BALDY i have never accused you of anything, you know
as well as i do who i talking about !!!
OFF R.G.
Very Intresting !!!!!!!!
BE CAREFULL WHAT YOU SAY
HealthSouth's CEO Exposes,
Sues Anonymous Online Critics
By MICHAEL MOSS
Staff Reporter of THE WALL STREET JOURNAL
BIRMINGHAM, Ala. -- Richard Scrushy, the chief executive officer of
HealthSouth Corp., was making the rounds of investor conferences last fall
when analysts pulled him aside to ask if he had seen the latest Internet
banter. A bulletin board devoted to his company had turned into a
broadside.
One posting called the company, which
provides rehabilitation services, a house of
cards starting to tumble. Others predicted
that he would be probed for billing fraud. A
series of messages alleged that executives were swapping their spouses,
with one poster going so far as to boast of his supposed affair with Mr.
Scrushy's wife.
Hardly a cybersophisticate, Mr. Scrushy had never even heard of the
electronic board owned by Yahoo! Inc., where the messages were piling
up. "Here I am, the CEO of a multibillion-dollar company, and I'm having
to answer about what some weirdo has said on a message board," Mr.
Scrushy fumes.
So he jumped into the fray. Using cybersleuths and
shoe-leather detectives, Mr. Scrushy has begun
unmasking the message writers on his board, and
he is suing some to put a stop to their postings.
One enthusiast turned out to be the husband of a
disgruntled employee. Another was an
ex-employee.
Many of the anonymous posters aren't even aware
that HealthSouth knows who they are and may sue
those whose messages it deems defamatory. The
latest target for its detectives is someone with the
online name "gletel," who recently posted that
HealthSouth had been downgraded. It hadn't been.
Until the Internet came along, the traffic in opinion about stocks and bonds
was largely -- and for the most part calmly -- controlled by Wall Street
analysts. The message boards, however, let all comers vent their feelings,
and that's the root of a growing problem for corporate executives: To
ignore the postings is to risk seeing them grow even more outrageous and
spread.
Some companies have gone straight to the
message boards to try reasoning with posters.
More are trying to thwart those of their online
critics who promulgate falsehoods, which is
complicated by posters' use of secrecy
software to protect their anonymity. When the
brokerage firm E*Trade Group Inc. discovered that a problematic poster
on its Yahoo board was using secrecy software, it hired a computer whiz
to slice through the shields. "My non-anonymizer was better than his
anonymizer," crows Henry Carter, E*Trade's vice president for
compliance.
Liars and Schemers
Mr. Scrushy calls some of his online detractors liars and schemers. But the
cybercritics and their defenders see an overreaction to what in some
instances is fair and accurate commentary, and they fear that message
boards will be stripped of the free expression that has made them so
popular.
A few have begun fighting what they view as corporate intimidation. They
include Kimberly Landry, a former HealthSouth employee who posted
many of the more salacious messages on the Yahoo board. Sued by
HealthSouth for defamation, Ms. Landry is demanding access to corporate
records to prove that her postings were correct. Her attorney, Jill Craft,
asserts: "Truth is an absolute defense, and the truth will come out."
The HealthSouth board began on an upbeat note when Yahoo launched it
in late 1997. "This has an awesome recommendation by the pros. Check it
out," reads the first posting, concerning HealthSouth stock, by Loony987.
Yahoo now has several thousand of these boards, each dedicated to a
single company. Yahoo prohibits vulgarity, defamation and other offensive
behavior like posting junk mail, but it doesn't screen or edit messages
before they are posted, and the discourse varies tremendously.
Serious investors find merit in the boards. Paul Kloepper, a physician's
assistant from Hastings, Neb., scans the HealthSouth board as an "early
warning system" for public reports that he might not otherwise hear about.
Analyst Howard Capek of Warburg Dillon Read in New York, says, "At
the end of the day, I'm not going to put a buy, sell or hold recommendation
based on a bulletin-board posting. But looking at and monitoring the
boards is something a prudent analyst has to do."
Initially, the HealthSouth chatter dwelled on the company's niche in
providing clinical rehabilitative care, and the finer points of its earnings
ratios. But a seismic shift occurred last summer when the company's stock
price began to ebb. "Get out and stay out," wrote dcm555 on July 22. "I
can't believe anyone would invest long-term in this pyramid scheme calling
itself a company."
Jr111 replied: "You may not be far wrong. I have heard rumors of a
federal lawsuit for several weeks now." No such suit materialized.
Mr. Scrushy presented an easy target. Self-made and brash, he founded
HealthSouth 15 years ago with $50,000, and he doesn't hide his pride in
reaching sales last year of $4 billion. His 1997 compensation made
headlines: $106.8 million including bonus and stock gains.
Now 46 years old, Mr. Scrushy uses a helicopter and five private planes
to reach the company's more than 1,900 facilities in all 50 states, while the
new 73-acre headquarters complex in Birmingham displays his name in tall
script. The grounds are patrolled by a security force; the CEO says he has
had several death threats in recent years.
Were They Duped?
Posters poked fun at Mr. Scrushy's executive style and business practices,
but the message board went wild last September when HealthSouth
disclosed that it would face pricing pressures from its managed-care
customers, and its share price plunged to below $8 from the $30 peak it
had reached that summer. In composite trading on the New York Stock
Exchange, HealthSouth closed Tuesday at $15.125 a share, up 37.5
cents. "WE WERE ALL DUPED!!!" Bonesman3 wrote.
Worse was to come. Scurrilous messages from one poster proclaimed that
Mr. Scrushy's wife, Leslie, who was seven months pregnant at the time,
was having an affair with him. Investors were calling to ask about various
messages. And the head of a company that Mr. Scrushy was trying to buy
raised the sexcapade talk as a concern. "He brought it up at dinner," Mr.
Scrushy says. The deal never gelled.
Mr. Scrushy had staffers monitor the board for the worst postings, and
when their printouts turned into a stream he phoned Bruce Fischman, a
Miami attorney who handles various matters for the company. Mr.
Fischman recalls: "He was angry. He was frustrated. And the cause for his
frustration was that he didn't know how to stop the bleeding."
Until then, companies aggrieved by an Internet posting mostly had sued the
message-board provider. But only those providers who tried to control
what moved through their system have been held liable by the courts --
much as a publisher, but not a distributor, is subject to libel law.
With Yahoo taking a hands-off stance, Mr. Fischman instead sued the
message writers, starting with a "John Doe" filing in Florida's Dade County
on Oct. 16 that let him subpoena Yahoo records.
Yahoo warns its users that it might be legally compelled to release
information on them. HealthSouth asked for records on each of its board's
more than 300 anonymous posters, and Yahoo turned over only about 20.
Yahoo officials say HealthSouth's request was "overly broad."
'Scrushy Should Resign'
On Oct. 27, just four days after Mr. Fischman got his first Yahoo records,
Peter Krum, 33, was in his office by the loading dock at the Pennsylvania
State University Conference Center Hotel, sending a message to the
Yahoo board: "Scrushy should resign." Hours later, the campus security
chief came through the door wanting to know if Mr. Krum was Dirk
Diggler, the author of that message and dozens of others, including the
"house of cards" characterization of the company. He was.
Mr. Fischman had tracked Mr. Krum down by computer, and a detective
he hired then filled in the blanks. Mr. Krum had previously worked for
HealthSouth as a hospital food-service manager. He didn't own any
company stock. He was married, and his wife was pregnant with their first
child. He had boasted on the board of an affair with Mrs. Scrushy, but
what alarmed Mr. Scrushy was his claim to have been inside the Scrushy
home.
Mr. Scrushy and his wife sued Mr. Krum and pressed criminal charges of
harassment and stalking, which were dropped when Mr. Krum signed an
apology stating he had made everything up. He lost his $35,000-a-year
manager's job at Penn State. Mr. Krum, who declined to comment for this
article, said in court records: "It was a really stupid game. I did not intend
to harm anyone, but this was a game."
HealthSouth asked Yahoo to remove all of Mr. Krum's postings, but some
were left on the board. Asked how they made this decision, Yahoo
officials referred only to their "terms and conditions," which prohibit any
posting that is "unlawful, harmful ... or otherwise objectionable."
Mr. Scrushy points out that the board has turned almost cordial since he
went on the hunt.
Legal observers say it's difficult to foresee what factors might play out in a
message-board defamation case that goes to trial. Are the boards even
seen as believable? Can anyone be harmed by the chatter? "There are
good arguments on both sides," says Lyrissa Barnett Lidsky, an associate
professor at the University of Florida College of Law.
Mr. Scrushy says he knows where to draw the line. "If somebody's got an
opinion that I'm making too much money ... or somebody doesn't think
that we should have hired this person, or bought this company, that's fine. .
. . But when they come on and have a direct assault about an individual, or
are making a statement that the company's earnings are going to be X
amount, and they're not, I have a problem with that. That's the kind of stuff
that should be dealt with."
As for HealthSouth's defamation suit against Ms. Landry, the company is
citing such postings as "Screwshe and his cronies are all megalomaniacs.
Instead of having sex they get off on their power and positions." She called
Mr. Scrushy a "bozo" and a "crook" and predicted the company stock
would decline because it paid too much for its surgery centers.
HealthSouth says the postings were false, though believable enough to
cause damage. Ms. Landry is now asking HealthSouth for a long list of
financial and personal records that she says will prove she was right.
Among them: Mr. Scrushy's income statements and expense reports back
to 1995 and flight records for the company's aircraft.
"This is a First Amendment issue," says Ms. Landry's attorney, Ms. Craft.
Mr. Fischman has filed objections to the requests and says the company
will prevail.
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