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Former HealthSouth executive lectures on failings

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It took just two years for Aaron Beam Jr. to become a millionaire as the chief financial officer of HealthSouth. Now, he cuts grass for a living in Alabama.

"I was a rock star," Beam said of his time as CFO of the healthcare services provider. "I could go anywhere in Alabama and everyone knew who I was. They wanted to talk to me and tell me what a great guy I was."

But, it was the decision he made in 1996 -- under the direction of HealthSouth's CEO, Richard Scrushy, Beam said -- to inflate company earnings that led to a three-month stint in jail and to his lecture Thursday at Augusta State University .

"(Scrushy) sold us that this was a one-time thing and we just needed to get him through it and he would take care of us," Beam said. "I was intimidated by (Scrushy). He was the kind of guy that got so angry about little things.

"For me to stand up at that point and say no to him and make his net worth go down several million dollars, I didn't have the ethical bearing of courage to stand up to him."

But it wasn't a one-time thing and the book padding happened again in 1997. Beam said he began drinking more and instead of doing the right thing, he just quit.

Six years later, in the spring of 2003, Beam was watching the news when he saw a headline that changed his life: "Breaking News: Massive Accounting Fraud Uncovered at HealthSouth. Over $2.5 billion in bogus entries made."

Beam turned himself in. Sixteen people admitted involvement to the fraud; one person denied it -- Scrushy.

Beam said Scrushy told him that he would deny everything if they were ever caught.

In 2005, Beam was sentenced to three months in a federal minimum security prison, less than some involved but more than Scrushy, who was found not guilty. Scrushy was convicted in 2006 of bribing the governor of Alabama and sentenced to seven years.

"You will, somewhere in your career, be exposed to fraudulent activities, be asked to participate in fraud. It's out there," Beam told students at the lecture.

When an ASU student asked what he recommends when that situation does arrive, Beam said to "just say no."

After seeing his home auctioned off and paying off more than $700,000 in fines and legal fees, Beam began a "one man and a mower" lawn service.

"Practicality-wise, I've lost all hopes of having a position in the financial world," he said.

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peonynut
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peonynut 02/19/10 - 09:40 am
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If you just say no you'll of

If you just say no you'll of course be fired for one reason or another. But just saying no is not enough you must report the illegalities. Be prepared however for being blackballed in your chosen profession and your community; it will happen. Some times you wonder if doing the right thing was worth it; it was and is. There are no ethics left in businesses today; someone has to stand up.

corgimom
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corgimom 02/19/10 - 10:08 am
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Peonynut, been there, done

Peonynut, been there, done that. But I like to sleep at night. People want honest accountants- but then want them to commit fraud. It's a major problem in the accounting industry.

CarlA
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CarlA 02/26/10 - 04:52 pm
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I remember my accounting

I remember my accounting professors in college telling us that we would be asked to do some unethical and even illegal things during our careers. I thought that financial accounting fraud couldn't be that big of a problem. Then I got a job in the real world!

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