Friday, January 20, 2006

How to Write-Off Your Pay-Offs

The trouble with blogging in Minnesota is we have to go out-of-state for the really good examples of greed, corruption and hubris.

Thank goodness for guys like Richard Scrushy, the HealthSouth CEO who got off from charges of manipulating corporate earnings.

Scrushy's PR blitz was transparent at the time, and now there are new revelations of his payments to influence the local black religious leaders — and thereby the predominantly black Christian jury pool. BusinessWeek Online has the best summary of allegations that Scrushy funneled money to a writer, Audry Lewis, and a local PR firm affiliated by family ownership with Birmingham's black newpaper —— in addition to making donations to local churches that seemed timed to turn the ministers out to sit in courtroom during his trial:

In 2003, Internal Revenue Service records show that Scrushy's charitable foundation gave Guiding Light $1 million. The next year, as his trial date approached, the records show that the foundation donated more than $700,000 to religious groups, some of whose leaders joined the courthouse Amen Corner. The foundation's 2005 IRS records are not yet available.

Scrushy, of course, denies there was any connection between his tax-deductible donations to the churches and their pastors showing up in his defense. He even went so far as to record his conversations with the writer and her minister who now say Scrushy has reneged on $150,000 in payments for their PR work. This is curious, given that one of Scrushy's HealthSouth staff tried to get him on tape when he raised his concerns with Scrushy that earnings statements were being falsified.

On the tapes provided to the Associated Press, Scrushy repeatedly tells Henderson the two had no contract for money. (BusinessWeek says the tapes were muffled and inconclusive.) It looks like Scrushy was carefully ambiguous except when he knew he was on tape.

In addition to the Lewis Group PR firm, Scrushy hired a Colorado PR guy, Charlie Russell, who specializes in corporate train wrecks. According to the Denver Post, Russell was "introduced to Scrushy by former Cherry Creek financial adviser Will Hoover, who was convicted in 2004 in a $13 million fraud case and sentenced to 100 years in prison." While Hoover was free on bail, he started a company called Executive Recovery Partners, presumably offering his personal expertise to help other swindlers with expert witnesses, public relations and psychological counseling.

Russell paid Audry Lewis $2,500 during the trial, but took care to have a contract calling it advance payment for possible work after the verdict. He said he gave Audry Lewis money so she could go to the funeral of a Detroit relative — a classic kindhearted gesture familiar to alumni football boosters everywhere.

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