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Scrushy Loses Appeal of HealthSouth Civil Judgment

Jan. 28 (Bloomberg) -- Richard Scrushy, the HealthSouth Corp. founder jailed in 2007 for bribery and mail fraud, lost his appeal of a $2.88 billion civil verdict against him for accounting fraud at his former company.

The Alabama Supreme Court today upheld the judgment against Scrushy, who remains in a federal prison in Texas for bribing former Alabama Governor Don Siegelman.

In the suit, shareholders accused Scrushy of orchestrating a fraud at Birmingham, Alabama-based HealthSouth from 1996 to 2002, when he was chief executive officer, causing the shares to plunge. Scrushy, 58, testified at trial that he had nothing to do with the fraud. He was acquitted of related criminal charges.

“Scrushy has demonstrated no error in any aspect of the trial court’s judgment,” the Supreme Court said.

John Haley, an attorney for the stockholders, said Scrushy’s assets -- including cash, real estate, yachts and artwork, and his wife’s jewelry -- will probably cover only $100 million of the judgment.

“Once Mr. Scrushy leaves prison, we will be cognizant of his lifestyle,” to see if he’s spending hidden cash, Haley said.

Scrushy’s attorney in the civil trial, Jim Parkman, didn’t immediately return a phone call seeking comment on the ruling.

The former CEO was found not guilty of criminal fraud charges in 2005, only to be convicted of bribery a year later. He’s serving a federal prison sentence of six years and 10 months after a jury convicted him of giving Siegelman a campaign contribution to get a seat on a state hospital regulatory board.

Scrushy’s lawyers on Jan. 19 asked a federal appeals court to grant him a new trial in the bribery case based on a U.S. Supreme Court ruling on the conviction of former Enron Corp. Chief Executive Officer Jeffrey Skilling.

The shareholder suit is Tucker v. Scrushy, CV-02-5212, Supreme Court of Alabama (Montgomery).

To contact the reporter on this story: David Beasley in Atlanta at dbeasley4@yahoo.com or .

To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.

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