By Jay Reeves, The Associated Press
and The Cincinnati Enquirer

BIRMINGHAM, Ala. - Former HealthSouth CEO Richard Scrushy was charged with 85 federal counts Tuesday in an alleged $2.7 billion fraud that prosecutors say financed his lavish life of big boats, fancy cars, mansions and jewels.

The charges against Scrushy include false certification of corporate statements, a new offense that makes him the first chief executive accused under the Sarbanes-Oxley law passed last year to target corporate wrongdoers.

Scrushy, who rose from humble Alabama roots to build one of the country's largest health care conglomerates, pleaded not guilty and was released on $10 million bond secured by his three homes and 360 acres of plantation property.

Scrushy faces a maximum possible penalty of 650 years in prison and $36 million in fines. A Jan. 5 trial date was set.

Founded by Scrushy in 1984, HealthSouth is the largest U.S. provider of outpatient surgery, diagnostic imaging and rehabilitation services. It has about 50,000 employees and about 1,700 sites in all 50 states and overseas.

The company has several operations in Greater Cincinnati. They include the HealthSouth Northern Kentucky Rehabilitation Hospital in Edgewood, which has about 120 employees and admits almost 14,000 patients a year. The company has three surgery centers locally, five sports medicine and rehabilitation centers, a rehabilitation-only center and an endoscopy center.

The indictment, returned Oct. 29 and released Tuesday, had been sealed amid government claims that his bodyguards had weapons and spy equipment that intimidated witnesses.

It seeks the return of more than $278 million in alleged ill-gotten gains, including a 92-foot yacht, a 40-foot racing boat, beach and lake homes, diamond jewelry, antique rugs and a 2003 Lamborghini.

The government also is after Scrushy's two airplanes, a Rolls-Royce Corniche, a nearly 22-carat diamond-and-platinum ring and paintings by Picasso, Chagall, Renoir and Miro.

Once best known as a self-made millionaire and philanthropist whose name adorns buildings across the state, Scrushy uttered only one word in court when a judge asked if he wanted to plead not guilty.

"Yes," Scrushy responded meekly.

His wife and a pastor sat on a courtroom bench nearby. Former five-term Birmingham Mayor Richard Arrington also came in a show of support.

U.S. Magistrate Judge T. Michael Putnam ordered Scrushy, despite defense objections, to wear an electronic monitoring device on his ankle.