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Originally published Friday, March 6, 2009 at 3:20 PM

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Court upholds most charges against ex-Ala. gov

A federal appeals court upheld most of the bribery and corruption charges Friday against former Alabama Gov. Don Siegelman and all the charges against former HealthSouth CEO Richard Scrushy.

MONTGOMERY, Ala. —

A federal appeals court upheld most of the bribery and corruption charges Friday against former Alabama Gov. Don Siegelman and all the charges against former HealthSouth CEO Richard Scrushy.

A three-judge panel of the 11th U.S. Circuit Court of Appeals in Atlanta struck down two of the seven charges that Siegelman was convicted of and ordered a new sentencing hearing. That means Siegelman's seven-year sentence could be reduced.

He won't get off entirely: The court upheld key bribery, conspiracy and obstruction counts against him in what prosecutors described as a scheme that put Scrushy on a state hospital regulatory board when he was at the helm of HealthSouth. The court upheld all six counts against Scrushy and his sentence of almost seven years.

Siegelman, 63, and Scrushy, 56, were convicted in 2006 by a federal court jury in Montgomery, where Siegelman was a prominent Democrat with a political career dating back three decades.

Siegelman has claimed his prosecution was pushed by Republicans, including former White House adviser Karl Rove, a claim career federal prosecutors who handled the case have emphatically denied. Rove, a Texas strategist, was once heavily involved in Alabama politics.

Prosecutors argued that Siegelman appointed Scrushy to the influential board in exchange for Scrushy arranging $500,000 in contributions to the governor's campaign for a state lottery in 1999.

Siegelman also was convicted on a single obstruction of justice count linked to the purchase of a motorcycle with the help of a lobbyist.

The former governor, who was sent to federal prison at his sentencing in June 2007, was freed last year on appeal bond. But the courts ruled the wealthy Scrushy, who turned Birmingham-based HealthSouth into one of the nation's biggest rehabilitation chains, was a flight risk. Scrushy is serving his sentence in the federal penitentiary in Beaumont, Texas.

Siegelman's attorneys said he would ask the full 11th Circuit to review the case and will appeal to the U.S. Supreme Court if necessary.

In an e-mail to supporters, Siegelman said he was disappointed but will continue to fight.

"We will get through this and we will win," he said.

Siegelman's chief attorney, Vince Kilborn, said if Siegelman is resentenced, he will ask the judge to sentence him "to no further jail time other than the nine months he has already served."

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Scrushy attorney Art Leach said he spoke Friday by phone with Scrushy - who is at federal prison in Beaumont, Texas - about their next steps.

"He wants to carry on the fight," Leach said. He added the ruling was "incredibly difficult" for Scrushy's wife Leslie and their nine children who "were hoping their dad was going to come home."

The appeals court judges, in a unanimous decision, rejected a key defense argument that prosecutors failed to prove there was an explicit "quid pro quo" agreement between Siegelman and Scrushy, which is required in federal bribery cases. The defense also argued that U.S. District Judge Mark Fuller did not adequately instruct jurors that such an agreement was necessary.

In a 68-page opinion, the panel said that the instructions Fuller gave jurors was sufficient. The judges also rejected defense arguments of juror misconduct involving a claim that some jurors exchanged e-mails and were subjected to outside influences during jury deliberations.

The judges ruled that Fuller adequately investigated the juror misconduct charges.

"We conclude that the district court did not abuse its discretion in holding that there was nor reasonable possibility of prejudice to the defendants arising out of the exposure of the jury to this extrinsic evidence," the judges wrote.

The judges also threw out defense arguments that the indictments against Siegelman and Scrushy came after the five-year statute of limitations in bribery cases had expired. The judges said they waived their right to make that claim by not raising the argument until after the trial.

The three-judge panel - Chief Judge J.L. Edmondson, Judge Gerald Bard Tjoflat and Senior Judge James C. Hill - threw out two mail fraud counts that accused Siegelman of helping Scrushy benefit from being on the Certificate of Need Review Board.

Prosecutors said Scrushy's company benefited when the board approved HealthSouth's applications for a high-tech scanner and to build a rehabilitation hospital in Phenix City. But Scrushy was off the board at the time those decisions were made and the judges said there was "no evidence that Siegelman participated in the events forming the basis for the charges."

Former Indiana Attorney General Jeff Modisett, one of 54 former state attorneys general who filed a brief urging a reversal of Siegelman's conviction, said he held out hope for Siegelman at resentencing.

"I would predict that the court, during resentencing, should give the governor time served," Modisett said.

Copyright © 2009 The Seattle Times Company

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