Introduction HealthSouth Corporation owns and manages inpatient rehabilitative hospitals, and has offices in Birmingham and Alabama. The company initially operated in 26 states as Amcare Company. It had around 97 inpatient rehabilitation hospitals, 29 outpatient rehab clinics, and 25 home-based health agencies. Richard Scrushy and close friends started HealthSouth, which was among the best hospitals for patients suffering from stroke, brain, and neurological disorders. The company dominated in rehabilitation market and was able to acquire its competitors. Thus, the aim here is to analyze the HealthSouth fraud case. In 1990s, several companies acquired more wealth at an unprecedented rate (Markham, 2006). This was due to technological advances and slack regulations that paved way for oversights in financial reporting. Thus, there were many unpredicted fraudulent transactions and information because investors were concerned with revenue rather than profitability. Many were focused on the sales and economic news and companies adopted destructive accounting policies. Consequently, some of the companies fabricated the revenue figures. HealthSouth HealthSouth was among the companies involved in fraudulent activities. The company started its operations in 1984 as Amcare Company and opened its first hospital in Little Rock, Arkansas,s, and Birmingham. The Company went public in 1986 and its IPO was on the NASDAQ Stock Exchange. By 1990, it had over 50 facilities in the US. In addition, it made its first acquisition in 1993 because it acquired 45 rehabilitation facilities and 28 hospitals for $300 (Hamilton, n.d). According to Johnson, G and Johnson, M (2005), HealthSouth indicated a rapid expansion through mergers and acquisitions. The companies acquired include Surgical Health Corporations and Horizon CMS. It also purchased companies in Australia, the UK and Europe. Scrushy and his associates were doing well in all the countries they set their foot in. HealthSouth later changed its name to HealthSouth Corporation and announced that it was to build its head office in Birmingham on Highway 280. It later acquired the surgical health corporation and extended into diagnostics when it acquired Health Images Company. In 2003, HealthSouth recorded almost $4.5 billion in earnings, it dominated in rehabilitation and other services and employed above 60,000 people in almost all the states in the US, became the largest health care company in the US, and second – based on earnings. HealthSouth operated for all those years and seemed to have no problems. However, in late 2002, an accounting fraud was detected when the CEO, Scrushy made a sale of $75 million in quite a few days before the company claimed a huge loss. The US Securities and Exchange Commission (SEC) accused HealthCase of a scandal because the company’s income was inflated by $1.4 billion. The US SEC claimed that in 1996, HealthSouth’s CEO allegedly instructed the accountants to write a false report about the company’s earnings to meet investor expectations and have control over the stock. The SEC continued with the investigation in 2003 and its main concern was whether Scrushy’s stock sale was linked