BIRMINGHAM, Ala. (AP) – A former HealthSouth executive pleaded guilty Thursday to overstating the value of assisted-living facilities in a massive fraud at the health care giant.

Will Hicks, who was vice president of investments, admitted to conspiring to make false statements to auditors and to maintaining false business records.

The government has accused HealthSouth of overstating earnings by some $2.5 billion to make it appear it was meeting Wall Street forecasts. Fourteen former HealthSouth executives have reached plea deals with the government and are cooperating with investigators.

Hicks, 39, is a former health care analyst who issued reports on HealthSouth before he came to work for the Birmingham-based company in November 1999. Prosecutors said Hicks participated in the fraud by hiding HealthSouth’s failed $13 million investment in assisted-living facilities.

He faces a maximum penalty of five years in prison and a $250,000 fine.

From 1996 until 1999, Hicks also was a principal with ousted HealthSouth CEO Richard Scrushy and former chief financial officer Michael Martin in 21st Century Health Ventures, a firm that reportedly invested some $10 million for HealthSouth.

Martin is among the five HealthSouth CFOs who have pleaded guilty in the fraud, while Scrushy has denied any wrongdoing through his attorneys.

While the fraud probe brought HealthSouth to the brink of bankruptcy, the company has said its core business is strong and cash flow is steady. On Thursday, HealthSouth said lenders had lifted a freeze that would let it pay about $24 million in debt.

HealthSouth is the biggest domestic provider of outpatient surgery, diagnostic and imaging and rehabilitation services. The company has nearly 1,700 facilities and 51,000 employees in every state and abroad.



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