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Ex-Alabama Gov. Siegelman, Scrushy Indicted by U.S. (Update1)

By Robert Schmidt

Oct. 26 (Bloomberg) -- Former Alabama Governor Don Siegelman and HealthSouth Corp. founder Richard Scrushy were indicted by a federal grand jury in an alleged bribery and extortion scheme.

The 30-count indictment, returned today in Montgomery, Alabama, accuses Scrushy, 53, of paying $500,000 in bribes. Paul Hamrick, a former chief of staff to the governor, and Gary Roberts, the ex-director of the Alabama Department of Transportation, were also charged in the case.

Siegelman, 59, a Democrat, was governor of Alabama from 1999 to 2003. The indictment alleges that Scrushy made two payments to Siegelman in exchange for appointing the business executive to an Alabama state board that approves hospital construction.

Today's indictment is separate from the criminal case that was brought against Scrushy in connection with a $2.7 billion accounting fraud at HealthSouth, the largest U.S. operator of rehabilitation hospitals. A federal jury found Scrushy not guilty in June, in that case.

Federal prosecutors first brought the charges against Siegelman and Scrushy in May, but filed them under seal so Scrushy's trial in the fraud case wouldn't be disrupted, the Justice Department said.

Art Leach, a lawyer for Scrushy in the criminal trial, declined to comment. Doug Jones, an attorney for Siegelman, didn't immediately return a phone call seeking comment.

Siegelman and Hamrick were charged with violating the Racketeer Influenced and Corrupt Organizations law and with mail and wire fraud. Siegelman is also charged with bribery, extortion and obstruction of justice. Scrushy is charged with bribery and mail fraud.

To contact the reporter on this story: Robert Schmidt in Washington at rschmidt5@bloomberg.net.

Last Updated: October 26, 2005 19:39 EDT

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