Defense Tries to Discredit Ex-CFO

Richard Scrushy’s lawyers Tuesday depicted a main witness against the fired HealthSouth Corp. chief executive as a free-spending, tax-dodging liar who made millions while orchestrating a huge fraud at the rehabilitation giant.

But the tough cross-examination didn’t sway former HealthSouth finance chief Bill Owens from the central theme of his 10 days on the stand: that Scrushy was behind what prosecutors describe as a scheme to overstate earnings by some $2.7 billion.

Testimony showed that Owens -- one of 15 former HealthSouth executives who pleaded guilty and could testify against Scrushy -- paid cash for more than $3 million of property and had a $700,000 tax lien from 1996 on his $1.3-million home.

Owens, an accountant, testified he failed to file federal tax returns for nine years beginning in 1995, the year before the HealthSouth accounting fraud began.

He insisted Scrushy was in charge of the fraud at HealthSouth.

“Mr. Scrushy was always concerned about who knew and how much they knew,” Owens said.

Seated at the defense table in U.S. District Court in Birmingham, Ala., Scrushy silently shook his head when Owens said he had informed Scrushy that a former assistant vice president for finance had figured out that the company was overstating its results. The worker, Diana Henze, was subsequently transferred to another division, Owens said.

The defense claims Owens was in charge of a group known as “the family” that inflated earnings on its own and hid the crime from Scrushy for years.

Scrushy attorney Jim Parkman said Owens “not only orchestrated this fraud” at HealthSouth but also manipulated workers and his own personal debts -- a charge Owens denied.

Testifying about his own finances, Owens said he paid cash for the $1.3-million house in Birmingham, three others in Alabama and South Carolina and two tracts of land. He also gave his daughter and her husband $290,000 for a home and bought a condominium for her, he said.

Owens admitted his spending occurred in years he wasn’t filing federal tax forms.