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Ex-HealthSouth president indicted

Prosecutors allege Bennett took part in $17.4m scheme

BIRMINGHAM, Ala. -- Former HealthSouth Corp. president and director James P. Bennett was indicted yesterday for what prosecutors say was a massive fraud at the rehabilitation giant, even as the trial of former chief executive Richard Scrushy continued.

Bennett, 47, was accused of fraud, conspiracy, insider trading, money laundering, and lying to the FBI in a scheme in which he sold company stock worth about $17.4 million, according to a statement from prosecutors.

Testimony in Scrushy's trial has indicated that Bennett knew of the scam, in which 18 people have now been charged.

Fifteen have reached plea deals and are expected to testify in Scrushy's trial.

Besides prison time and $33 million in fines if convicted on all 39 counts, prosecutors are seeking $28 million in assets that they claim Bennett made from the alleged conspiracy.

Defense attorney Jim Henry said Bennett ''was not involved, in any form or fashion, with any fraud or other wrongdoing at HealthSouth."

''He will plead not guilty, and is looking forward to the opportunity to clear his name," Henry said.

Bennett, who worked at HealthSouth from 1991 until 2000, was president and chief operating officer from 1995 until he left. He joined the HealthSouth board in 1993.

Bennett's indictment was disclosed as a one-time colleague, former HealthSouth controller and chief financial officer Bill Owens, began a third day on the stand.

Using a marker and easel, Owens told jurors about the company's various financial statements.

On Wednesday, Owens testified that Scrushy feared a shareholder lawsuit and encouraged employees to continue the fraud after it began in 1996 so he'd be able to sell $100 million of company shares.

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