Opinion ID: 78505
Heading Depth: 1
Heading Rank: 1

Heading: facts

Text: The charges filed against Defendant-Appellee Kenneth Livesay (Livesay) arose out of a massive accounting fraud conspiracy at HealthSouth Corporation (HealthSouth), headquartered in Birmingham, Alabama. This massive fraud has been described in many of our previous decisions. See, e.g., United States v. Livesay, 484 F.3d 1324, 1326 (11th Cir. 2007) ( Livesay II ); United States v. Martin, 455 F.3d 1227, 1230-31 (11th Cir. 2006); United States v. McVay, 447 F.3d 1348, 1349-50 (11th Cir.2006) ( McVay I ). Suffice it to say that Livesay's participation in an illegal scheme to artificially inflate HealthSouth's earnings and to falsely report HealthSouth's financial condition is at the heart of the fraud. Senior officials at HealthSouth issued instructions as to the desired earnings per share and Livesay and members of the accounting staff would meet to discuss ways to artificially inflate HealthSouth's earnings. Once they decided upon the means of inflating earnings, Livesay instructed HealthSouth's accounting staff to manipulate various accounts to accomplish this purpose. False and fraudulent entries were made to accounts in HealthSouth's books and records including, but not limited to (1) the property plant and equipment account; (2) the cash account; (3) the inventory account; and (4) the intangible asset (goodwill) accounts. Livesay knew that there was no justification in fact or under generally accepted accounting principles for these entries. Additionally, Livesay participated in the preparation of HealthSouth's 1998 quarterly and annual reports filed with the Securities and Exchange Commission (SEC), including HealthSouth's 10-Ks. Livesay and others caused HealthSouth to file these reports publicly with the SEC, knowing that the reports materially misstated, among other things, HealthSouth's net income, revenue, earnings per share, assets, and liabilities. As a result of the scheme, HealthSouth's revenue and earnings were inflated by hundreds of millions of dollars in the publicly filed reports. Finally, Livesay knowingly caused, directly and indirectly, to be transmitted by wire, from Birmingham, Alabama, to Washington, D.C., the 10-Qs and 10-Ks for HealthSouth in 1998, knowing that the financial results and financial condition related in those reports were materially false or that the reports omitted material information.
Whoever said third time's a charm was apparently unfamiliar with the history of this case. On April 3, 2003, the government filed a three-count information in the Northern District of Alabama charging Livesay with conspiracy to commit wire fraud, securities fraud, and falsifying books and records; falsely certifying financial information filed with the SEC; and a forfeiture count related to count one. Livesay entered into a plea agreement with the government. Pursuant to the agreement, in exchange for waiver of his right to indictment and his plea of guilty to all three counts in the information, the government agreed to recommend that Livesay receive a three-level reduction to his offense level for his acceptance of responsibility and be sentenced at the low end of the Sentencing Guideline range as determined by the district court. In addition, the government agreed to file a motion for a downward departure pursuant to § 5K1.1 of the United States Sentencing Guidelines and 18 U.S.C. § 3553(e) (2006) if Livesay provided substantial assistance to the government in the investigation and/or prosecution of another person who had committed an offense related to the HealthSouth conspiracy. On April 3, 2004, Livesay pled guilty to all three charges in the information before Judge U.W. Clemon. Livesay's first sentencing hearing occurred in June 2004. The pre-sentence investigation report (PSI) determined that Livesay's offense level was 28 and his criminal history category I, which resulted in a Sentencing Guidelines imprisonment range of 78 to 97 months, a supervised release period of 2 to 3 years, and a fine range of $12,500 to $1 million. Pursuant to the plea agreement, the government recommended a downward departure of approximately 3 levels and a sentence of 60 months imprisonment. The district court granted the government's motion for a downward departure, but departed well below the recommended departure to a level 10, which when combined with a criminal history category of I resulted in a sentencing imprisonment range of 6 to 12 months. Judge Clemon sentenced Livesay to 60 months probation. The government appealed and we reversed, holding that the district court failed to state the reasons supporting the extent of its departure, leaving this court to speculate regarding that reasoning. See United States v. Livesay, 146 Fed. Appx. 403, 405 (11th Cir.2005) (unpublished) ( Livesay I ). Livesay testified for four days at the trial of HealthSouth founder Richard Scrushy and two days at the related trial of another HealthSouth executive-Hannibal Sonny Crumpler. Scrushy was acquitted and Crumpler was convicted. During Livesay's second sentencing hearing, held in December 2005, the government informed the district court of Livesay's cooperation, renewed its motion pursuant to § 5K1.1, and recommended a sentence of 20 months in custody due to the additional cooperation. Judge Clemon imposed the same sentence of probation that he did at the first sentencing. Once again the government appealed and we reversed. See Livesay II, 484 F.3d at 1325-26. In Livesay II, we held that both the extent of the district court's departure and the ultimate sentence imposed by the district court were unreasonable given Livesay's key role in the massive fraud. Id. at 1332-34. Livesay filed a petition for writ of certiorari. The Supreme Court granted the petition, vacated our decision, and remanded for reconsideration in light of Gall v. United States, 552 U.S. 38, 128 S.Ct. 586, 169 L.Ed.2d 445 (2007). See Livesay v. United States, ___ U.S. ___, 128 S.Ct. 872, 169 L.Ed.2d 712 (2008). After remand from the Supreme Court, we again vacated Livesay's sentence. See United States v. Livesay, 525 F.3d 1081 (11th Cir.2008) ( Livesay III ). In Livesay III, we held that the district court committed procedural Gall error by basing the extent of its § 5K1.1 departure on an impermissible consideration: specifically, Livesay's repudiation of or withdrawal from the conspiracy. Id. at 1092. Once again, we remanded the case to the district court for resentencing. Id. at 1094. This time around, Judge Clemon recused himself and District Judge Karon O. Bowdre was assigned the case for resentencing. Judge Bowdre confirmed that the total offense level was 28, the criminal history category I, and the Sentencing Guidelines range was 78 to 97 months imprisonment. The district court again granted the government's § 5K1.1 motion and imposed a term of 5 years probation. For the third time, the government appealed the sentence.