Another HealthSouth executive charged in fraud scancal

A former HealthSouth president and chief operating officer has been accused in a 39-count indictment of securities fraud, insider trading and more for his role in the outpatient services company's massive accounting scandal.

James P. Bennett pleaded innocent to the charges at a hearing in U.S. District Court in Birmingham, Ala., on Feb. 10, a week after the indictment was announced.

His lawyer, Jim Henry, said Bennett "was not involved in any way, shape or form with any fraud or other wrongdoing at HealthSouth." Henry said, "We look forward to the opportunity to clear his name."

The indictment alleges that Bennett, who worked for Birmingham-based HealthSouth in various roles from 1991 to 2000, conspired in a scheme to inflate HealthSouth's earnings by $2.6 billion. The indictment accuses Bennett of knowingly signing false financial statements and lying to investigators, as well as selling about $17 million worth of HealthSouth stock in 2000 and 2001 while he allegedly knew about the fraud.

If convicted of all counts, Bennett could face 350 years in prison, $33 million in fines and the forfeiture of another $28 million.

Bennett became at least the 18th former executive to face charges in the fraud scandal.

Several executives, including all five former chief financial officers, have pleaded guilty to charges and are expected to testify at the ongoing trial of HealthSouth founder Richard M. Scrushy, who has been accused of being the mastermind of the plot. Scrushy has maintained his innocence, arguing that his executives carried out the scheme without his knowledge.

Recently at Scrushy's trial, in U.S. District Court in Birmingham, prosecutors played tapes of what they said were secretly recorded conversations in March 2003, between Scrushy and his former chief financial officer, William Owens. In the tapes, Scrushy said "everybody goes down" if problems in the company's financial statements were exposed. He also expressed concern that he could face trouble, saying his children "need their daddy."

Henry declined to comment on whether Bennett would testify at Scrushy's trial, which began on Jan. 5 and is expected to last for months.