The lawyer for HealthSouth Corp. founder Richard Scrushy on Tuesday sought to portray his former finance chief, Michael Martin, as a deceitful and violent executive who hid a $2.7 billion fraud at the company from his former boss.
Martin, who pleaded guilty to his role in the accounting fraud, told jurors that Scrushy knew the company would make 20 cents a share in 1998, not the $1.09 he told Wall Street analysts. But Scrushy's lawyer, Jim Parkman, suggested that Martin and others were the masterminds of the fraud.
Martin is the third former HealthSouth chief financial officer to testify that Scrushy, a detail-oriented chief executive, directed the fraud. But Parkman said Martin and other executives withheld expense figures from Scrushy.
"That's why he couldn't tell what was happening" when the company failed to meet earnings estimates in 1998, Parkman said at the federal trial in Alabama. "You all planned it that way so he wouldn't know what the true picture was."
Martin said he gave Scrushy reports that included detailed financial information.
Scrushy denies participating in the seven-year scheme to inflate HealthSouth's earnings to meet Wall Street expectations and prop up the company's share price. Fifteen people have pleaded guilty to fraud charges.
Tyco board didn't ask, witness says
Tyco International Ltd.'s directors never asked for the final version of an employee-relocation plan that former CEO L. Dennis Kozlowski and former finance chief Mark Swartz are accused of misusing, a former company executive testified in New York.
The witness, former Treasurer Barbara Miller, said under cross-examination at Kozlowski's and Swartz's fraud and larceny trial that no director asked for a final version once the board's compensation committee approved an outline in August 1995. Defense lawyers say their clients didn't try to hide the changes.
"Mr. Kozlowski never asked you to keep that from the compensation committee, did he?" Kozlowski's lawyer, James DeVita, asked Miller.
"No," she said.
The plan offered moving allowances and interest-free home loans to executives moving to New York from Tyco headquarters in Exeter, N.H. Prosecutors say Kozlowski and Swartz broke the law by making unauthorized changes after the plan was OKd by the compensation committee.
Swartz and Kozlowski are accused of giving themselves and others $150 million in unapproved payments and of defrauding shareholders by inflating the value of Tyco stock. Their first trial ended in a mistrial in April.
Jury gets copy of Ebbers' testimony
Jurors reviewed testimony from former WorldCom Inc. CEO Bernard Ebbers for the first time but failed to reach a verdict in their third day of deliberations at his federal fraud trial in New York.
The jury of seven women and five men asked to see transcripts of testimony from Ebbers, who is accused of engineering the $11 billion fraud at WorldCom that led to the largest bankruptcy in U.S. history. It also asked to see testimony from two accounting executives who pleaded guilty to taking part in the fraud.