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HealthSouth (Richard Scrushy (Charismatic CEO but super greedy with lavish…
HealthSouth
Richard Scrushy
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Cofounded Healthsouth: "Taking rehabilitiation services out of hospitals and into outpatient facilities"
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When discussing with CFO's regarding telling the truth, he would pressure them into following his orders
"You guys won’t be rock stars anymore,” Beam quoted Scrushy as saying. “You know how to fix these numbers. Now go back to your offices and do it!”
Aaron Beam
CFO from 1984 - 1997
For the rest of the year and into 1997, HealthSouth’s auditors did not detect the fraud. “We begged Richard to tell Wall Street we were going to have a down year, but he wouldn’t do it,” Beam said.
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Responsible for misclassifying expenses, revenue, and accounts receivables
Cofounded Healthsouth: "Taking rehabilitiation services out of hospitals and into outpatient facilities"
"$2.8 billion accounting scandal at HealthSouth, which was perpetrated from 1996 through 2002"
Over 126,000 fraudent journal entries
“I started doing things like changing any accounting estimate I could, involving bad debts or whatever,” he said. “But over time Wall Street noticed that our earnings didn’t match our cash flow.”
When growth started to slow, Scrushy ordered Beam to cook the books and generate false revenue
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Misclassifying expenses, understate accounts receivable, overstate revenue
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