Healthsouth Research Assignment

Healthsouth Research Assignment Words: 564

Week 3 Assignment 1 Tracy Elmer I Wendy Ecclesiastical 1 [Type the abstract of the document here. The abstract is typically a short summary of the contents of the document. Type the abstract of the document here. The abstract is typically a short summary of the contents of the document. ] I With the growing infamy of the Enron scandal, companies are under the microscope for ethical and accounting questionable practices everywhere. One company that has risen to claim such fame in the world of accounting scandals is Healthiness.

Healthiness is the largest U. S. Operators of rehabilitation hospitals. They were also under investigation by the Securities and Exchange Commission, as well as, the Justice Department for allegedly overstating the earnings by $2. 5 billion The majority of the finger pointing was done toward the former CEO since 1999. Richard M Crush. He was accused of obstruction of Justice. Charges were filed on September 29, 2004, accusing him of lying to regulators and urging subordinates to lie to support his story.

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Fourteen other employees, including all five chief financial officers had pled guilty to criminal charge. The assistant controller Emery W. Warns served 5 months for fraud. Two executives Robert E Thomson and James Riley were indicted on a bribery scheme involving the company’s $50 million to run a hospital in Saudi Arabia. (Crawford, 2005) Forensic audits that were done on Healthiness, they were administered by PricewaterhouseCoopers. PricewaterhouseCoopers found fraudulent entries to range between $3. 8 billion to $4. 6 billion.

This amount was up from the original $3. 5 billion thought to have been recorded in 2003. (Freudianism, 2004) These entries were recorded between 1996 and 2002 estimated at $2. 5 billion, $500 million in incorrect accounting for goodwill and other items involved in acquisitions from 1994 to 1999. Over $800 million to $1. 6 billion were recorded in “aggressive accounting”. (Freudianism, 2004) When public companies take these positions and create a fictitious world the victims of this fraud turns out to be the security holders and the equity holders.

Not to mention fraud against the government, when $6 million dollars in fraud against Medicare was uncovered by PricewaterhouseCoopers. (Freudianism, 2004) In June of 2005 it was reported that Richard Crush was found not guilty of the $2. 7 billion dollars in accounting fraud. The Jury in Alabama began deliberations and appeared o be deadlocked. (Crawford, 2005) Crush was the first chief executive charged with violation of the 2002 Serbians-Cooley Act, this was enacted after the Enron Scandals. Crawford, 2005) At the time Crushes acquittal came in after two former Delphic Communications executives were given two hefty sentences, as well as, Ex- World CEO Bernard Beers. (Crawford, 2005) Richard Crush was charged with 36 counts, including fraud, money laundering and conspiracy charges. He claimed to be the victim of an overzealous prosecutor. (Crawford, 2005) Prosecutors were shocked and disappointed by the verdict, but acknowledged the ease was not made to prove Richard Crush guilty. Crawford, 2005) Crush was scrutinized as a CEO, because he was a high school dropout and a former gas station attendant. He did manage to receive a degree as respiration therapist from the University of Alabama. He started Healthiness with the help of friends with $50,000 after the firm he was with sold in 1983. (Cheaper, 2006) Companies in general are being scrutinized after all of the findings of Enron. The Enron scandal woke the accounting world up as to the unethical practices that were occurring all over the place. 002 became the year of reckoning with the Serbians- Cooley Act.

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