying to get a federal court to drop three of the 85 counts against him, questioning the constitutionality of the Sarbanes-Oxley Act, from which the charges stem.

At the same time, Scrushy is appealing a judge’s decision last month that bars him from traveling to some coastal counties in Alabama without first getting the court’s permission.

On the first matter, the Birmingham Business Journal reported that Scrushy’s attorneys are challenging the constitutional validity of the Sarbanes-Oxley Act, which requires senior management to sign off on their financial statements. All three of the contested charges relate to the Sarbanes-Oxley accountability law.

Scrushy was indicted on the 85 counts in November 2003. He has pleaded innocent and is free on $10 million bail. The federal government accuses Scrushy of masterminding the fraud, which prosecutors say involved more than $2.7 billion in faked assets and earnings since 1996, the Birmingham Business Journal reported.

The Associated Press reported that documents made public late last week show that Scrushy was denied free access to coastal counties in Alabama because prosecutors fear he is a flight risk. Scrushy is reportedly worth much more than the $10 million bond.

His attorneys cited several reasons why Scrushy won’t flee. Among them is a pregnant wife, eight children, an elderly father and numerous business interests in Alabama, the AP reported.

"Despite travel (authorized by the court) to New York, Washington, D.C., and Florida, all of which have ready access to the coast, including trips by private plane, he has done nothing to suggest that he would flee or that he presents a danger to the community," Scrushy's attorneys argued.

Scrushy's trial is set for Sept. 27 or, if a delay is needed, Jan. 10, the AP reported. He seeks permission to travel without court permission to Mobile and Baldwin counties, where he has business interests and family, the AP reported.

Government prosecutors opposed the request, and U.S. Magistrate Judge T. Michael Putnam sided with them last month, the AP reported, adding that Scrushy's appeal was originally filed under seal on May 24. It was filed in open court Thursday with some portions blacked out, including a reference to the total value of the former CEO's estate, the AP reported.

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