Former HealthSouth CFO talks ethics in Trussville
By Gary Lloyd
TRUSSVILLE — Almost 12 years to the day, Aaron Beam was watching the local NBC affiliate in his Fairhope home when the news broke.
The title of the press release from the Securities and Exchange Commission was this: “SEC Charges HealthSouth Corp. CEO Richard Scrushy With $1.4 Billion Accounting Fraud.”
Beam realized pretty quickly that “in the not too distant future I would be in prison.”
He was right. Beam, the former CFO of HealthSouth Corp. from 1984 to 1996, pleaded guilty to bank fraud in May 2003. He served three months in prison and was released in February 2006.
Beam spoke to the Trussville Rotary Daybreak Club last Wednesday about the whole ordeal, starting from the beginning.
Beam co-founded HealthSouth Corp., a provider of outpatient surgery and rehabilitative services, with Scrushy in 1984. Beam told his wife at the time Scrushy hired him that he was either the best business man around, or the biggest con man.
“Donald Trump does not have an ego compared to Richard Scrushy,” Beam said.
HealthSouth flourished. Beam was a millionaire. He bought a house in Greystone, then three beach houses, then a condo in the French Quarter in New Orleans. He had a new car every year. He once spent $30,000 on ties.
“It changed me,” Beam said.
He easily got tables at high-end restaurants. People bought him drinks.
“I was a rockstar in Birmingham,” Beam said.
Revenues grew to more than $3.5 billion. But in 1996, the company’s earnings fell slightly short of its goal during one quarter. That’s when, Beam said, Scrushy ordered the books to be fixed, telling Beam and a lead accountant the numbers would be made up the next quarter. Scrushy promised Wall Street more and more earnings, Beam said. Anything to keep the stocks up was the mindset. Beam states on his website that Scrushy is a “maniacal dictator.”
“We were very greedy,” Beam said.
Beam calls himself a “coward” for being “intimidated” by Scrushy, when he knew “cooking the books” was the wrong move. He took part in it for a year. In 1997, hating going to work because of guilt, Beam retired and built a large home in Fairhope. He sold all his stock in the company.
But by 2003, the news broke. Beam served three months in a minimum security federal prison in Montgomery. He lost nearly everything he had — the cars, the homes, amenities.
“I don’t have money today, but I realize today that’s not the most important thing in life,” he said.
Scrushy in 2005 was acquitted in a federal criminal trial relating to the HealthSouth fraud, but the next year he and former Gov. Don Siegelman were convicted of bribery. Scrushy paid $500,000 to Siegelman’s campaign for a state lottery in exchange for a seat on a state hospital regulatory board, according to Reuters. Scrushy was released from federal prison in July 2012 after serving about five years. Beam said had Scrushy been convicted of the fraud at HealthSouth, he could have faced 20 to 30 years in prison.
“He got off all right,” Beam said.
Ethics are at the center of Beam’s new book, “Ethics Playbook,” which covers his personal and professional insights on avoiding wrongdoing. Beam has also written a memoir about the HealthSouth fraud titled, “HealthSouth: The Wagon to Disaster.”
Beam said people can learn lessons from his experiences. People who cheat even just a little bit on taxes shouldn’t. People shouldn’t cook the books like he and others did. No amount of cheating is OK.
“You have to train yourself to do right,” he said. “You have to work at being ethically strong.”
Contact Gary Lloyd at news@trussvilletribune.com and follow him on Twitter @GaryALloyd.