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Scrushy defense hits ex-CFO's testimony

Owens is called mind behind fraud

BIRMINGHAM, Ala. -- The defense in Richard Scrushy's corporate fraud trial sought to poke holes yesterday in the claims of a key witness who contends the fired HealthSouth chief executive was behind a scheme to overstate earnings.

Under cross-examination by Scrushy attorney Jim Parkman, former HealthSouth finance chief Bill Owens conceded Scrushy never attended big meetings of a group called "the family" that carried out the fraud, and that he didn't previously identify Scrushy as being a member at all.

Also, jurors heard about the cloak-and-dagger mood at HealthSouth, with meetings moved to homes and cars amid worries of electronic eavesdropping.

And the defense tried to rebut Owens's claim that Scrushy knew a company financial announcement in 2002 was false.

The questioning came in the ninth day of testimony by Owens, among 15 former HealthSouth executives who have pleaded guilty in what prosecutors describe as a $2.7 billion overstatement of earnings from 1996 through 2002.

The defense claims Owens was the "godfather" of a group known as "the family" that inflated earnings on their own and hid the crime from Scrushy for years.

In sometimes combative questioning, Parkman brought out that Scrushy never met with "the family" as the group of executives worked for years to inflate HealthSouth earnings to meet Wall Street earnings forecasts.

As investigators focused on allegations of insider trading by Scrushy in late 2002, Owens said, finance executive Tadd McVay and Bill Horton, HealthSouth's corporate counsel, asked him to meet them at McVay's home on a Sunday to discuss concerns of investors and outside lawyers who wanted Scrushy removed.

The two were worried eavesdropping equipment at HealthSouth headquarters would pick up the conversation if they talked at the office, Owens said.

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