As spot-on as the Feds were in the case against former Qwest (NYSE:Q) CEO Joe Nacchio, they've fallen far short in multiple cases against former HealthSouth (NYSE:HLS) chief Richard Scrushy.

This, after all, is the guy who cashed out at least $99 million in stock as his company was collapsing. He then used that moola to finance a dirty PR campaign to beat 36 criminal counts of fraud, conspiracy, and a violation of the Sarbanes-Oxley act. I'd be impressed, if the whole affair didn't make me sick.

More bad news came yesterday. After initially seeking as much as $785 million in penalties and restitution, the SEC settled with Scrushy for $81 million. That stinks. But, sadly, it gets worse.

There are two conditions to Scrushy's deal. First, he doesn't have to admit guilt. And second, he only has to pay $9.5 million in real dollars. The SEC is crediting $71.5 million he's already paid or forfeited in three earlier cases. And if other pending cases against Scrushy collect $9.5 million or more, the SEC will collect -- wait for it -- zero.

Why settle for so little? Apparently, the SEC is concerned that Scrushy is suffering a cash crunch. Quoting his attorney, who spoke to The Associated Press, "There's a serious question on his ability to pay, and that's built into the papers."

But this, too, is a scandal. The SEC agreed to allow Scrushy to exclude the undisclosed value of his retirement accounts and a Birmingham-area estate. Anyone want to bet each is worth millions?

CBS's 60 Minutes interviewed Scrushy before his trial began -- apparently a part of his aggressive PR tactics. While he wouldn't allow the cameras to film his excesses, this story on the Web plays them back in excruciating detail: four estates, an expansive art collection, and a cellar filled with thousand-dollar bottles of wine. There's a serious question about Scrushy's ability to pay? That's like calling Hurricane Katrina a mild windstorm -- and just as insulting.

The SEC blew it with this deal. Aside from disgraced former Enron CEO Jeffrey Skilling and deceased former chairman Ken Lay, Scrushy was the do-anything, say-anything, name-everything-after-me robber baron of the late '90s bubble era. Letting him off the hook this easily sets back corporate governance at least as far as the conviction of Nacchio advanced it.

That's more than a shame. It's a crime.

Fool contributor Tim Beyers, who is ranked 2,136 out of more than 27,700 in our Motley Fool CAPS investor-intelligence database, didn't own shares in any of the companies mentioned in this article at the time of publication. All of his portfolio holdings can be found at Tim's Fool profile. His thoughts on Foolishness and investing may be found in his blog. The Motley Fool's disclosure policy is happy to be lead counsel for your portfolio.