Mendoza School of Business

Former HealthSouth CFO and whistleblower to share insider view of scandal

Published: April 8, 2014 / Author: Carol Director

Weston Smith, former CFO turned whistleblower at
health care giant HealthSouth, will deliver a talk at 5 p.m. Monday (April 14)
in the Jordan Auditorium at the University of Notre Dame’s Mendoza College of Business. The event is
free and open to the public.

Today, HealthSouth is one of the nation’s largest health care providers
specializing in rehabilitation with hospitals in 27 states and Puerto Rico. In
2012, the company reported more than $2 billion in revenue. But just 10 years
ago, after a decade of impressive growth, HealthSouth was destined to become a
notorious case of corporate malfeasance.

In 2003, FBI agents opened a federal investigation
of accounting fraud on a massive scale at HealthSouth, with fraudulent entries
mounting as high as $2.7 billion. Nearly put into bankruptcy, the company fired
its CEO Richard Scrushy and spent three years
restructuring its operations and financial reporting procedures.

Smith, credited with being the first-ever whistleblower to warn federal
investigators, had a front-row seat to HealthSouth’s meteoric rise and plummet,
and was eventually sentenced to 27 months in prison for his role in the fraud —
the longest sentence ordered for any of the HealthSouth defendants — and was
ordered to pay $1.5 million in forfeited assets and to spend one year on
probation after his release.

A frequent speaker on ethics and integrity in business, Smith will describe
the culture of the company that supported the fraud, the mechanics of how the
unethical accounting was put into place and how detection was avoided. Smith
also has a message for broader audiences “to simply do the right thing” — a
challenge to live and work responsibly.

The event is sponsored by the Center
for Accounting Research and Education
(CARE), an
academic center at Mendoza that seeks to strengthen the bridges between
accounting research, education and practice. CARE
sponsors an annual conference that gathers industry, governmental and academic
thought leaders from across the globe to discuss current issues in accounting.

Contact: Lorie Marsh, program manager for the
Center for Accounting Research and Education,



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