Jurors in HealthSouth Case Hear FBI Recording of Scrushy

Jurors in Richard Scrushy’s corporate fraud trial heard a secret recording Wednesday in which the former HealthSouth Corp. chief instructed aides to tell investigators the company’s financial statements were accurate, after warning: “This conversation did not take place.”

Although prosecutors claim the digital recordings prove Scrushy’s guilt, the defense contends parts of them exonerate Scrushy.

In a recording made for the FBI by former Chief Financial Officer Bill Owens, Scrushy was heard discussing his testimony to the Securities and Exchange Commission three days earlier on March 14, 2003.

Owens said that besides him and Scrushy, assistant controller Ken Livesay was present for the meeting at HealthSouth headquarters. Owens, Livesay and 13 others have since pleaded guilty in what prosecutors describe as a $2.7-billion fraud.

“I’m OK. I’m gonna talk, talk to y’all just real. This conversation did not take place. OK?” Scrushy said on the recording.

“I understand,” responded Owens, who was under subpoena to testify before the SEC at the time.

“It ain’t happened,” said Scrushy.

He continued: “Bill, they ain’t got nothing. They didn’t ask me nothing about the numbers.”

The SEC had been probing alleged insider trading by Scrushy, and Scrushy said the investigator also asked whether he had signed HealthSouth financial statements and whether they were accurate. Scrushy said he responded that the numbers were correct.

“That’s your answers: ‘To the best of my knowledge, everything in this report is accurate,’ ” Scrushy said. Owens testified that Scrushy was talking to him.

Jurors listened to the recording on headphones as a transcript was projected on video screens. Scrushy had no visible reaction to the presentation made during his trial in U.S. District Court in Birmingham, Ala.

Scrushy contends Owens and other HealthSouth executives hid the fraud from him, lying to him for years.

Scrushy is charged with conspiracy, fraud, money laundering, obstruction of justice and perjury. He also is accused of false corporate reporting in the first test against a chief executive of the 2002 Sarbanes-Oxley Act.