Neighbors' verdict on Scrushy: He's not welcome

Hometown: A lawyer for the acquitted executive blames ill will on envy.

July 09, 2005|By BLOOMBERG NEWS

Vestavia Hills and Mountain Brook are places where summer is a verb, Versace dinner plates are on wedding registries and the median family income is almost triple the U.S. average.

Richard Scrushy certainly has the trappings of wealth to blend into those tony Birmingham, Ala., suburbs: He's worth more than $300 million, according to his lawyers and court documents. And then there are the mansions, yachts, racing boats and a Rolls Royce.

But Scrushy's neighbors in Vestavia Hills, where he lives, and in Mountain Brook, where his family shops, have long considered him an outsider, and the reception is no less chilly since the HealthSouth Corp. founder was acquitted on fraud charges last month.

"He wasn't welcome at the height of his power and fame, and he's certainly not now," said Vestavia Hills businessman Terry Argo, 54, while walking his dogs, one a Havanese, the other a Chinese Crested.

A 12-member jury acquitted Scrushy, 52, of charges that he directed a $2.7 billion accounting fraud at Birmingham-based HealthSouth, the largest U.S. operator of rehabilitation hospitals. After his trial, he vowed to fight management's plans to oust him from the board. He also wants to return as chief executive officer.

Board Chairman Robert May said in a June 28 statement that HealthSouth is "appalled by the multibillion-dollar fraud that took place under Mr. Scrushy's management," which was terminated in March 2003. "Under no circumstances will Mr. Scrushy be offered any position within the company," May said.

At the Mountain Brook Starbucks last week, where coffee was selling for $1.85 for a small cup, Scrushy-bashing was just as free and plentiful.

Lynn Renoll, 57, a lawyer, described his reaction to the Scrushy verdict as "utter disgust." Retired investment banker Rod Kendrick, 71, called it "an embarrassment."

Scrushy's lawyer, Donald Watkins, said he knows why goodwill eludes his client in his own backyard.

"He's a self-made man," Watkins said. "In Mountain Brook, the money is generational, and they resent him. They never viewed him as a legitimate corporate leader because they didn't create him." The social elite who reject Scrushy are "sitting in envy," Watkins said.

"He built something that became No. 1 in the world, while we're used to being No. 1 in Alabama for illiteracy and infant mortality," Watkins said.

That explanation didn't sit well with some town residents.

Kendrick, the former investment banker, said he and his seven-member Mountain Brook morning coffee klatch found distasteful Scrushy's public embrace of Christianity, complete with a daily devotional television show and a more than $1 million donation to a church. One man in Kendrick's group nodded in agreement while declining to give his name because of a business transaction in the works with HealthSouth.

"He needs to ask himself what would Jesus do with all that money," Kendrick said of Scrushy.

Mountain Brook bookstore owner Charles Van Eaton, 55, said Scrushy's personal lavishness reminded him of the Oklahoma oil boom when oilmen would fly to lunch in New Orleans from Tulsa.

"Something seemed shady about it," Van Eaton said. "There was just something that didn't pass the smell test."

If history is any guide, Scrushy is in for a tough time back home, said Bill Bartmann, former chief executive of Commercial Financial Services Inc. who was acquitted in December 2003 of fraud charges stemming from the bankruptcy of his Tulsa-based company.

Bartmann, ranked with his wife as No. 287 on Forbes magazine's 1998 list of wealthy Americans with $1.4 billion, said in a news release last week that his trial drove him into bankruptcy and people continue to think he's guilty.

"Some will think that he `got off' because he was acquitted," Bartmann wrote of Scrushy. "In spite of a unanimous vote of innocence by 12 people who saw all of the evidence and heard all of the facts -- he and his family have suffered and will continue to suffer."

Bartmann predicted that Scrushy will never regain his company, his reputation or the years he spent defending himself.

"He will continue to pay for a crime he didn't commit for the rest of his life," Bartmann said.

Scrushy still faces a raft of civil suits by the Securities and Exchange Commission and investors who accuse him of securities fraud. He owes about $12 million in a loan repayment to HealthSouth under a Delaware Chancery Court ruling, according to Art Leach, another attorney for Scrushy.

Lawyer Watkins said Scrushy's only crime is being born of humble origins to a father who installed cash registers for the National Cash Register Co., now NCR Corp., and died June 20 while awaiting the verdict at his son's trial. Scrushy was raised in Selma, Ala., a city best known as the starting point for three civil rights marches in 1965.

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