by Roger Shuler

An article in Sunday’s Montgomery Advertiser reveals that Alabama Governor Bob Riley apparently has committed a federal crime — not once, but twice.

The article, by reporter Sebastian Kitchen, was meant to provide details about the two political parties’ financial condition heading into Alabama’s 2010 election.

But Kitchen, perhaps inadvertently, reveals that Riley appears to have violated federal bribery and honest-services fraud statutes. Riley certainly committed crimes if the Don Siegelman case is to be believed as the law of the land.

Siegelman, Alabama’s former Democratic governor, and co-defendant Richard Scrushy, the former CEO of HealthSouth, were convicted on federal corruption charges in 2006. At the heart of the case was a transaction where Siegelman accepted $500,000 from Scrushy for an education-lottery campaign and then appointed Scrushy to a position on a state health-care board, where he had served under three previous governors.

Now, let’s take a look at what Kitchen reveals in his reporting about the Alabama’s GOP’s swelling coffers.

First, Kitchen states that Riley is chairman of the Alabama GOP’s Campaign 2010 fund-raising effort.

Then, comes this nugget about Raymond J. Harbert, CEO of Harbert Management Corporation in Birmingham: Some of those donors to the Republican Party include Raymond Harbert of Birmingham, who Riley appointed to the Auburn University board of trustees as an at-large member in March 2009. He donated $10,000 in 2008.

Let’s review that information briefly. Harbert made a donation to a fund-raising campaign, chaired by Riley, and then was appointed by Riley to the Auburn University board of trustees.

But that isn’t the only curious transaction in Kitchen’s story. We also have this regarding Birmingham physician Swaid Swaid: Dr. Swaid N. Swaid, who Riley appointed to the Certificate of Need Review Board, donated $5,000 in 2008.

Again, let’s review. Swaid gave to a campaign chaired by Riley and then was appointed by Riley to a spot on the Alabama Certificate of Need (CON) Review Board.

Both of these transactions sound an awful lot like the alleged crimes in the Siegelman/Scrushy transaction, do they not? And Swaid even was appointed to the same board to which Scrushy was appointed.

A devil’s advocate might point out that there was no proof of a quid pro quo in Riley’s transactions with Harbert and Swaid. But a student of the Siegelman/Scrushy trial knows that a quid pro quo was not shown in that case either, and U.S. Judge Mark Fuller’s jury instruction did not require one.

A devil’s advocate might also point out that the amounts of Harbert’s and Swaid’s donations were not nearly as large as the one from Scrushy. But if memory serves us correctly, the amount of the donation was not an overriding factor in determining whether a crime took place in the Siegelman/Scrushy case.

Finally, the donations apparently went to the Republican Party, not to Riley personally. But that also was the case in the Siegelman/Scrushy matter.

Scrushy currently is in federal prison, and Siegelman might be heading back, because Siegelman received a donation from Scrushy and then appointed the CEO to a state board.

That is exactly what appears to have taken place with Bob Riley’s donations from Raymond Harbert and Swaid Swaid.

Roger Shuler is a veteran legal journalist. This article appeared first in the Legal Schnauzer blog. He and I are in the process of teaming up to build the alternative, independent Web Press in Alabama. If you like to see these stories you will not see in the so-called mainstream press in this state and want to help fund this effort, consider making a large or small donation today.

Editor’s Note: In any other state in the country with a functioning watchdog press, this story would have generated howls about a conflict of interest on the part of the governor’s son. Yet not one word about this has been published in a single Alabama newspaper. We are now pursuing funding from investigative journalism sources to begin shedding light on all the political shenanigans being conducted in the dark in this state, and teaming up with other reporters such as Roger Shuler to try and build the new Web Press infrastructure here. This story only scratches the surface of what we can accomplish. If you want to help, get in touch.

by Roger Shuler

Alabama attorney Rob Riley, who has a curious history of cashing in on the Don Siegelman prosecution, recently announced a $109-million settlement in a fraud lawsuit involving HealthSouth Corporation. But sources tell Legal Schnauzer that Riley himself is involved in a company that faces allegations it practices health-care fraud.

Riley, the son of Alabama governor and former Siegelman opponent Bob Riley, announced that HealthSouth investors had reached a settlement with the accounting firm Ernst and Young. The suit alleged that Ernst and Young failed to detect a fraud that almost destroyed Birmingham-based HealthSouth.

“We think it is a good settlement for the shareholders, many of whom thought they would never see any return on their investment,” Riley told The Birmingham News.

Riley is a curious choice to be lead counsel in a lawsuit alleging health-care fraud. That’s because, according to our sources, he is an officer in a company that appears to have engaged in health-care fraud–and perhaps still is.

Sources tell Legal Schnauzer that Riley is an owner and officer in a Birmingham-based company that provides physical-therapy services. The company is facing allegations that it has repeatedly defrauded federal health-care programs.

Alice Martin, U.S. attorney for the Northern District of Alabama, has received extensive information about the alleged fraud scheme involving Riley’s company, sources say. But Martin, a George W. Bush appointee and a long-time ally of Bob Riley, has refused to intervene in the case.

As we reported back in January, Martin has a history of providing favorable treatment to politically connected parties who have allegedly engaged in health-care fraud. She appears to be doing that again with the case involving Rob Riley’s company.

Riley’s connections to the HealthSouth lawsuit first came to light in April 2008, thanks to some expert reporting by Sam Stein, of Huffington Post.

Let’s review some of the key points from the Stein article:

* Months before Siegelman was charged, court documents show, Riley knew an indictment was coming and former HealthSouth CEO Richard Scrushy would be drawn into it;

* In what appears to be a case of legal-political “insider trading,” Riley managed to maneuver himself into a hugely profitable role as lead local counsel in a massive lawsuit against Scrushy, HealthSouth, Ernst and Young, and others;

* Riley snagged the lead counsel role even though most of his legal experience was in the area of medical malpractice. He had little or no experience in complex securities litigation;

* When the HealthSouth litigation began in 2003, Riley’s name was nowhere to be found. He joined the fray in January 2005, representing the New Mexico State Investment Council, a relatively new player in the case;

* Why did Riley rise to play a central role in the HealthSouth lawsuit? Almost certainly it was because of his ties to U.S. District Judge Mark Fuller, whom Riley knew held a grudge against Siegelman and would be the perfect hanging judge in the criminal case;

* Riley surely knew that his ties to Fuller would pay off in the civil case. That apparently happened in May 2006 when an investment banker testifying in the criminal case said HealthSouth had pressured him to come up with $250,000 for Siegelman’s education lottery fund;

* Shortly after this revelation in the criminal case, HealthSouth agreed to pay $445 million to settle its portion of the civil case. It was one of the largest settlements in securities-litigation history. And it appears that Rob Riley engineered it.

So what is the current status of the HealthSouth lawsuit? The $109 million payment from Ernst and Young appears to be set. An appeal issue has delayed disbursement of the $445 million from the 2006 settlement involving HealthSouth and several former officers and directors. Riley says a shareholder lawsuit still is pending against Scrushy and investment bank UBS AG.

Let’s do a little quick Schnauzer math. At least $554 million is waiting to be dispersed to multiple shareholders and plaintiffs’ attorneys. How massive is this litigation? The case file includes almost 1,600 documents, and roughly 150 plaintiffs’ lawyers have been involved.

Out of all of these attorneys, representing powerhouse firms from both coasts and some of the most prominent firms in Alabama, who was designated as “liaison counsel for shareholder lead plaintiff”?

Whose name was front and center on a motion for settlement filed on March 23, 2009? Why, none other than Rob Riley, who just happened to have all kinds of connections to the Siegelman/Scrushy criminal case.

Here are a couple of questions to ponder:

* Did any of the 150-plus lawyers who apparently allowed Riley to take a lead position in the HealthSouth lawsuit ever wonder if he might have more than a few conflicts of interest in the case? Were they concerned about the appearance of impropriety caused by Riley’s connections to the Siegelman criminal case? Or were they simply interested in the fact that Riley could help rake in big bucks — for them and for himself?

* Did any of these lawyers know — or did they even care — that Riley was an officer in a company that itself appeared to be engaged in health-care fraud? Would any of these 150 plaintiffs’ lawyers–or perhaps the numerous defense attorneys — think it relevant that lead counsel in the HealthSouth fraud litigation was himself an apparent actor in a fraud case connected to the delivery of health-care services?

* Aside from alleged fraud committed by Riley’s company, consider the conflict Riley appears to have in the HealthSouth case. Riley is an owner in a company that provides rehabilitation services. That’s the same area of medicine in which HealthSouth has made its name. If HealthSouth is greatly weakened in the rehabilitation field, do Riley and his business partners stand to profit?

Would some of these multimillion-dollar settlements fall apart if it is shown that Rob Riley has a massive conflict of interest — and is an owner in a company that allegedly engaged in health-care fraud while he purported to be fighting for victims of health-care fraud?

Stay tuned to Legal Schnauzer. We are going to be looking into all of these questions — and providing details about the case against Rob Riley’s company.

Originally published by the Legal Schnauzer. Republished here with permission. Roger Shuler is an experienced journalist who formerly wrote for the Birmingham Post-Herald, now defunct.

by Roger Shuler

George W. Bush might no longer be our president, but the political prosecutions that started under his watch are continuing — particularly here in Karl Rove’s Alabama.

Insurance executive John W. Goff is on trial this week in U.S. District Court in Montgomery, Alabama, charged with 26 counts of fraud, embezzlement, and conspiracy. The trial is expected to last two to three weeks, and when it is over, America could have a new political prisoner.

The case involves possible wrongdoing by GOP officials at the very top of Alabama government, and it has received a fair amount of national attention. But based on my research, it appears that no major Alabama newspaper is covering the trial.

Curious isn’t it, considering the case’s myriad connections to disgraced Republican lobbyist Jack Abramoff?

How did Goff get in trouble? He filed a lawsuit against Governor Bob Riley and other Republicans, claiming they had conspired to ruin his lucrative business. Goff’s lawsuit contained allegations that the governor and his son, Rob Riley, had wrongfully laundered Mississippi casino money into the 2002 Alabama gubernatorial campaign, using Riley’s connections to Abramoff and his partner, Michael Scanlon.

Desperate to keep the Goff lawsuit from reaching the discovery stage, Riley asked U.S. Attorney Leura Canary (who oversaw the Don Siegelman prosecution) to help make it “go away.” Canary, whose husband Bill Canary had assisted with Riley’s campaigns, was more than happy to help.

She hit Goff with criminal charges that mirror those that were settled in March 2005 in an administrative-law case brought by the Alabama Department of Insurance. At that time, 59 of 60 charges against Goff were dismissed, with him pleading guilty to one charge and paying a fine.

“I thought, until now, this whole matter was settled,” Goff said. And he had good reason to think that. Language in the 2005 settlement agreement says Goff was released from “any and all claims, demands, charges (and) prosecutions . . . related to the subject matter” in the administrative-law case.

The Goff case does not involve the prosecution of a high-profile former governor. But in many ways, it might smell worse than the Don Siegelman case.

Consider the timeline:
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