Mendoza School of Business

HealthSouth former CFO and whistleblower to share insider view of the scandal

Published: April 10, 2013 / Author: Carol Communications

Today, HealthSouth is one of the nation’s largest health-care providers specializing in rehabilitation, with hospitals in 27 states and Puerto Rico. The company reported more than $2 billion in revenue in 2012.

But just 10 years ago, after a decade of impressive growth, HealthSouth was soon to become a notorious case of corporate malfeasance. On the night of March 18, 2003, FBI agents descended on the company’s headquarters, setting off a federal investigation of accounting fraud on a massive scale, with fraudulent entries mounting as high as $2.7 billion. Nearly put into bankruptcy, the company fired its high-flying CEO Richard Scrushy and spent three years restructuring its operations and financial reporting procedures.

Weston Smith had a front-row seat to HealthSouth’s meteoric rise and plummet. Smith was the CFO during the time the illegal practices were being put into place. Notably, he is also credited with being the first whistleblower to warn federal investigators.

In 2006, a court sentenced Smith to 27 months in prison – the longest sentence ordered for any of the HealthSouth defendants – and to spend one year on probation after his release.

Smith will be presenting “Crossing the Line: An Insider’s Perspective of the HealthSouth Fraud” at the Mendoza College of Business at the University of Notre Dame at 5 p.m. on April 15 in the College’s Jordan Auditorium. 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.

While his talk focuses on the accountancy aspect of the scandal, Smith also has a message for broader audiences “to simply do the right thing” – a challenge to live and work responsibly.

The talk, which is free and open to the public, is sponsored by the Center for Accounting Research and Education (CARE) at the Mendoza College of Business.

For more information, contact Lorie Marsh, program manager for the Center for Accounting Research and Education at


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