In The Matter Of Kenneth Livesay, CPA

IN THE MATTER OF KENNETH LIVESAY, CPA

On August 20, the Commission issued an Order Instituting Administrative
Proceedings Pursuant to Rule 102(e) of the Commission's Rules of
Practice, Making Findings and Imposing Remedial Sanctions (Order)
against Kenneth K. Livesay. The Order finds that Livesay, a certified
public accountant licensed to practice in the State of Alabama, served
as assistant controller of HealthSouth Corporation (HealthSouth) from
1989 until November 1999. The Order finds that on April 3, 2003, the
Commission filed a complaint against Livesay in SEC v. Kenneth K.
Livesay et al., (Civil Action No. CV-03-S-0758-S), and that on August
19, 2004, the court entered an order permanently enjoining Livesay, by
consent, from future violations of Section 17(a) of the Securities Act
of 1933 and Sections 10(b) and 13(b)(5) of the Securities Exchange Act
of 1934 and Rules 10b-5 and 13b2-1 thereunder, and from aiding and
abetting violations of Section 17(a) of the Securities Act and Sections
10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules
10b-5, 12b-20, 13a-1 and 13a-13 thereunder.

The Commission's complaint alleged, among other things, that Livesay
directed other HealthSouth employees to record fictitious assets on the
company's books which matched generally fraudulent overstatements of
income. The complaint alleged that the fraudulent entries were designed
to avoid detection by HealthSouth's independent auditors.

The Order also finds that on June 3, 2004, a judgment of conviction was
entered against Livesay in United States v. Livesay, CR-03-C-0182-S, in
the U.S. District Court for the Northern District of Alabama, finding
him guilty of one count of conspiracy to commit wire fraud, one count of
securities fraud and one count of willfully and knowingly falsifying
books and records of HealthSouth. As a result of this conviction,
Livesay was sentenced to 60 months probation, with the first six months
home detention, to pay a $10,000 fine, to forfeit $750,000 and to pay a
$200 assessment.

Based on the above, the Order forthwith suspends Livesay from appearing
or practicing before the Commission as an accountant. Livesay consented
to the issuance of the Order without admitting or denying any of the
allegations in the civil injunctive action. (Rel. 34-50225; AAE Rel.
2082; File No. 3-11593)