In the weeks to come, during some of the long recesses we’ll have (preferably around the time when the prosecution rests) I’ll write some articles exploring the ‘trial thus far,’ and some of the timelines and themes that have been developed throughout the trial. But by week six, a few things come to mind.
—-Although the present configuration of the defense has always said they would try to advance the theory that this was a conspiracy masterminded by Bill Owens, and carried out without Scrushy’s knowledge, they have apparently completely abandoned the “Know Nothing” defense, the kind of strategy employed by Bernie Ebbers, in the WorldCom case, and hinted at by earlier versions of Scrushy’s defense team. Even though, as previously noted, the defense has employed kind of a scattershot approach, this strategy has apparently been evolving throughout the trial. In earlier testimony, they made a point that Scrushy had no accounting degree and made efforts to show he might not have had a true understanding of the numbers. But by the time Mike Martin was on the stand, they made a very deliberate point to portray him as brilliant, and even invited Martin to say he was “head and shoulders above” most MBAs. Both versions were presented by the defense attorney’s, so at some point, there had to have been a shift in strategy. Why? There are at least two possible reasons. 1) Too much evidence to the contrary: Owens, Martin, Beam and Murphy have all testified that Scrushy had a keen awareness of the numbers. On the tapes of the conference calls, and on the DVDs of the Corporate Conference slide presentations, Scrushy’s voice testified to the jury by rattling off information about numbers and charts and terms that would make an accountant blush. 2) The Richard M. Scrushy factor. I have written about it several times, but one of the mysteries of the trial is if Scrushy would even allow himself be portrayed in any way that would contradict the image he has built, even to save himself. There may have been some meddling with the strategy, or there could have been a combination of the two, the led to the change.
—An image or perception has emerged of a man who was intellectually capable of understanding many things, and of using that knowledge to achieve many goals, but there seems to have been some kind of disconnect when it came to processing adversity and trusting ideas or concepts that did not originate with Richard Scrushy. We’ve seen this pattern surface in several different places, from the price of the Horizon deal, to the Street expectation disagreement, to the ManorCare acquisition, and at several other points sprinkled throughout the testimony of Beam, Owens, Murphy and Martin. This could be very significant for at least two reasons: It shows that he could have had the knowledge but yet could not accept (or face) reality, and possibly even more important, it shows a fundamental inability to trust the people around him. If this is true, and if the jury somehow comes to understand this concept, it shows that he never could have trusted the people below him enough to allow them to perpetrate the crime.
—Scrushy seemed to be addicted to accolades, to glowing reports like having HealthSouth beat market expectations for the forty-something time. Even when this became unrealistic. Even when this kind of success was casting HealthSouth as the ONLY provider in the sector to be doing that well. Both Murphy and Martin testified that the cash flow HealthSouth was generating, in 1999, was actually very good for the climate, and was more respectable then most other healthcare providers. But it still would have involved admitting that they weren’t beating unrealistic expectations, expectations that were already inflated by the fraud. And this is understandable. We would all rather be in the limelight, then talking about how things are not going well. But it seems that Scrushy had such an aversion to saying anything that he thought reflected badly on himself, even in the short-term, that he wouldn’t do it even when it was the right and responsible thing to do. And how long can you sit at the poker table, showing four aces, before someone gets suspicious. The difficulty in understanding this point, is that it does cast some doubt on his ability as a businessman, because in business, a necessary skill is an honest assessment of adversity, and plotting a course. He could not seem to do this, yet he was a successful businessman, maybe a great one.
—Is Jim Parkman ready for the big time? That was a question at the beginning of this trial, and it hasn’t been thoroughly answered. But we haven’t seen the defense’s case yet. There have been mixed results from the combination of southern home-spun charm and bombastic theatrics. These are not the usual players that he has built his career on, and they have not always responded well to his manipulative style. He did serious damage to the cocky Bill Owens’ testimony, but has thus far not been able to do undermine the crucial testimony of Leif Murphy or Mike Martin.
—Now we’ll add one more (for now). Overlay the specter of a dynamic man and a charismatic leader. Make him a charismatic leader who is brilliant. History is dotted with these kinds of people, who either were able to accomplish very great things, or they had the potential to create very great things, if only something hadn’t gone wrong. It’s the stuff of tragedy. And it is the brilliance and the potential that make these bad deeds so much harder to discover or understand. For further confusion, they also have the ability to inspire people, sometimes without direct involvement, or fingerprints (or email) but they are using their abilities to accomplish less than honorable things, nonetheless.
—At week six, it is far from over. Other images will emerge. Other patterns. Another version.
In the week’s events, the defense finally got done with Livesay (who helped them more than the prosecution) and Martin confirmed most of the Murphy testimony about the still-most-damaging information concerning what’s known as Murphy’s “book,” and he talked about frantically trying to get Scrushy to understand the dire nature of where HealthSouth was going, in 1999. With the books overloaded with fraud and with declining revenue, Martin was convinced they were headed either toward bankruptcy or having the fraud exposed. He originally felt that they had to do one of three things to save the company. 1. Make a large acquisition; 2. Split the company into two pieces; or 3. Lower Street expectations. But time was running out, and before they could even finish exploring the first two options, the company’s health and the fraud made it impossible for them to be able to withstand the official and public scrutiny it would take to split the company, or make a large acquisition. This led to only the one option. Martin said he agreed to lowering the expectations once, but when he was faced with analysts and the reality of admitting his company wasn’t doing as well as he said, he backed off. And the die was cast. Four more years would go by before the FBI kicked in the doors.
Cross examination floundered and failed to poke any significant holes in the story. But it is still ongoing. Perhaps when I write next week’s summary, the headline will be Martin Destroyed. Stay tuned.
