Reaction Of Senator Patrick Leahy
To The Indictment Of Richard M. Scrushy,
Former Chief Executive Officer Of HealthSouth Corp.
November 4, 2003

As principal author of the Corporate and Criminal Fraud and Accountability Act provisions of the Sarbanes-Oxley Act, I watched as President Bush signed the bill putting into effect an array of new provisions in response to a disturbing upward trend in corporate greed and deceit. I was hopeful that it would help in significant ways in curbing such excesses.  Along with whistleblower protections that I joined Sen. Charles Grassley in offering, a lengthening of the statute of limitations in securities fraud cases, and new protections for relevant auditing records with penalties for illegally shredding them, I had proposed a securities fraud statute which gave prosecutors a new tool for holding corporate wrongdoers accountable

Last year I wrote Harvey Pitt, then-chair of the Securities and Exchange Commission (SEC), to detail my concerns about the appearance of lax enforcement despite the new mechanisms provided by the law.  I urged the Administration to vigorously use these new tools to help restore full confidence in the information that the American people depend on for sound investments in our markets.

 Today it has been reported that Richard M. Scrushy, former chief executive officer and chairman of the board of HealthSouth Corp., was charged in a multi-count indictment alleging a wide-ranging scheme to defraud investors, the public and the U.S. government about HealthSouth’s financial condition.  The charges against Mr. Scrushy include securities fraud under Section 1348 of Title 18 of the United States Code -- an important piece of the Corporate and Criminal Fraud Accountability Act.  As recognized by Assistant Attorney General Christopher Wray in the Department of Justice press release announcing the indictment:  “These charges show that the government has important new tools to hold executives accountable for corporate fraud, and we won’t hesitate to use them where the evidence warrants it.”

 We worked hard to forge these new tools, and we hope they will be useful in protecting the investing public.

 

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