Effects of Unethical Behavior

HealthSouth was one of the largest provider of outpatient surgeries in the United States. Not only the largest provider of outpatient surgeries in the United States but also the largest diagnostic and rehabilitative health care service in the United States. This was until March 19, 2003, when the Securities and Exchange Commission charged the company and Richard Scrushy with fraudulent account reporting of company finances. Scrushy and other executives from the finance and accounting departments (15 total) were later indicted in November 4, 2003. Richard Scrushy became the first CEO of any Fortune 500 company to be tried under the Sarbanes-Oxley Act of 2002 for any accounting fraud. During court proceedings other practices involving HealthSouth were uncovered. Things such as unethical behavior and corporate governance involving the Board of Directors (banks and creditors were suspected to be involved but were not indicted, only civil suits). Richard Scrushy was charged with money laundering, conspiracy, securities fraud, overstating HealthSouth's earnings, and 81 more counts.

"The Commission's complaint, which was filed in the federal district court in Birmingham, Ala., alleged that since 1999, at the insistence of Scrushy, HealthSouth systematically overstated its earnings by at least $1.4 billion dollars. This was because they needed to meet or exceed Wall Street earning expectations" (n/a, 2013). Prosecutors believed that Scrushy intentionally allowed his financers and accountants to commit this fraud in order to control HealthSouth's company stock. Because of the fraud, personal assets for both him and the other founding CEO's of the HealthSouth increased profusely. By the end of 2003, the 15 executive finance and accounting members that were also indicted with Scrushy, pleaded guilty to fraud for a reduced sentence. Each member implicated Scrushy as the mastermind behind the fraud scheme.

[The SEC executed a court order, pursuant to...