A Medical Device Daily

Richard Scrushy’s defense rested Wednesday without the fired HealthSouth (Birmingham, Alabama) CEO taking the stand to answer charges that he directed a long-term $2.7 billion fraud at the rehabilitation chain.

After calling more than 20 witnesses to rebut prosecution claims that Scrushy was at the heart of the scheme, defense lawyers told the judge they were finished with their case.

Without Scrushy taking the stand, jurors won’t hear his explanation for his failure to detect the fraud. If he had taken the stand, Scrushy could have been hit with a blistering cross-examination, including questions about secretly recorded tapes that prosecutors contend prove he knew of the crime.

On trial in Birmingham since Jan. 25, Scrushy faces charges of money laundering, conspiracy, obstruction of justice, securities and wire fraud, and reporting false financial figures to the government.

Lawyers for both sides are to begin closing arguments today, with the court having set a three hour limit on their presentation.

Scrushy, outside the courthouse, said prosecutors had not come up with “a shred of evidence” proving his responsibility for the accounting fraud at the healthcare company he founded. “They found no smoking gun,” he said in a Reuters report.

Scrushy and his attorneys have contended that the fraud was carried out by underlings who hid it from him. If convicted of all charges, he could go to prison for the rest of his life, and becoming the first U.S. executive to do jail time for corporate malfeasance under the 2002 Sarbanes-Oxley corporate reform law. A total of 15 former HealthSouth executives have pleaded guilty to various fraud charges related to the accounting scandal.

When asked outside the courtroom why Scrushy had not taken the stand, his lawyer Donald Watkins said: “We don’t need him. We are going to call the game while we are ahead.”

The defense called only one witness, James Goodreau – a former HealthSouth employee still on Scrushy’s payroll – who testified that Scrushy was unaware of the fraud. That contrasts with five former HealthSouth chief financial officers who testified that Scrushy orchestrated it.

Alice Martin, who rested the government’s side of the case in April, said, “The defendant has had his day in court – 55 days in court in fact.” She added: [W]e are very pleased with the witnesses the defense put on. There was no need for rebuttal.”