Richard Scrushy founded HealthSouth in 1984 and with only a few years, skyrocketed to millionaire status. He used his success to woo employees and investors alike.
Beginning in 1996, HealthSouth began to experience financial troubles as sales fell below expenses.
In an attempt, Scrushy instructed accountants to inflate and deflate numbers; at the peak
of the fraud sales were inflated 11x
and 126,000 false entries in one quarter.
The scam was revealed by former financial adviser Weston Smith. Even with this, he would serve 27 months in jail.
Out of the seventeen originally involved, fifteen pled guilty. Sentences were between 3 months and 5 years, through Scrushy avoided charges. He was, however, sentenced to 6 years for bribing the governor of Alabama.
HealthSouth has been cleared of their charges and is able to continue operating under a new CEO and name as it builds hospitals and therapy centers.