Updated from 10:58 a.m. EST

HealthSouth

(HLSH)

Chairman Richard Scrushy was indicted Tuesday on conspiracy, fraud and other criminal charges.

The indictment, which contains more than 85 counts, charges Scrushy with falsifying books, records and accounts at HealthSouth from the mid-1990s until this year. The government is also seeking the forfeiture of $278 million.

At a news confernece earlier Tuesday, prosecutors said Scrushy supervised a scheme to inflate earnings by $2.5 billion over a period of years and "personally vouched for false financial statements to the SEC to cover up."

Scrushy's attorney said his client would plead not-guilty.

Fifteen former HealthSouth officials have already acknowledged that they helped to overstate the firm's financial results.

The charges against Scrushy are the first against a chief executive officer of a large company under the Sarbanes-Oxley Act, which holds CEOs and CFOs criminally responsible for signing false

Securities and Exchange Commission

filings. Scrushy certified the accuracy of HealthSouth's results to the SEC on Aug. 14, 2002, after the law had gone into effect.

Experts say the certification will make it harder for Scrushy's lawyers to prove that he had no knowledge of the accounting scheme. The indictment was widely expected.