William Thomas Owens has been on the stand so long it seems like it’s his trial, like it’s hard to remember a time, in this trial, when there was someone else in the witness box. Aaron Beam saying that Scrushy instructed him and Owens to “fix” the numbers seems like a vague and distant memory. Somewhere along the way, there was a forensic accountant who went through a bunch of charts and talked about millions of dollars until it had a desensitizing effect, like it was monopoly money. His most memorable line, in an answer to Parkman, was “It has been my experience that when people are committing fraud, they generally do not put their name on the documents.” It is hard to know what the jury is thinking and what kind of cumulative effect the testimony has had on them, but those are the kinds of things that are memorable. As the days melt into weeks that collect into months, a lot of the numbers and charts and forms get blurry and blend together, but a few lines stand out, along the way.

How will Owens be remembered? He’s been up there for eight days now. He first swore to tell the truth last Tuesday, and he’s been up there all this week. His cross-examination will continue on Monday.

There were two central themes of the testimony this week.

In the later part of the conspiracy, the executives were frantically trying to find a solution for correcting fraud-laden balance sheets before they were inevitably discovered. In the midst of the situation that was slowly spiraling out of control, a couple of other events were harbingers of the beginning of the end. The expiration term for a large amount of stock options, that Scrushy had, was running out, so he opted to sell them before they expired. At the time, a portion of a plan that was hatched to hide some of the fraudulent numbers had unexpected consequences, and when the stocks fell on the heels of Scrushy’s stock sale, the company’s business practices drew the attention of the SEC and the US government. The company ordered an outside investigation, and while the conspirators were trying to keep them focused on insider trading, and away from the fraud, other events and situations became a pincer that squeezed the conspiracy from the inside and the outside. The two CFO’s who followed Owens reportedly got nervous about having the spotlight turned on the company with so many unsupported numbers on their official documents. And these official documents became poison pills after Congress passed the Sarbanes-Oxley act, which attached an extra level of certification and accountability to the CFOs and CEOs of companies who have to file forms with the SEC, along with increased penalties. According to Owens’ testimony, first Weston Smith said he wouldn’t sign them, and fearful that it would bring the searchlight onto the fraud, they offered him a lateral transfer, to a proposed spin-off company, that would have clean books. Later, the next CFO would also bolt, demanding a large bonus in order to assume the risk of putting his signature on the forms.

The second theme was that after the air swirling around the suspicious activities of HealthSouth was thick with investigators, William Owens decided it was the end of the line, that he needed to come clean. And he went to the Feds. Now government informant, Bill Owens, agreed to wear a wire into work at corporate headquarters. The later half of the week focused on these recordings. Due to technical errors and malfunctions, the quality of some of recordings is not very good. Because the recorded conversations of Owens and Scrushy do not contain much obvious material about the two of them talking about cooking the books or inflating numbers, much of the value of the taped evidence will come down to competing semantic arguments about the meaning of the words, within their contexts. On one of the tapes, Scrushy does appear to discuss his testimony to the SEC and indicates that he was not very forthcoming about it. This activity, if both believed and remembered by the jury could result in guilty verdicts on the obstruction of justice and perjury charges. But it is a long way between here and there, and it is likely the defense will lay down a gauntlet before we can determine if what happened in week three will be on the jury’s mind, in the final week of this trial. Another factor that will need to be remembered by those who might read these notes, or read pieces of the taped conversation, in the newspapers, is that the quality of some of the tapes renders them almost inaudible, and the defense successfully kept the transcripts of the tapes out of the jury’s hands. They were able to see the transcripts one time, when the tapes were playing, but when they deliberate in a couple of months, all they will have are their memories of a transcript they once read, and a tape that is hard to make out what is being said. (However, a couple of the tapes are fairly clear.)

The prosecution’s presentation has been between shaky and erratic, throughout Owens’ testimony, but it was a little stronger in the last day or day and a half. This improvement might have been a good thing, because Parkman used the last few hours of the week to begin his cross-examination. As noted in yesterday’s entry, he began by dismissing the documentary evidence, and attacking the tapes. On the recording, Owens told Scrushy that that they had to stop, or his wife would divorce him, and Scrushy said: “Stop what?” Parkman wanted to know why Owens didn’t tell him to stop doing fraud, or to stop overstating assets, and a number of terms he had used throughout his testimony. I reviewed some of the semantic aspects of this kind of argument, but while reviewing notes from yesterday’s testimony, there appears to be another possible prosecution response. When Owens told Scrushy that he would not be able to sign the document, why didn’t Scrushy ask him why, or tell him there was no reason not to. And even if the position is adopted that Scrushy really didn’t know what was going on, and he was confronted with an executive who wouldn’t sign a document because of the risk, why didn’t Scrushy go to the authorities. He always talked about what a great company it was. Why would he let Owens or anyone else bring it down? The argument I am making here is not to particularly argue or rebut either side, but only to show some of the traps and difficulties of trying to find the truth and of the barriers and limitations of language as a means to finding out anything. As the weeks wear on, we will arrive at many of the answers, no matter what is said in these notes and in any other publication. But it is interesting to look at the issues along the way.