Monday, May 6, 2019
HealthSouth Scandal
HealthSouth was the largest publicly traded health care company in the U.S. The fraud included the inflation of the companies earning numbers by about $1.4 billion to meet the expectations of stockholders. Richard Scrushy, the CEO of the company, would tell the people under him to fake transactions and make up random numbers. Richard kept this up from 1996 to 2003. A crucial mistake that Richard made was selling $75 million worth of stock right before the company released a posting of a huge loss. This made the U.S Securities and Exchange to become skeptical and begin investigations on the company. At the end of the investigations, Scrushy was not found guilty and freed of 36 accounts of accounting fraud but instead sentenced to 7 years in prison for trying to bribe the governor of Alabama.
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4 comments:
It it interesting how big companies in the US, even though failing, could trick the public into that they are successful. This may be good for the companies until everything falls.
It is terrible that Scrushy not only tricked stockholders but also was found not guilty. Thankfully, he was arrested in the end, although he got away with the fraud. Learning about scandals like Madoff's Ponzi scheme and the HealthSouth scandal is frustrating. There will always be people that find loopholes, but I am hopeful that we will be able to prevent more of these frauds in the future.
The fact that Scrushy was acquitted of fraud seems ridiculous, but the United States has a long history of prioritizing the wants of corporations over the needs of the public. Seven years doesn't seem like enough for someone who caused so much difficulty and suffering.
This was a major call for transparency and regulation in investment. The criminal justice system and legislation must protect American people, their assets, and their interests.
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