April 23 (Bloomberg) -- HealthSouth Corp. founder Richard Scrushy settled a U.S. Securities and Exchange Commission lawsuit for $81 million, closing the book on a federal probe of the former executive's role in a $2.7 billion accounting fraud.

Scrushy, who was also HealthSouth's chairman and chief executive officer, agreed to a $3.5 million fine and must forfeit $77.5 million in profits to end the suit filed in 2003, the SEC said in a statement today.

The accord resolves much of Scrushy's liability for one of the largest accounting restatements in U.S. history, a fraud that nearly bankrupted the Birmingham-based chain of rehabilitation hospitals. A federal jury acquitted him in 2005 of criminal charges that he masterminded the inflation of profits.

``The settlement reflects an effort to bring to closure a case that involved lots of pieces,'' said Christopher Conte, an SEC enforcement attorney overseeing the agency's investigation. ``There are many and multiple claims that are out there for much of the same money and assets.''

Because the SEC is crediting Scrushy for $71.5 million paid in investor lawsuits, his actual payment to the regulator won't exceed $9.5 million. At least five civil lawsuits are still pending between Scrushy, the company and investors, according to the SEC.

Numbers `Fix'

Scrushy, 54, ordered other managers to ``fix'' the numbers and ``get them where they need to be,'' as earnings threatened to miss investor expectations in 1996, the SEC said in its suit. In the following six years, he repeatedly released inflated figures and mislead investors on conference calls, the regulator said.

By the end of 2002, HealthSouth claimed to be retaining more than $1.5 billion in accumulated profits, when the company actually had operated at a loss over its entire history, the SEC said. Some 15 executives eventually pleaded guilty for their roles in the fraud.

HealthSouth agreed in 2005 to pay $100 million to settle a related SEC lawsuit. Scrushy's payments may be added to those funds for redistribution to injured investors, the SEC said.

`A Lot For Him'

The penalties are ``are small relative to the hundreds of millions of dollars the SEC was claiming'' originally, Scrushy's attorney, David Russell of Parker, Hudson, Rainer & Dobbs LLP, said in a telephone interview. Still, ``it's a lot for him and it may be too much for him.''

Scrushy didn't admit or deny wrongdoing under the accord. The regulator granted him a year to pay the first $1.5 million of the fine, and two years to pay the rest.

The former HealthSouth chief may also eventually be allowed to again run a public company. While the regulator barred him from serving as an officer or director, the agreement specifies he may return to court after five years to try to get the ban lifted.

Scrushy still faces as much as 30 years in prison for a June 2006 federal conviction for bribing former Alabama Governor Don Siegelman. In that case, jurors found Scrushy guilty of paying a $500,000 bribe to Siegelman's campaign to create a state lottery, in exchange for a seat on the state's hospital regulatory board.

``Our case against Mr. Scrushy will proceed apace'' after the SEC settlement, said Sean Coffey, an attorney who represents the Retirement Systems of Alabama, the lead plaintiff in a bondholder lawsuit against him.

To contact the reporters on this story: David Scheer in Washington dscheer@bloomberg.net; David Voreacos in Newark, New Jersey, at dvoreacos@bloomberg.net.

Last Updated: April 23, 2007 18:42 EDT