Aaron Beam

Founder and first Chief Financial Officer of HealthSouth

Aaron Beam is a popular, highly regarded speaker at universities, healthcare companies, auditor meetings and conventions, securities training seminars and ethics institutes across the U.S.  He has spoken to student audiences as a guest lecturer at many business schools (Univ. of Chicago, LSU, UAB, Penn State, Stanford, Arizona State, and over fifty other schools) over the past four years.


Mr. Beam was the first CFO at Healthsouth Corp., and as a co-founder witnessed first-hand the series of accounting, stock manipulation and leadership failures that led Healthsouth to the $2B securities fraud scandal and ultimate prosecutions of Richard Scrushy. He relates to students and professionals the heights of success, followed by the unethical and illegal mistakes that led to his professional downfall. Serving three months in federal prison for his role in approving fraudulent quarterly numbers in 1996 and losing his CPA credentials, led Mr. Beam to his current speaking career; trying to make a positive difference by educating others about the pitfalls of unethical business practices. Through his Ethics First message he identifies early warning signs, influences and the bad choices he and others made at Healthsouth, allowing the audience to apply what they learn to their business practices and the organization's culture and environment.


The Story

Aaron Beam Jr.'s story reads like the "Great American Success Story": start a healthcare company from zero, raise some venture capital, take the company public in two years, become a millionaire overnight and see the company become the darling of Wall Street. But the success story didn't end there. Instead, Beam found himself in the middle of a corporate scandal, lost almost everything and ended up in prison. That's not the way success stories are supposed to end, but for Beam, that is the harsh reality.
"I think others can learn from my story," Beam says. "From how I started a major company, got involved in the fraud while serving as CFO; and more importantly, the human story of the pain of going through a scandalous trial and to prison."
In short, it's the story of how something really great went horribly wrong and the price one man had to pay. Beam hopes that sharing his perspective, as a key player in one of the biggest corporate frauds in recent history, can help future business leaders avoid making the same mistakes that he, and the four CFOs who succeeded him - made.


The company was HealthSouth, the nation's largest provider of outpatient surgery and rehabilitative services, which Beam co-founded in 1984. As revenues grew to more than $3.5 billion, Beam enjoyed the many rewards that corporate success can bring - until 1996, when the company's earnings fell just slightly short of its goal. That's when, according to Beam, HealthSouth's chief executive, Richard Scrushy, ordered the books to be fixed.
"HealthSouth was a very viable company," Beam explains. "Our earnings projection was just shy of what Wall Street was expecting in 1996 - we were 90-95% there. When it got to the point that we couldn't legitimately make our numbers, Richard couldn't accept that. He's such an intimidating person and led the company as a maniacal dictator. He convinced us to fudge that 5-10% so we would make our numbers - he made us believe that we'd make it up in the next quarter. Unfortunately, my lead accountant said he thought he could make the entries and hide them from the auditors, and Richard said, 'let's do it.' The correct thing to do was to say no to him, stand up to him, but I didn't. Obviously, I was weak of character."
And many people in his position would have failed to stand up to a bully like Scrushy, only better awareness of the real-world pressures and warning signs can help tomorrow's business leaders make better ethical decisions.

But the next quarter, earnings fell short again. "We didn't make our numbers, and he gave us the same speech," Beam recalls. "I did it for four quarters - for a year - then I couldn't live with it anymore."
Anguished and guilt-ridden, Beam resigned from the company in 1997. As the years passed, hearing nothing in the media, he mistakenly believed that HealthSouth was indeed making its numbers. In reality, the fraud continued until 2003, when it was made public by a whistleblower, one of Beam's successors. Beam, and each of the other four CFOs testified against Scrushy when the case when to trial in 2005. In the meantime, Beam pled guilty to bank fraud. "You look back and think, What was I thinking? Why didn't I just do the right thing? But when you're caught up in the heat of battle, it didn't seem so simple," he recalls. "I've learned my lesson. Today, if I was faced with a similar kind of thing, I know I would do the right thing." I hope that by sharing my experiences with students and corporate audiences, I can help people learn what they might encounter and be prepared to do the right thing.


Beam eventually served three months in a federal prison for his part in cooking the books. Looking back at that time, he reflects on the experience. "Being in jail is rough. But, it was a minimum security prison - you could literally, walk out of the prison if you wanted to. But it is prison. You can only make a certain number of phone calls to your family, you only have visitors on weekends and you have to be in bed by 10:00 every night. You're in a barracks, a bunk bed, right up against 20 other guys. There's no privacy. When Beam looks back on his time in prison, he understands how fortunate he was. "I was only in for three months - that's rare. Most people connected with Healthsouth were there for multiple years. If I had been incarcerated for 5 years or so, that would have been hard to take. It was emotional, a tough thing. The embarrassment to your family and friends - that was the hardest thing. But my family loved me and stuck by me."


There was, of course, a price to pay in addition to prison time. "We lost nearly everything we had," Beam explains. "We had a lot of worldly things, three or four homes, cars and amenities. But they don't mean that much. Now that all this is behind us, my wife and I are as happy as we've ever been  In fact, I'm much happier now than when I had all that stuff." Stressing the positive outcome of an extremely negative experience is an important part of Beam's story. "It helped me realize what really, truly is important - your family and your health. If you've got that, you're okay."


Today, HealthSouth remains a viable company, the largest in its field. "In a way, I can still take pride in HealthSouth," says Beam. "It's a great company." With the HealthSouth turmoil behind him, Beam is focusing on the future. He believes it's his obligation to share his story so that others won't be led astray. He understands the pressures that abound in the boardroom. He wants to educate today's business leaders - and the leaders of tomorrow - to the pitfalls to watch for along the road to success.


"There are many unscrupulous leaders heading companies and major corporations," he says. "They have huge egos, they intimidate people, they totally believe that they are right about everything, they have no empathy for other people. If you're in the workplace and you have a boss like that, be aware. Realize that one day, you could be asked to do something you shouldn't do. Don't be overly influenced by others to the point that you are willing to behave unethically, because its a slippery slope to criminal acts.” You have to develop moral character and be able to apply it to how you conduct yourself in the business world. The pressure to make earnings, to make money, can lead you down a path that you shouldn't go."


Aaron Beam, Jr. learned a lesson the hard way. His is a cautionary tale with a moral for all: "You have to stand up for what you believe in - or you may be the guy that goes to prison and pays the price."