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Medical news |patient's rights | Malpractice|lawyer: Scrushy Attorney Letters Outline Objections to Draft Presentence Investigation Report
Scrushy Attorney Letters Outline Objections to Draft Presentence Investigation Report
MONTGOMERY, Ala., June 1, 2007 -- In letters made part of the court record Scrushy attorneys Art Leach and Carmen Hernandez outline objections to the Presentence Report (PSR) issued in April by the probation officer.
In one letter, dated May 3, 2007 Leach says, "Richard Scrushy acknowledges the jury's verdict in this case. Our continuing dispute over the factual and legal issues in this case are for another court to review..."
He then goes on to outline the facts of the case as the defendant sees them. Note: We do not have access to the complete Presentence Investigation Report from the probation office. Both the government and the defense present the areas they deem in their best interest. The following is an extended excerpt without commentary. I do not have electronic copies of the referenced unofficial transcripts. The government filings, which were made ahead of the Scrushy filings by several days, thus far can be accessed at the bottom of the page. One interesting note - neither the government nor the defense called to the witness stand two men at the center of disputed facts, Tim Adams and Eric Hanson. Items in bold were that way in the court filing.
"Overview of the Facts "
"It is well known that by 1999 Richard Scrushy was the long standing CEO and Chairman of the Board of Directors at HealthSouth. Mr. Scrushy had grown that company from the four original partners, to a four billion dollar, Fortune 500 Company. HealthSouth was the largest healthcare company in the State of Alabama and was a world leader in healthcare innovation. One of the many attributes of this corporate giant was its corporate philanthropy. Not only did HealthSouth donate generously to causes throughout Alabama and the United States, it also donated time of its employees to including Richard Scrushy, Thom Carmen and Loree Skelton to the CON process. Richard Scrushy also personally has given millions of dollars in donations to a wide array of causes in the State of Alabama.
By the time Don Siegelman was elected Governor, Richard Scrushy had served as a member of the CON Board pursuant to appointments by the three preceding Governors of Alabama. Due to the fact that he served on the CON Board for Governor Fob James, Richard Scrushy publicly supported Governor James in his campaign against Don Siegelman. Governor James lost that election which put Richard Scrushy and HealthSouth in an uncomfortable position with Governor-Elect Siegelman.
Richard Scrushy's long time business associate, Elmer Harris, became head of Governor-Elect Siegelman's transition team upon the Governor's election. As he testified at trial, Elmer Harris encouraged both Governor Siegelman and Richard Scrushy to mend their fences and work for the good of Alabama. To facilitate this effort, Eric Hanson who was a lobbyist for HealthSouth and a long time friend of Governor-Elect Siegelman, also worked to bridge the political differences between the two men.
Richard Scrushy willingly supplied support to the Siegelman transition team, including a $25,000 donation from HealthSouth intended to aid in the inaugural festivities. At the Governor's request, Richard Scrushy agreed to provide a HealthSouth aircraft to fly the band "Alabama" to the inaugural to play for the celebration. There has never been a claim that this was done for any quid pro quo related to the relationship between the Governor and Richard Scrushy.
Richard Scrushy did attend the meeting with the Governor on June 29, 1999 in Montgomery. No check was exchanged on that date. Since this was the first "in person" meeting between the Governor and Richard Scrushy, and due to the fact that the IHS check which constitutes one of the two contributions at issue in this case is dated well after the meeting, that check for $250,000 was not present on the date of this meeting.
Richard Scrushy subsequently agreed to raise $250,000 to assist in the get out the vote effort related to the lottery. That agreement was not in exchange for the Governor trading on his newly won office. Eric Hanson was in the middle of the discussions regarding Richard Scrushy's fund raising effort for the get out the vote campaign. The Government did not call Hanson as a witness at trial. Richard Scrushy declined to personally contribute and would not agree to permit HealthSouth to contribute to the lottery campaign due to his wife's objections to the lottery. Even the Government's key witness, Mike Martin, supports these facts. (R-May 9, 2006 at 345).
Richard Scrushy did, however, agree to raise $250,000 for the lottery fund, which he did through IHS. After the lottery failed, Richard Scrushy agreed to contribute another $250,000 through HealthSouth because the contribution was targeted to retiring the debt amassed in the failed effort to pass the lottery. Richard Scrushy respectfully denies having intended to bribe the Governor. He readily admits that he intended to build a relationship with the newly-elected Governor who may have served the state for up to eight years if he won re-election. Part of building that relationship was serving the new Governor. Scrushy did not want or seek the job on the CON Board. HealthSouth did not need Richard Scrushy's representation on the board and nothing was passed that benefited HealthSouth while Richard Scrushy remained on the board. Richard Scrushy respectfully denies having been involved in any effort to bribe anyone. He did not conspire nor commit honest services mail fraud. "
"A Detailed Review of the Evidence from the Trial"
"The evidence presented shows that Defendant Scrushy met with then-Governor Siegelman on June 29, 1999, a meeting that Loree Skelton characterized in her testimony as an opportunity to "get acquainted." (Tab 6, R-May 10, 2006 at 259). Skelton knew that because HealthSouth had supported Fob James for Governor, access to the Seigelman administration would be "nonexistent" without some effort to build a relationship. (Tab 2, R-May 10, 2006 at 256). The importance of building the relationship was clarified by Alva Lambert who explained that CON terms are inconsequential because the members serve at the pleasure of the Governor and when there is a change of administration all terms functionally expire upon the inauguration of the new governor. (Tab 1, R-May 1, 2006 at 42-44). Skelton contacted Eric Hanson who had known Governor Seigelman for a long time and the get acquainted meeting to establish a positive rapport was set. (Tab 6, R-May 10, 2006 at 257, Tab 13, R-May 11, 2006 at 126). As Skelton also testified, there were no plans to make any kind of Education Foundation or campaign contribution during that visit because it was the first meeting between Defendant Scrushy and Governor Siegelman. (Tab 13, R-May 11, 2006 at 126).
Nick Bailey testified that he had previously told investigators and had testified to the grand jury that this meeting occurred on July 14, 1999, and that after the meeting he saw a check for $250,000 which he thought had been signed by Scrushy. He admitted that he had informed the FBI that he knew prior to the meeting that Scrushy was coming with a check. (Tab 47, R-May 5, 2006 at 140-141). While on direct examination, Bailey indicated that there may have been two meetings, he conceded on cross-examination that there was only one meeting where Skelton, Hanson, Scrushy and the Governor were present. (Tab 49, R-May 5, 2006 at 123). Yet the undisputed evidence shows that the meeting could not have happened on July 14, 1999, and more particularly that the check could not have been present on that date. (Tab 37, R-May 2, 2006 at 185-187 (on direct), Tab 42, R-May 3, 2006 at 225-230 (on cross) Tab 45, R-May 4, 2006 at 288). Bailey would only concede regarding the IHS check that, "I will agree that it possibly was not there on the 14th." (Tab 42, R-May 3, 2006 at 230).
Bailey testified that the check was not reported due to Scrushy's desire to conceal his support of the lottery. When it was pointed out that the check was not signed by Scrushy, Bailey maintained that the check was not reported as a campaign contribution due to Scrushy's desire that his wife not find out about his support for the lottery. When asked whether such a conclusion made sense in light of the fact that the check does not belong to Scrushy, Bailey's response was "It has not been determined and shown to me that it was not Mr. Scrushy's check." (Tab 45, R-May 4, 2006 at 285, see also, Tab 43, R-May 3, 2006 at 9). When the Court inquired whether there were any "written document, electronic documents or confirmatory memoranda," other than the checks and the appointment letters to support his testimony, Bailey conceded that there were none. (Tab 45, R-May 4, 2006 at 281-282, see also Tab 44, R-May 4, 2006 at 276-277).
Bailey conceded that he was not an eyewitness to any meeting between Richard Scrushy and the Governor. (Tab 44, R-May 4, 2006 at 274-275). He conceded that the Governor never told him that the payment was a bribe for the CON seat. (Tab 47, R-May 5, 2006 at 144). He would not state that the second check from HealthSouth was part of an effort to bribe the Governor. (Tab 49, R-May 5, 2006 at 128-132). He agreed that he did not know that Scrushy had stated that he did not want the CON seat or that Thom Carmen was the applicant for the CON seat for HealthSouth (see Gov't Exhibit 3 and Seigelman Exhibit 220). Bailey testified he was unaware of the documents from the Governor's office that demonstrate these facts. (Tab 46, R-May 5, 2006 at 180). Bailey also testified that his memory had improved over time and that it was better during his testimony in 2006 than it was when he spoke to the FBI in June of 2003. (Tab 49, R-May 5, 2006 at 127).
When the accounts of the meeting testified to by Skelton (Tab 6, R-May 10, 2006 at 258-262), Jabo Waggoner (Tab 18, R-May 10, 2006 at 150-153) and Bailey (Tab 49, R-May 5, 2005 at 123-125) are compared, there can be no doubt that each witness is discussing the same meeting. The meeting date was June 29, 1999, because the HealthSouth flight records indicate that this is the only date it could have been (Scrushy Exhibits 100, 101 and 102) along with the added confirmation that the meeting was logged into Senator Waggoner's calendar. (Scrushy Exhibit 113; see also Tab 19, R-May 10, 2006 at 171-181). When these facts are considered with the undisputed fact that the IHS check was not written until July 19, 1999 and sent sometime after that date (Pickett at Tab 34, R-May 10, 2006 at 223; see also Leif Murphy testimony Tab 29, R-May 9, 2006 at 304-308), it is apparent that the check could not have been in Montgomery during the meeting between Scrushy and the Governor, whether it was on June 29, 1999 or July 14, 1999.
Bailey testified on direct examination by AUSA Feaga that he was possibly wrong about the check being present and that he had made that decision by "reevaluating his memory and by thinking about it and by looking at the documents." (Tab 37, R-May 2, 2006 at 188). For these reasons, Bailey's testimony, at least on the point regarding the delivery of the check and the possibility of any "agreement" at that point, is "so contrary to the teachings of basic human experience that no reasonable person would believe it beyond a reasonable doubt[.]" United States v. Kelley, 412 F.3d 1240, 1247 (11th Cir. 2005).
Ultimately, the evidence shows that Scrushy arranged for two $250,000 donations, the first one from IHS and the second from HealthSouth, to be made to Alabama Education Foundation. It is uncontested that both checks went to entities associated with the lottery campaign. It is uncontested that Scrushy never gave the Governor, personally, any money or thing of value associated with any of the charges in this case. It is also uncontested that Scrushy had absolutely nothing to do with the negotiation of either check. Scrushy did not determine what account the checks were deposited into or how the funds were utilized.
No doubt, the jury could infer that around the time of the contributions that (a) Scrushy made it known that HealthSouth was interested in a seat on the CON Board. and (b) thatSiegelman was aware of Scrushy's desire that HealthSouth obtain the CON Board position. This evidence must be taken in the context of the period in which it occurred. Scrushy supported Fob James in the 1998 Governor's campaign. (Tab 6, R-May 10, 2006 at 254-255). This is, of course, logical in that both Scrushy and Carmen served on the CON Board under Governor James. (Tab 4, R-May 2, 2006 at 86-87). Governor Seigelman had attempted to reach out for Scrushy with regard to campaign contributions and did not get a return call. (Tab 35, R-May 8, 2006 at 22). Scrushy was targeted for contributions, including contributions for the Education Foundation. (Id.; see also Bill Blount testimony (which is not transcribed) and Blount's memo (Scrushy Exhibit 9) regarding targeting Scrushy for the Education Foundation). Additionally, the testimony of Raymond Bell establishes that Scrushy was on the list for a CON seat during the transition period or shortly thereafter, as is also shown by Seigelman Exhibit 220. (Tab 22, R-May 8, 2006 at 328-331).
Bailey testified that the Governor had a conversation with Hanson in which the Governor told Hanson that since Scrushy had contributed $350,000 to the Fob James Campaign ". . . to make it right with the Seigelman campaign he (Scrushy) needed to do at least $500,000." (Tab 40, R-May 2, 2006 at 162-166). There was no discussion of the CON seat. There is no indication in the record whether this conversation predates the "get acquainted" meeting at the Governor's office. Bailey agreed with AUSA Feaga's parameters that it was between inauguration and the appointments to the CON Board. (Tab 40, R-May 2, 2006 at 162-163).
Critical testimony regarding the alleged bribery was provided only by Bailey. He testified that upon seeing the check in the Governor's hand (after the "get acquainted" meeting set out above), Governor Seigelman and Bailey had the following exchange:
Governor: "He's half-way there." (referring to the $500,000 commitment).
Bailey:"What in the world is he going to want for that?"
Governor: "The CON Board."
Bailey: "I wouldn't think there would be a problem with it."
Governor: "I would not think so."
(Tab 39, R-May 2, 2006 at 175-176).
Bailey admitted that he was not an eyewitness to any meeting between Scrushy and Governor Seigelman. (Tab 44, R-May 4, 2006 at 274). Additionally, the mere fact that there was a contribution is not telling under these circumstances because Bailey readily admitted that every member of the CON Board had made such a contribution. (Tab 41, R-May 3, 2006 at 246). Additionally, the size of the contribution tells little of the relationship and legality of the contribution inasmuch as Bailey admitted that Margie Sellers was supported for appointment to the CON Board by the Nursing Home Association, which contributed a million dollars or more to Governor Seigelman. (Id.) (Bailey testified "It could have been more than that."). Bailey further testified that the chairman's position was not available because Governor Seigelman had already committed to Margie Sellers that she would be chairperson. (Tab 41, R-May 3, 2006 at 244-245).
One aspect of the Government's case is built upon the fact that the IHS check was a "disguised payment". (Indictment Count 5 at ¶ 55(a)) The evidence at trial did not establish this claim. Bill McGahan testified that he received a call from Mike Martin which was followed shortly thereafter with a call from Richard Scrushy and Mike Martin. (Tab 23, R-May9, 2006 at 145). According to McGahan, Scrushy stated that:
He wanted UBS to make a contribution to a cause in the state of Alabama, that it was a good cause, that other companies in the state were supporting it, that he (Scrushy) was supporting it and he wanted UBS to step up and support it too. (Tab 23, R-May 9, 2006 at 145-146).
While McGahan stated that Martin called and put pressure on him to make the contribution, McGahan also testified that he received calls from Hanson. (Tab 24, R- May 9, 2006 at 148-149). McGahan characterized Hanson as polite and testified that Hanson brought up another client, IHS, as a source of the contribution. McGahan testified that he told Hanson that if IHS would make the contribution UBS would work with a sizable outstanding debt owed to UBS by IHS which was unrelated to HealthSouth. (Tab 25, R-May 9, 2006 at 187-189). Hanson returned the call and told McGahan that Dr. Elkins at IHS had agreed to make the contribution. (Tab 25, R-May 9, 2006 at 189-190). In McGahan's initial statement to the agents he got the entire transaction wrong, including the fact that he totally excluded Martin from any involvement. (Tab 28, R-May 9, 2006 at 248-249). He testified further that he did not think the transaction was illegal and does not believe that he did anything wrong. (Tab 27, R-May 9, 2006 at 240).
Martin testified that he pushed McGahan who was the investment banker for HealthSouth to get the contribution. (Tab 52, R-May 10, 2006 at 127-128). He testified that the check was provided to the Education Foundation by way of a "circuitous route" and that he did not know if it was illegal, but that it looked bad, smelled bad and he did not like it. (Tab 52, R-May 10, 2006 at 128-129). Martin admitted that he did not know of any quid pro quo for the check and that he only knew that HealthSouth was trying to get in the Governor's good graces. (Tab 54, R-May 10, 2006 at 6-7). Martin testified that he was told that Scrushy wanted to have the check in hand so that he could deliver it during a meeting he was to have with the Governor. (Tab 53, R-May 10, 2006 at 29).
Taylor Pickett from IHS testified to the other side of the transaction. He related that he spoke to McGahan about a donation to a not for profit corporation. (Tab 31, R-May 10, 2006 at 193). Pickett met with his boss and CEO of the company, Dr. Elkins, who provided him a two-fold response. First, Elkins left the decision up to Pickett and second, he asked that Pickett run the not for profit corporation through legal counsel to be sure that it was valid. (Tab 31, R-May 10, 2006 at 194-195). After the corporation checked out, Pickett called McGahan back and said that they would make the contribution. He stated that they put no stipulations on the transaction, that they agreed to pay the contribution and UBS agreed to reduce their bill. (Tab 31, May 10, 2006 at 195-198)
Regarding Hanson and the contribution, when Bailey was asked to relate exactly what Hanson had said to him about the contribution and the CON Board his response was that "he would see that Mr. Scrushy made the contributions and for us not to let him down." (Tab 48, R-May 5, 2006 at 171).
There has been no evidence linking Richard Scrushy to the projects identified in the Indictment in any way. In fact, the only evidence presented is to the contrary, in that Loree Skelton agreed that Richard Scrushy was long gone from the CON board by the time those projects were considered. (Tab 14, R-May 11, 2006 at 155). She recalled no conversation with Richard Scrushy about the projects, stating that any conversation about the projects would have been with Thom Carmen who was the board member at the time the projects were presented to the CON Board. (Tab 14, R-May 11, 2006 at 156-157).
The Government alleges in the Indictment ¶ 59(e) and in the conspiracy count ¶ 55(e), that "Richard Scrushy and others would offer things of value to another CON Board member to attempt to affect the interests of HealthSouth and its competitors." This information relates to Tim Adams, a witness who the Government did not call and again, the evidence in the record is contrary to the allegation. The only witness who could speak to these allegations was Loree Skelton and she countered every attempt by the Government to show that Richard Scrushy was orchestrating anything with regard to Tim Adams. With regard to the helicopter rides, it was established that Tim Adams only rode on the helicopter while Mr. Scrushy was on the board. (Tab 11, R-May 11, 2006 at 256). Mr. Scrushy resigned in January of 2001 and the first item to be considered involving HealthSouth was in July of 2002, with the second and only other matter coming up in December of 2002. (Id.). For the entire period after Mr. Scrushy's resignation Ms. Skelton and Mr. Carmen rode to Montgomery to attend the meetings in a car without Mr. Adams. (Tab 11, R-May 11, 2006 at 257).
With regard to a potential job with HealthSouth, Ms. Skelton testified that she initially did not try to get Adams a job. (Tab 8, R-May 10, 2006 at 274). Adams asked Richard Scrushy and Peck Fox, attorney for HealthSouth, about possible employment and Mr. Scrushy told Ms. Skelton to send Adams to Dr. Swaid, Medical Director at the HealthSouth Medical Center, who offered Adams a scrub nurse job in Dr. Swaid's practice, which Adams declined. (Tab 8, R-May 10, 2006 at 275-278). Ms. Skelton testified that Mr. Scrushy told her to relate to Adams that "we just weren't going to be able to find a position for him at this time, there wasn't anything available." (Tab 9, R-May 10, 2006 at 303). She further testified that Mr. Scrushy told her to "basically pacify him and keep him happy." (Id.).
With regard to the payment of the fees related to the mobile PET scanner application, Ms. Skelton testified that she had agreed to pay Adams between $8,000 and $12,000 for his efforts. (Tab 10, R-May 10, 2006 at 295). When the vote was coming up on the rehabilitation hospital, Adams indicated that he did not think he would make the board meeting because he would miss several days of work. (Tab 10, R-May 10, 2006 at 292-293). Adams reminded Ms. Skelton that there was a balance outstanding on their agreement regarding the CON application for work already done and they negotiated the balance of the fee at $3,000 and Adams did attend the meeting and voted in favor of the unopposed 38 bed rehabilitation project. (Tab 10, R-May 10, 2006 at 295-296).
She admitted that she did not advise Mr. Adams on the propriety of the vote. (Tab 10, R-May 10, 2006 at 297-298). When asked if she had let any of the officials associated with the CON board know about Tim Adams financial relationship with HealthSouth, she testified that she let SHPDA Executive Director Alva Lambert know and that she told Lambert to put him on notice of the relationship between HealthSouth and Adams. (Tab 12, R-May 11, 2006 at 49-51). More germane to the charges in this case, Ms. Skelton testified that she could not remember a specific conversation where she related to Mr. Scrushy that she planned to give Tim Adams a contract to prepare the mobile PET scanner application. (Tab 15, R-May 11, 2006 at 165-166).
She testified that she talked about the PET scanner application with Thom Carmen, not Richard Scrushy, and she did not recall whether she had that conversation with Mr. Scrushy or not. (Tab 15, R-May 11, 2006 at 167-168). Ms. Skelton agreed that by the time the rehabilitation hospital and the mobile PET scanner came up for consideration Richard Scrushy was not in the loop as to what was happening at the CON board. (Tab 16, R-May 11, 2006 at 173-174).
The Government further alleges that Mr. Scrushy orchestrated his replacement by Thom Carmen on the board. There is simply no testimony to support this allegation. Alva Lambert testified that Mr. Carmen replaced Mr. Scrushy in both the James administration and under Governor Seigelman. He stated that Mr. Carmen was a competent selection for the board and that he acted appropriately during his terms on the board. (See Tabs 2-5). "
On Friday, May 25, the government filed their sentencing memorandum. Below I intersperse the government's filing with information from the letters filed by Leach and Hernandez. Defense statements below are placed in bold with a yellow background.
In the government's filing, filed between 7:30 and 8 p.m, May 25, the government says, "The United States asserts that twenty-five years imprisonment, a fine of $7,274,109.24, and an order of restitution of $628,000 is the most appropriate sentence in this case."
The United States objected to the Presentence Report calculations of "$500,000 based on the value of the payments. The United States objects to this amount as the value of the payments for the offense conduct because it does not include the value of all payments received as bribes. In addition to the $500,000 bribe received by Defendant Siegelman, Defendant Scrushy paid at least $11,0003 in bribes to Tim Adams as part of the conspiracy and honest services fraud scheme for which Defendant Scrushy and Defendant Siegelman were convicted in Counts 5, and Counts 6-9, respectively..."
"The amount of benefits received in return for the payments is as follows: Defendant Siegelman received $500,000 in benefits because the IHS check for $250,000 and the HealthSouth check for $250,000 were both used to pay off a loan for which he was personally liable. In addition, IHS received $17,000 in benefit because UBS Warburg forgave $267,000 in debt owed to it by IHS in return for IHS issuing the $250,000 check that Defendant Scrushy used to bribe Defendant Siegelman ($250,000 of this $267,000 amount has already been counted as a benefit received by Defendant Siegelman)."
"...the government's argument that $17,000 should be added based on the $17,000 that UBS Warburg forgave IHS for its debt is not a "benefit" that accrued to Richard Scrushy as that term is defined in U.S.S.G. § 2C1.1, comment, (n. 2). Nor is it a loss to the government. For the same reasons, the amounts to Tim Adams are neither benefits nor a loss to be added under any formula set out in the guidelines.
"Tim Adams received at least $11,000 in benefits from Defendant Scrushy and Defendant Siegelman as part of the offense conduct. In addition, the United States submits that HealthSouth received $3,109,054.62 of benefit from the construction and operation of the Phenix City hospital - a project for which Defendant Scrushy paid a $3,000 bribe to Adams for Adams to attend the July 2002 CON Board meeting, establish a quorum, and vote in favor of HealthSouth's CON application for the hospital. Adding these sums together provides a total amount of benefit received of $3,637,054.62..."
Attorneys for Scrushy in a recent motion, which was denied by Judge Fuller say Scrushy "will argue at sentencing, there was no evidence presented at trial connecting him to either of the alleged bribes paid to Mr. Adams. Moreover, and in any event, any "benefit" that might have accrued to HealthSouth did not "result from" the payment of any monies or the provision of any thing of value to Tim Adams. "
The government's filing goes on to assert the following:
"...More importantly, the United States objects to the PSR's use of the value of payments as the The Court should impose a fine on Defendant Scrushy in the amount of $7,274,109.24. The United States avers that a reasonable amount for Defendant Scrushy to pay as a fine is the amount of loss caused to the victims of his crime plus the amount of ill gotten gain he expected to receive from his illegal acts."
" As discussed supra, the total benefit received from Defendant Scrushy's criminal conduct provides the best measure of the amount of loss and expected gain from his criminal actions and is conservatively assessed at $3,637,054.24. Considering Defendant Scrushy's financial condition, an amount that is double the loss and expected gain, or $7,274,109.24, is an appropriate and reasonable fine. This amount will not only punish Defendant Scrushy for his role in corrupting the Office of Governor and the CON Board, but will also deter him and others from engaging in similar actions in the future."
" The United States urges the court to impose this amount, the statutory maximum, because the most effective method to ensure no recidivism by Defendant Scrushy and to deter others from corrupting State government is to signal clearly that those who engage in public corruption offenses shall not profit from such activity."
"...The Probation Officer correctly enhances Defendant Scrushy's offense level by four-levels under Section 3B1.1 because he was an organizer/leader of the criminal activity. PSR at ¶ 36. The PSR expressly states that Defendant Scrushy "organized the activities relating to and surrounding the circumstances of the federal funds bribery and there are at least five participants." The United States asserts, however, that the Court should also find that Defendant Scrushy qualifies for the four level enhancement because the criminal activity was "otherwise extensive."
A. Mr. Scrushy did not engage in pervasive or systematic corruption. First, Mr. Scrushy did not engage in nor cause pervasive government corruption. The allegations in this case refer to a one-time political contribution amounting to $500,000 that was made by Mr. Scrushy as a result of a request that he do so. Even accepting the government's allegations that he also made two additional related payments to Mr. Adams, this does not amount to "pervasive" conduct nor systematic corruption.
"...Because the offense in this case involves bribery the disruption of governmental function is inherent in the offense. An upward enhancement is warranted only in the most extraordinary of cases, which this one, involving a single bribe is not. Or put another way, an upward departure is unwarranted unless the disruption is so atypically great that it exceeds the level of interference inherent in the offense. .."
"The CON Board criminal activity was certainly otherwise extensive given that it involved numerous corporations, professionals, government offices, and individuals, including many unsuspecting accomplices, (e.g., numerous personnel from Integrated Health Services, HealthSouth, UBS Warburg, First Commercial Bank, and the Alabama Secretary of State's Office, David Kassouf, Darrin Cline, and Jabbo Wagoner). The CON Board criminal activity was replete with instances of each Defendant trying to hide his participation in the crimes (e.g., Defendant Scrushy told Mike Martin that he [Scrushy] did not want his fingerprints on the IHS check, Defendants Siegelman and Scrushy never disclosed publicly that Defendant Scrushy was the source of the $250,000 IHS check)."
" Mr. Scrushy was asked to make a political contribution, which he did. He did not organize or lead a "federal funds bribery" as alleged in this paragraph and as set out in the detailed factual recitation of the facts..."
As noted in our ealier objections, there is no basis for stating that Mr. Scrushy "organized the activities relating to" to the federal funds bribery. Indeed, he did not even propose the payment. Instead, Mr. Scrushy was asked to make a political contribution and he did so. Mr. Scrushy did not organize nor was he a leader and there were not five or more "criminally responsible" persons. ..Mr. Scrushy's conduct involved a single and isolated instance where Mr. Scrushy was asked to make a political contribution. There is no likelihood that he will recidivate, both because of his age and in particular because he has left the business world and devoted himself to the ministry and to help those in need."
"...The government objects to ¶ 34 of the PSR insofar as it does not include a two level increase for the specific offense characteristic of "more than one bribe" under Section 2C1.1(b)(1). In the course of the offense conduct for which he stands convicted, Defendant Scrushy paid at least two bribes. Specifically, Defendant Scrushy paid (1) a bribe of $500,000 to Defendant Siegelman, and (2) at least one bribe to CON Board Member Timothy Adams. The bribes identified above are offense conduct specifically identified in the indictment.
Defendant Scrushy's bribe payment to Defendant Siegelman is specifically charged in Count 4, which states that "defendant Scrushy gave, offered, and agreed to give $500,000 to DON EUGENE SIEGELMAN ... ." The jury found Defendant Scrushy guilty of Count 4. The $500,000 bribe in Count 4, together with further, different bribes, are all charged as integral parts of Count 5. Count 5 charges a mail fraud conspiracy to deprive the State of Alabama of the honest services of both Defendant Siegelman "as well as other members of the CON Board."
"Count 5 goes on to specifically state as one manner and means of the conspiracy the same bribe identified in Count 4, i.e., that "RICHARD M. SCRUSHY would and did pay $500,000 to DON EUGENE SIEGELMAN ..." Indictment, at ¶ 55a. Count 5, however, goes on to specifically state as a separate manner and means of the conspiracy that "RICHARD M. SCRUSHY would and did offer things of value to another CON Board member..." Id. at ¶ 55e. Moreover, the indictment specifically charged two payments to the "CON Board Member," separate and apart from the $500,000 paid to Defendant Siegelman. In particular, ¶ 56 charges as one overt act a "payment of $3,000" on August 2, 2002, for creating a CON Board quorum for action on a proposed hospital.
Further, ¶ 56 charges a February 6, 2002, "payment of $8,000" concerning a certain PET scan application as another overt act. At trial, the testimony of Loree Skelton both identified Timothy Adams as the CON Board member receiving these two separate payments, and highlighted their separation from the $500,000 bribe to Defendant Siegelman, of which she had no knowledge. The jury found Defendant Scrushy guilty of Count 5. Further, all of the same bribes identified in the Count 5 conspiracy were also charged as substantive mail fraud in Counts 6 through 9. Specifically, Counts 6 through 9 charged the very same manner and means as Count 5, i.e., that "RICHARD M. SCRUSHY would and did pay $500,000 to DON EUGENE SIEGELMAN ...", id. at ¶ 59a, and that "RICHARD M. SCRUSHY would and did offer things of value to another CON Board member..." Id. at ¶ 59e. "
"Moreover, and more importantly, Counts 6 through 9 proceed to charge aspects of all the various bribes as separate mailings in furtherance of the scheme. Specifically, Counts Six and Seven charge mailings of CON Board appointment letters that furthered the $500,000 bribe of Defendant Siegelman by giving HealthSouth membership on and influence over the CON Board. Count 8, in contrast with Counts 6 and 7, charges a mailing in furtherance of the $3,000 bribe to Timothy Adams to facilitate a Certificate of Need for a HealthSouth hospital in Phenix City, Alabama. Count Nine, in further contrast with Counts 6 through 8, charges a mailing that furthered the $8,000 bribe in connection with the PET scanner application. The jury found Defendant Scrushy guilty of each of Counts 6 through 9, thereby specifically finding that each of the multiple bribes at issue did occur."
The Preliminary PSR was correct in not assessing an enhancement under § 2Cl.l(b)(l). First, Mr. Scrushy objects to the government's assertion that he engaged in additional acts of bribery in reference to payments made to Timothy Adams and its suggestion that Loree Skelton's testimony supports this. In making this claim, the government leaves out a key fact. The fact is that Loree Skelton testified at trial that she did not speak to Richard Scrushy about the $8,000 or $ 3,000 payments to Adams. Mr. Adams did not testify at trial. There is therefore no basis for the allegation that any such payments to Adams were a separate bribe made by Mr. Scrushy.
Significantly, neither the Indictment nor the Superseding Indictment allege as a separate count of bribery either of these payments. Indeed, there is no evidence that Richard Scrushy was involved in any bribe directed at Adams. The jury finding on the mail fraud counts (Counts 5-9) does not amount to a finding that Mr. Scrushy engaged in making additional bribes as the government alleges. Second, even assuming that the payments to Tim Adams amount to multiple payments, the PSR is nevertheless correct in not assessing a two-level enhancement because such payments would amount to "related payments" as explained in application note 6. See U.S.S.G. § 2C1.1, comment. (n.6):
Subsection (b)( 1) provides an adjustment for offenses involving more than one incident of either bribery or extortion. Related payments that, in essence, constitute a single incident of bribery or extortion (e.g... a number of installment payments for a single action) are to be treated as a single bribe or extortion, even if charged in separate counts.
Even the government concedes that these payments are related. In its Objection I, at paragraph 3, the government makes the argument that the "$500,000 bribe in Count 4, together with further, different bribes, are all charged as integral parts of Count 5." This count charges a mail fraud conspiracy to deprive the State of Alabama of the honest services of both defendant Siegelman and members of the CON Board, (emphasis added).
Mr. Scrushy also objects to any judicial findings by a preponderance of the evidence concerning these allegations of bribery that were not charged nor proved to a jury beyond a reasonable doubt. The PSR is therefore correct in not imposing a two-level enhancement for multiple bribes under U.S.S.G. § 2Cl.l(b)(l).
"...Defendant Scrushy has willfully attempted to obstruct justice in the course of his sentencing proceedings in this case. Specifically, under Section 3C1.1, Defendant Scrushy has attempted to obstruct the revocation of release proceedings concerning his travel aboard his yacht in Florida without the knowledge of his probation officer."
"... the government is incorrect when it claims that Richard Scrushy obstructed justice in connection with his recent travel in Florida with his wife and children or in connection with the hearing held to resolve the government's request to revoke Mr. Scrushy's release. It seems clear that the government's view did not prevail at the revocation hearing as Mr. Scrushy remains on release."
"Further, as noted by the PSR at ¶ 66, Defendant Scrushy might also have attempted to obstruct justice by providing false information on his financial condition, a matter that remains under review and subject to further investigation.
"Again, the PSR is correct in not imposing this enhancement. Mr. Scrushy has not willfully obstructed or attempted to obstruct or impede the administration of justice. First, there is no basis for imposing this enhancement in connection with the provision of financial data. As you know, Mr. Scrushy's financial holdings are extensive and complex and review by accountants is required to provide the most current information. Any and all additional information required is being diligently prepared and will be provided as it becomes available."
In the course of the probation revocation proceedings against Defendant Scrushy that came to a hearing on April 9, 2007, Defendant Scrushy attempted to obstruct justice in two ways. First, Defendant Scrushy willfully attempted to prevent a witness from communicating information to the Federal Bureau of Investigation in its investigation of Defendant Scrushy's movements in Florida."
"More specifically, Defendant Scrushy at the very least engaged in misleading conduct by instructing William Kurtz, captain of Defendant Scrushy's yacht, to inform the FBI, when approached by an agent, that Kurtz was unwilling to speak to the FBI and that he was represented by Art Leach, one of Defendant Scrushy's defense attorneys. Defendant Scrushy gave Kurtz these instructions knowing that Mr. Leach did not then, and had never, represented Kurtz. (The government notes that Mr. Leach has directly communicated that fact to government counsel by e-mail on his own initiative)."
"Defendant Scrushy advised Kurtz to invoke this spurious representation by counsel as a means to avoid providing information to the government about Defendant Scrushy's movements in Florida."
"As a result, FBI Special Agent Keith Baker was prevented from interviewing Kurtz on or about April 4, 2007. Further, Defendant Scrushy perjured himself during the Court's revocation hearing.
"Specifically, Defendant Scrushy falsely stated under oath (1) that he had advised a United States Probation Officer of his intended movements in Florida, (2) that a United States Probation Officer had approved his movements in Florida, and (3) that he had not instructed Kurtz to invoke nonexistent representation of counsel and to refuse to cooperate with the FBI."
"As to the last false statement, at the revocation hearing, Defendant Scrushy's testimony under oath was as follows:
Q. Okay. And you heard Special Agent Baker testify that the boat captain told him that you had told him, the boat captain - you had told the boat captain to tell Agent Baker that he was represented by Art Leach.
A. I did. Yes, sir. I heard that.
Q. And you also heard the testimony about the boat captain feeling loyal to you because of what had been done; and therefore, he was going to do what you told him to do. I think Agent Baker said he said when he says jump, I jump; is that right?
Q. Okay. And the fact of the matter is that he didn't cooperate with law enforcement when they came down there to try to find out about where you had been and where you were, right?
A. If he - are you saying he didn't meet with them?
Q. Did you tell him not to cooperate with law enforcement?
A. No, sir. I didn't say -
Q. Am I - am I asking the question the wrong way? Let me ask it another way. Did you tell him not to talk to the FBI?
A. I told him that we had a lawyer and to have them call the lawyer.
Moreover, the government's factual allegations, including the inferences it seeks to draw from the communications between Mr. Leach and government counsel, are not accurate. For example, the assertion that "Defendant Scrushy at the very least engaged in misleading conduct by communicating to the witness that the witness was represented by defense counsel Art Leach..." does not accurately represent what Mr. Scrushy said or did. Moreover, double and triple hearsay is not an appropriate basis for imposing an enhancement under this provision. Nor is "misleading conduct/' even were it to have occurred, a proper basis for imposing an obstruction of justice enhancement under either application note 4 or 5 in U.S.S.G. § 3C1.1.
None of the conduct that the government alleges even comes close to what is necessary for this enhancement under § 3C1.1. None of the conduct amounts to any of the conduct set forth in application note 4, which sets out , the only instances where a § 3C1.1 enhancement is to be applied. The allegations also do not satisfy the requirements of materiality nor the requirement that any such material statement have "significantly obstructed or impeded" the official investigation or prosecution of the case.
The cases the government cites in support of its argument are completely different from this case. For example, United States v. O'Dell 2104 F.3d 829, 837 (8th Cir. 2000) involved perjured testimony by the defendant. Mr. Scrushy has not committed perjury and the government does not even allege so. United States v. Stallings. the other case the government relies is an unpublished case with limited precedential value and also presents an entirely different situation than is present here. Neither Mr. Scrushy nor his counsel made any false statements at the recent hearing. Moreover, under United States v. Dunnigan, 507 U.S. 87, 95 (1993), a district court must make specific and independent findings for a perjury obstruction to apply. Lastly, defendant objects to an obstruction enhancement based on non-jury preponderance findings at sentencing.
"Moreover, Defendant Scrushy remains subject to further investigation for obstruction of justice in his representations about his financial condition for inclusion in the PSR..."
"The PSR states that "[t]here is no identifiable victim who incurred a . . . financial loss as a result of the counts of conviction," PSR at ¶ 27, and that "[r]estitution is not an issue in this case." PSR at ¶ 79.
"The United States objects to this statement because HealthSouth, UBS Warburg, and Brookwood Hospital are identifiable victims of Defendant Scrushy's criminal conduct for which he was convicted. In particular, UBS Warburg lost at least $267,000 by forgiving that amount in indebtedness to Integrated Health Services, which gave a $250,000 check to Defendant Scrushy as part of Defendant Scrushy's $500,000 bribe to Defendant Siegelman. Similarly, Defendant Scrushy illegally expended at least $261,000 of funds from HealthSouth as part of his paying bribes to Defendant Siegelman and Tim Adams. Brookwood Hospital lost at least $100,000 in expenses and income associated with the CON Board's denial of its application for a MRI at its meeting in January 2001 - the night before which Defendant Scrushy improperly contacted Margie Sellers, Chairperson of the CON Board, at home ex parte to criticize Brookwood's proposal."
"Again, the PSR is correct in stating that there are no identifiable victims as that term is defined in the guidelines. USB Warburg is not an identifiable victim of any wrongful conduct by Mr. Scrushy. It undertook to act as it did and discount a debt to one of its customers, based on its own independent assessment of its business interests.
Brookwood Hospital did not lose any funds "as a result" of federal funds bribery conspiracy and honest services mail fraud charged in this case. HealthSouth is not a victim of the federal funds bribery conspiracy and honest services mail fraud charged in this case."
The government misidentifies the defendant as Siegelman in this paragraph but the information pertains to defendant Scrushy. "The United States asserts that Defendant Siegelman should therefore be ordered to pay restitution as follows: $261,000 to HealthSouth, $267,000 to UBS Warburg, and at least $100,000 to Brookwood, for a total amount of restitution of $628,000."
The government wraps up its argument as follows:
"...The United States asserts that Defendant Scrushy should receive a sentence of 300 months, or 25 years, a fine of $7,274,109.24, and an order to pay restitution of $628,000 for the offenses for which the jury convicted him. A sentence of 25 years is a reasonable sentence given that the jury convicted Defendant Scrushy for public corruption offenses that spanned at least a four year time frame, including a period while he was CEO and Chairman of HealthSouth, involved his corruption of the office of Governor and the CON Board, caused a heightened distrust of State government, and abused his position of trust as the chief fiduciary at HealthSouth. If ever a defendant was deserving of being held accountable to the maximum extent for his criminal wrongdoing, Defendant Scrushy is that defendant, especially given the complete lack of remorse and acceptance of responsibility he has shown for his crimes. The United States, therefore, respectfully urges this Court to punish Defendant Scrushy to the fullest extent permitted under the law."
The Leach letter says the wrong guideline has been used as a basis for the recommended sentencing range and objects to an enhancement "where the "value of the payment, the benefit received or to be received in return for the payment, or the loss to the government from the offense" exceeds $5,000. In fact, none of the money contributed to the AELF triggers any of the three provisions of this enhancement as addressed below in reverse order. "
"First, there was no loss to the government. Second, Mr. Scrushy received no benefit of any monetary value as a result of the contributions to AELF. That is, for example, no contract was let to Mr. Scrushy or HealthSouth, no surplus property was sold to him below market value, and he received no other thing of value...As noted earlier, Mr. Scrushy had served on the CON Board under previous administrations and took no part in any votes where HealthSouth was concerned or where any benefits to him or HealthSouth, directly or indirectly were under consideration. "
"Third, in this case, using the total amounts contributed to AELF as the "value of the payment" is not appropriate because that amount does not reflect any benefit to Mr. Scrushy above and beyond the good will that any corporate political contributor expects in return for political contributions..."
"...As is clear, the reason the Sentencing Commission contemplated for using the amount of the contribution paid to AELF is because of the likelihood that the payer expected something in return that would be worth that amount. In this case, however, that likelihood is not present."
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