Aron Bean and the HealthSouth Fraud

In 1984 Richard Scrushy and Aron Beam founded a

company that would provide medical rehabilitation services to hospitals and their outpatients in Birmingham, Scrushy as CEO and Beam as CFO. Initially the company was very profitable to satisfy investors and lenders and also succeeded in issuing and selling company stock to the public. In 1986 the company successfully went public and both Scrushy and Beam, as well as their investors made a great deal of money. It expanded rapidly and the revenues were also increased.

 In this mean time with their new riches, Beam and

Scrushy led a very luxurious life. Over the next ten years the HealthSouth company grew into a $3 billion Fortune 500 company. With 22,000 employees , it was the nations largest provider of rehabilitation, surgery, and therapy outpatient service. In the second quarter of 1996,they realized that for the first time, the company would fall short of meeting Wall street analysts expectations of quarterly revenue about $500 million.

 Beam did everything he could to keep as much

information about the shortfall as possible from leaking out of the company. With the help of some employees Beam inflated the numbers by inserting many small additional revenue entries throughout each report and consolidated the reports into a single corporate report. Beam felt that what he was doing was for the good of everyone in the company. In the next quarter also the earnings of company again fell short and the fraud proceeded much like it had in the previous quarter.

 By 1997 HealthSouth was the rehabilitation service

company in the industry land with a total of $106 million in compensation. In this time, being repentant in his doings Beam decided to retire from the company. By the time the government stepped in and prosecuted Healthsouths executives in 2003, as its earnings had been overrated by $2.7 billion and as a result Beam, Smith, Martin, Owens, Livesay were accused but Scrushy was declared innocent of any criminal wrongdoing by a jury.

 But Scrushy was sentenced to seven years in prison

for a bribe , a sentence he began in 2007. Scrushys bank accounts were seized and his houses , boats , cars and other remaining properties were auctioned off to pay the $2.8 billion judged against him. Although he could have received upto 30 years in jail and fined upto $ 1 million, Beam spent only 3 months in a federal prison and paid $285,000 and another $250,000 in lawyers fees. Beam completely blamed Scrushy for much of what had happened.