The former head of HealthSouth said in court filings Monday that the Sarbanes-Oxley law he is accused of breaking is unconstitutional and that the government used it to file multiple charges for the same conduct to inflate the gravity of its case against him. According to the Birmingham News:
The other motion asks the court to dismiss the three counts of violating the Sarbanes-Oxley Act, a 2001 federal law that increased penalties on corporate executives who lie, saying the law is unconstitutionally vague and unfair. The Sarbanes-Oxley law is unconstitutional because it breaks violations into technical, non-material ones and willful ones, the first motion says. That means a corporate finance staffer who makes a non-material mistake on a financial statement can’t be held criminally liable.
But the chief executive who certifies the report as accurate can be held criminally liable, the motion says. U.S. due process “doesn’t permit the imposition of such Draconian secondary liability when the primary conduct itself isn’t criminal,” the motion reads. The law is also flawed because it imposes criminal penalties not only for filing false financial reports but also for not filing accurate ones. That means a chief executive who fails to sign a financial statement - from negligence, concern over its accuracy, anything - can be charged with a crime. “A wholly innocent CEO can be damned if he does and damned if he doesn’t,” the Scrushy motion says.