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Eleventh Circuit rules ex-HealthSouth executive's sentence too lenient

[JURIST] The US Court of Appeals for the Eleventh Circuit [official website] for the third time vacated [opinion, PDF] a trial court's sentence of former HealthSouth [corporate website; JURIST news archive] executive Ken Livesay for being too lenient Monday, remanding the case to the lower court with a demand that Livesay be sentenced to time in jail. Livesay pleaded guilty in 2004 to charges that he participated in accounting fraud while at HealthSouth in order to overstate the company's earnings. In exchange for his guilty plea and testimony against fellow conspirators, the government promised to recommend a reduced sentence. In accordance with Federal Sentencing Guidelines [text], the government recommended five years imprisonment. The court, however, sentenced Livesay to five years of probation. The government appealed, and the Eleventh Circuit reversed the sentence [opinion, PDF], finding the sentence too lenient and not based on specific findings. On remand, the trial court found extensive cooperation by Livesay and once again sentenced him to five years probation. The government appealed, and once again the Eleventh Circuit vacated [opinion, PDF] the sentence. On remand, the trial court handed down the same sentence of five years of probation for the third time and the government once again appealed. In Tuesday's decision, the court held that due to the severity of the crime and the possibility of deterring similar behavior, the trial court's sentence was "patently unreasonable." The court continued, stating: "Not only do we hold that the particular sentence imposed below is unreasonable, but we also hold that any sentence of probation would be unreasonable given the magnitude and seriousness of Livesay’s criminal conduct."

Former HealthSouth founder and CEO Richard Scrushy [JURST news archive] was found liable [JURIST report] to the company's shareholders for fraud in June and ordered to pay $2.88 billion of restitution. Also in June, the Eleventh Circuit rejected [JURIST report] Scrushy's challenges to a $445 million settlement against HealthSouth. In May, the Eleventh Circuit denied [JURIST report] Scrushy's petition for an en banc rehearing of his conviction for unrelated federal bribery and corruption charges for paying campaign debts of former Alabama governor Don Siegelman [official profile] in exchange for a seat on a state-operated review board that regulates Alabama hospitals. In 2007, the US Securities and Exchange Commission [official website] settled its accounting fraud claims [JURIST report] against Scrushy for $81 million. In 2005, Scrushy was acquitted [JURIST report] of criminal charges of wire and mail fraud, money laundering, conspiracy, and violations of the Sarbanes-Oxley Act. In 2003, HealthSouth conceded that its prior financial statements had overstated its income and assets by a substantial amount. Several class action suits were subsequently filed by investors against the company and its officers for alleged violations of the Securities Act of 1933 and the Securities Exchange Act of 1934. The actions were consolidated and, in 2006, the $445 million settlement was reached.

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