(CN) – Richard Scrushy, the embattled founder of the HealthSouth Corporation, was ordered by a federal judge Thursday to pay $2.9 billion for a “massive accounting fraud.”
While the 57-year-old Scrushy maintained until the end that he knew nothing of the fraud during his years as CEO for the Birmingham, Ala.-based company, the court found that he “knew of and participated in the fraud” and “consciously and willfully breached his fiduciary duties as CEO of HealthSouth,” U.S. District Judge Allwin E. Horn III in an opinion released Thursday.
Scrushy’s attorneys admitted during the trial that there was widespread fraud at HealthSouth from the summer of 1996 through March of 2003, when the FBI raided the company and arrested Scrushy and others. But they argued that Scrushy was unaware of the illegal activity, which consisted of a long-running conspiracy to falsify HealthSouth’s financial records so that they were “in line with what Wall Street expected,” Horn wrote.
“Even if this court is wrong to conclude Scrushy knew of and participated in the fraud, by failing to review and know about monthly financials while CEO of HealthSouth, he consciously and willfully failed to perform his fiduciary duties as CEO,” the ruling states.
The civil action was brought against Scrushy by a group of former HealthSouth investors.