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January 28, 2023

CFO Confession: HealthSouth Edition

It might be a fair statement that we like to talk a little trash here at Going Concern. We do our best to embrace our natural inclination. However, every once in awhile we try to spread some positive news.
Today’s attempt at a positive story comes courtesy of Aaron Beam, a former CFO at HealthSouth. Beam was CFO at HealthSouth when the fraud first began in 1996. Beam describes his decision to make the numbers up this way, “one night, during the second quarter of ’96, I said, ‘OK, let’s do it,’ and we credited revenue that did not exist and we debited assets that did not exist.”
Not exactly the most sophisticated fraud in the world but whatevs. The Street and Richard Scrushy demanded results.
And so it went, until Beam left in 1997. HealthSouth continued to commit accounting fraud until 2002 when it imploded. Beam testified against “Hannibal Lecter” Scrushy but the slimeball walked on the criminal charges only to be found liable for damages to the tidy sum of a shade under $2.9 Billion.
As for Beam, he spent 3 months in a non-FPMITA prison and now speaks to business students around the country about ethics and has a lawn-service business.

I’m trying to turn a big negative into a positive, because there is such a need for ethics in the business world today, and I’m in a unique position to talk about it. If we can teach college students that they’re going to face these kinds of temptations every day in the business world, we can make a difference.

WTG man, and hey, we’re being serious.
“I Should Have Said No.” [CFO.com]

It might be a fair statement that we like to talk a little trash here at Going Concern. We do our best to embrace our natural inclination. However, every once in awhile we try to spread some positive news.

Today's attempt at a positive story comes courtesy of Aaron Beam, a former CFO at HealthSouth. Beam was CFO at HealthSouth when the fraud first began in 1996. Beam describes his decision to make the numbers up this way, "one night, during the second quarter of '96, I said, 'OK, let's do it,' and we credited revenue that did not exist and we debited assets that did not exist." Not exactly the most sophisticated fraud in the world but whatevs.

The Street and Richard Scrushy demanded results. And so it went, until Beam left in 1997. HealthSouth continued to commit accounting fraud until 2002 when it imploded. Beam testified against "Hannibal Lecter" Scrushy but the slimeball walked on the criminal charges only to be found liable for damages to the tidy sum of a shade under $2.9 Billion. As for Beam, he spent 3 months in a non-FPMITA prison and now speaks to business students around the country about ethics and has a lawn-service business.

I'm trying to turn a big negative into a positive, because there is such a need for ethics in the business world today, and I'm in a unique position to talk about it. If we can teach college students that they're going to face these kinds of temptations every day in the business world, we can make a difference.

WTG man, and hey, we're being serious. "I Should Have Said No." [CFO.com]

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