The week began with Owens’ ninth day on the stand and Parkman trying to poke holes in his version of the narrative; and it ended with an account of the fraud told by someone who was a HealthSouth executive, but was not a part of the conspiracy, not part of “The Family,” not someone who went along with the scheme to ride it to wealth and position.  And unable to neutralize his testimony, like they did to Beam or poke holes in the story, like the defense was able to do to Owens, the defense finished off the week by detonating a bomb on the courthouse steps.

Some of the holes Parkman tried to open up in Owens’ version included offering an alternative explanation for the performance drop that Owens said was the result of blaming a change in Medicare billing for a $175 million shortfall. They explored the possibility that the number was real, and that there might have actually been a catastrophic shortfall, and they also tracked memos and meetings that were held to discuss the effect of the transmittal that Parkman suggested would have been unnecessary if Scrushy knew the number was a fiction. Parkman cited a memo Owens sent to Scrushy where he was explaining some of the issues involved in how HealthSouth would report the Medicare billing, wondering why this memo was necessary if Scrushy already knew.

And there were the tapes. From the beginning of Parkman’s cross examination, until he said “No further questions,” those tapes were never far from Parkman’s mind, and he wanted to make sure that his version of those two days in March, 2003, would be firmly imbedded in the jury’s mind. The problem with the tapes, for the defense, was not that the conversations made such a convincing case for the prosecution, or were so damning, but it is that in a couple of months, the jury will retire to deliberate. They will have memories clouded by dozens of witnesses and competing versions of the story, they will have a mountain of documents—10Qs, 10Ks, long press releases, memos, consolidation reports—and since they won’t be so neatly highlighted, as they were when presented on their computer monitors, they won’t remember what half of the documents were even supposed to represent or signify. And they’ll have some tapes. How they regard the voices on the tapes could be crucial to the outcome of the case.

There were a couple of themes that also permeated the week. Both involved a Parkman vs. Owens challenge, with the defense coming out on top, on one of them, and Owens holding his own fairly well, with the other one. Owens clearly had a strong ego and came off as a little cocky, which played into Parkman’s style. Owens would sometimes challenge Parkman, who would often counter by using the sumo wrestler’s trick of using the challenger’s confident aggression to throw him to the mat. In one of these exchanges, Parkman asked Owens about a lunch he had with HealthSouth chief of security, Jim Goodreu, on August 5^th, 2002. Owens denied having lunch with him at the Mexican restaurant, On The Border. After a couple exchanges about this lunch, with Owens sticking to his story, Parkman finally asked him what he would do when he produced a receipt from that lunch. Owens responded, “I don’t think you could do that.” The other issue that Parkman and Owens danced around again and again, throughout the week was the language heard on the tapes. Parkman’s point was always that incriminating words like “fraud,” “illegal,” or “phony,” were not used when Scrushy and Owens talked. He consistently said, “We had a way of talking.” And Owens held his own on this point, as Parkman wanted to characterize this manner of speaking as “code words,” presumably so he could point out that that not only did they not talk about criminal activities, it did not appear that there were any words that could be substituted for others.

The next morning, Parkman put a slip of paper on the witness stand. He asked Owens if he recognized the credit card number on the paper. He did. It was a receipt for $55.11, from On The Border.

The final day of Owens’s testimony was concerned with personal issues, not directly related to HealthSouth or the fraud. Owens and his wife separated their property almost simultaneously with the time he went to the Feds, and his subsequent wearing of a wire. His divorce would later be filed and sealed in a down-state county.   He had also failed to file his tax returns for nine years, paying most of his taxes during this time, but for some reason, had just failed to file. All of these pieces of information were used to cast Owens as someone fully capable of doing things that are less than honorable or honest.

Parkman ended Owens’ eleven days on the stand by using a lawyer’s ploy to underscore the general impression he was trying to portray. He asked Owens about the receipt for the restaurant, and how he liked to have Parkman prove things to him. And then he mentioned the day that Owens said he met with Scrushy when Weston Smith refused to sign the 10Q because of the fraud it contained. He said, “What if I said to you that Richard Scrushy wasn’t even in the state of Alabama, on that day.”

 

“No further questions.”

And then it was time for Leif Murphy, who brought some life back to the prosecution’s case while being a stark contrast to Owens. He was a Group VP at HealthSouth, and later Treasurer, who was asked to do an analysis of what the books would like if HealthSouth was split into two companies. What he found in his analysis was something he had not expected. No one had expected it. When Murphy did his calculations, ran his consolidations, what he found was a company that had $550 million of fraud on the books. When the forensic accountant, Harvey Lee Kelly III, was on the stand, a few weeks ago, his analysis from the same year, came up with an amount of fraud that was strikingly similar to Murphy’s. He attended no meetings of the family (except one for a few minutes) he had no “way of talking,” he cashed in no stock options. Leif Murphy saw a company with $550 million of fabricated income, and he wanted to alert his superiors. He first went to Owens to verify some of the assumptions in his spread sheet, and then to the CFO, Michael Martin. And Martin took Murphy to see Scrushy, where he presented his findings. According to Murphy, Scrushy listened to him in silence, and then later, when he was back in Martin’s office, Scrushy blew up at him. Murphy left HealthSouth shortly after his presentation, after Mike Martin first offered him a million dollars to stay and later tried to beat him up. What made his testimony even worse for the defense, was that after a day of prodding, poking, berating and twisting, Parkman was unable to make Murphy sound like anything other than a nice guy who did the right thing.

So it was time for the bomb. As a parting shot after a disappointing day, the defense alleged that someone “tampered” with evidence that was given to them at discovery. This apparently has to do with the original copy of the presentation that Murphy has kept with him, for all of these years, and the copy the government had given the defense. The original has a word that was marked out. Murphy said the word was “fabricated” and Martin crossed it out because he said it was “too strong.” But the defense claims the document they received was different.

Next week, we’ll find out what the collateral damage is. Stay tuned as this continues to heat up.