Siegelman, Scrushy, two others indicted

MONTGOMERY -- A federal grand jury indicted former Gov. Don Siegelman, ex-HealthSouth CEO Richard Scrushy and two of Siegelman's Cabinet members Wednesday on charges in a "widespread racketeering conspiracy,'' with prosecutors accusing Siegelman of soliciting more than $1 million in payoffs.

The prosecutors said Siegelman and former Chief of Staff Paul Hamrick violated racketeering laws beginning during his term as lieutenant governor and continuing during his term as governor from 1999 to 2003. The indictment, in part, alleges Scrushy made disguised payments totaling $500,000 to Siegelman's lottery campaign to get appointed to a key state hospital regulatory board.

Former state Transportation Director Gary Mack Roberts also was charged with mail and wire fraud for his alleged role influencing agency actions on behalf of Siegelman.

Siegelman called the long-running grand jury probe a political witch hunt by Republican prosecutors trying to derail his Democratic campaign for a second term in 2006.

"I never put a dime in my pocket that didn't belong there,'' Siegelman said in an interview Wednesday night.

Noel Hillman, chief of the Justice Department's public integrity section, said the case was reviewed by top department officials in Washington before the indictment was issued.

"This case has nothing to do with politics. Public integrity does not do politics,'' he said.

The prosecutors said the case against the four developed from three others with ties to the Siegelman administration who pleaded guilty to public corruption charges in 2003: Nick Bailey, a former executive secretary to Siegelman; Lanny Young, a former lobbyist and landfill developer; and Curtis Kirsch, a Montgomery architect who did work for the state during the Siegelman administration.

The indictment charges Siegelman with racketeering, bribery, mail and wire fraud, extortion and obstruction of justice, and it charges Hamrick with racketeering, wire and mail fraud and obstruction of justice. It alleges that Siegelman received $204,200 and an all-terrain vehicle from Young and that Hamrick received $46,000 from Young.

In return, they are accused of helping Young with official state business, including getting a tax break for Waste Management's hazardous waste landfill in Emelle, getting legislation passed to allow the Talladega Superspeedway to sell liquor on Sunday, and selecting a company in which he was involved to build two state warehouses.

Siegelman is also accused of soliciting $250,000 from Montgomery businessman Forrest "Mac'' Marcato, whose highway striping product Rainline was used by the state Department of Transportation during the Siegelman administration.

Siegelman is accused of soliciting $100,000 -- and accepting $40,000 -- from toll bridge developer Jimmy Lynn Allen in return for favorable state action on his toll bridge in Tuscaloosa County and on Rainline, where Allen was an investor. Roberts, who worked for Allen before joining Siegelman's Cabinet, is accused of helping.

In all, Siegelman is accused of soliciting more than $1 million for himself, his 1998 campaign for governor, or his unsuccessful bid in 1999 to get Alabama voters to approve a state lottery. Prosecutors say in he took official state actions in return for the money.

Siegelman said the charges were made by "obsessed government officials who spent millions in tax dollars in a pathetic attempt to control the election for governor.''

Siegelman said he has no intentions of dropping out of next year's governor's race.

"When this trial is over, we will be shown to be absolutely innocent of these charges. The people of Alabama will be able to see it was a farce and a waste of taxpayer's money,'' the former governor said.

Hamrick said he was "absolutely'' innocent of any wrongdoing and said federal prosecutors had been trying to find wrongdoing in the Siegelman administration for more than five years.

"One of the things that's very obvious is that if there was anything that had gone wrong it wouldn't take six years to figure out how to make a charge,'' Hamrick said.

The charges come one year after a federal judge threw out a charge accusing Siegelman and Hamrick of rigging bids on state Medicaid contracts. That case was investigated by a separate federal grand jury in Birmingham and was not connected to the grand jury in Montgomery that issued the indictment Wednesday.

The new indictment claims Scrushy made "two disguised payments'' totaling $500,000 to Siegelman's unsuccessful campaign for a state lottery in 1999 in exchange for Siegelman appointing the HealthSouth chief to the state's Certificate of Need Review Board, which decides on hospital expansions. Scrushy was charged with bribery and mail fraud in an indictment filed May 17 but kept under seal until the new indictment Wednesday, the prosecutors said.

In June, Scrushy was acquitted on all charges in a criminal fraud case stemming from a massive accounting fraud at the Birmingham-based medical services chain.

Federal prosecutor Louis Franklin said the Scrushy indictment in Montgomery was not disclosed in May because prosecutors didn't want it to influence his other case.

Roberts did not immediately return a call seeking comment.

A spokesman for Scrushy said he would have a news conference in Birmingham today.

The indictment had both a personal and political impact on Siegelman.

Siegelman's opponent for the Democratic nomination for governor, Lt. Gov. Lucy Baxley, said, "This is a very sad day for Alabama because our people want truth and honesty in government.''

Jess Brown, a political science professor at Athens State University, said it will be difficult for Siegelman to raise money for a campaign. The indictment could either give Baxley "an easy primary,'' or it could prompt another candidate to enter the race, Brown said.

If Siegelman remains in the race and is found not guilty by a jury, it might increase his appeal with some voters.

"I don't think it's outside the realm of possibility that this could give Siegelman added credibility with some constituencies within the party,'' Brown said.