By: Associated Press
By: Associated Press

A former HealthSouth finance chief testified today that then CEO Richard Scrushy referred to him as the potential fall guy for a massive fraud as an earnings overstatement scheme grew out of control.

Mike Martin, testifying in his third day on the witness stand, said he offered to resign in late 1998 because internal projections showed HealthSouth earnings for the next year were one dollar short of Scrushy's bid to keep stock prices around 15-dollars a share.

Martin is one of 15 former executives who have pleaded guilty in the case.

Jurors also listened to a recording of a 1999 meeting in which Scrushy told managers that HealthSouth executives were the only ones with credibility in the industry after the company finally lowered earnings guidance.

In the recording, Scrushy also expressed pride in HealthSouth's supposed record of meeting Wall Street forecasts -- a performance
that was later revealed to be false.

The government claims Scrushy was behind a conspiracy to overstate HealthSouth earnings for seven years beginning in 1996.

But defense attorneys contend Martin and other aides came up with the conspiracy on their own and hid it from Scrushy.

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