The Wolf of Alabama: How Aaron Beam embezzled millions

Story by Tiara Burgess, Student Reporter

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Photo by Larry Massey, Photo Chief.
Aaron Beam is now classified as a felon after embezzling money from his company.

Last Tuesday the School of Business had guest speaker Aaron Beam talk about his journey with accounting, embezzlement, and what he learned from it. Beam tells us that he first met Richard M. Scrushy when he answered an ad in the paper.

He was interviewed by Scrushy for a controller position at the Life Mart which was a hospital company. “After working for him for almost four years, I came in one morning and I picked up my Wallstreet Journal… and the headline was AMI Life Mart to Merge,” Beam said, “I was afraid I was going to lose my job.”

AMI, a much larger hospital company in California, was going to merge with the company Beam was working for and headquarters were going to be in California.

Scrushy started a start up company with Beam as his CFO. They moved to Alabama and they opened their first out patient center in Little Rock.

“We tried to make it look like a fitness center; we did not want the patient to feel like were going back into a building full of sick people and it worked.” Their outpatient center made more the first year than they had projected.

Their company motto was designed by Scruchy as pulling a wagon and working together. Beam explains how when he was younger that a physician would not cut on you at all unless you were inside a hospital.

“Today, 60 percent of all surgeries are done out patient,” Beam said, “They cut on you that day, you go home that day.”

Within less than two years they were talking about going public with their company. People came to talk with them and did not think it was a good idea for them to go public so soon.

“They said look, we like the way your facility looks, we think your management team is sound, you have a good business plan, but your still losing money; you’re a startup company.” Beam said.

Beam explained how Scruchy yelled at him in front of everyone about how poor his accounting skills were. Beam redid all the numbers and when he was done the numbers looked alright. After the accounting change they were able to go public. “We registered to sell tentatively 2 million shares, tentatively priced at 8-10 dollars a share.” They went on road shows to talk about their company and get the public eye’s opinion on if their company should go public or not.

At the end of the road show they were able to go public with $6.50 a share. Beams said, “In 1995, we were the largest company in Alabama.” Beam explained how Scruchy met with stock analysts yearly to find out how much they needed to make for them to keep buying their stock and Scrushy always promised them to get it done.

He knew they couldn’t get their numbers to where they needed to be so Bean started doing “aggressive accounting”. “We ran our numbers, they stink, lets change the way we do our accounting,” Bean said, “that’s not good accounting.”

In 1996, Beam and Bill Owens their chief accountant decided to tell Scrushy that they weren’t going to mess with the numbers anymore. “He said here’s the problem, you guys have gone lazy, your smart, you know how to fix these numbers, get back in your office and do it.” Beam said.

Beam explained to us that he should have stopped right then and stood up to Scrushy, but he didn’t. In September of 1997, Beam left the company and the country, sold his stock, and he moved to south Alabama.

Beam said that after a year of retirement, Scrushy called him up to have lunch with him and said he wanted him back on the team and that the numbers were fine. “I told him no and I drove back home.” Beam said.

Beam explained how in the spring of 2003, many people came forward who were associated with the accounting fraud and that’s when beam hired a criminal attorney.

The trial lasted six months and Scrushy was found not guilty of all charges. Beam was sentenced to prison for three months. “I got out of prison; I am now a felon,” Beam said, “I will be known as a felon for the rest of my life.”

Beam explained that it was hard to get a job when he was a felon, but he finally got a job mowing lawns and he did that for about three years and then he started talking to schools about what had happened.