2006; however, he was defeated in the primary by Lt. Governor Lucy Baxley, former wife of the controversial 1986 gubernatorial nominee, former attorney general and lieutenant governor Bill Baxley. In large part because of Siegelman's indictment for bribery and racketeering, Baxley was able to secure important endorsements from the Alabama Democratic Conference, the New South Coalition, and the Alabama State Employees Association. Although outspent by Siegelman, and criticized on her call for a raise of the state's minimum wage by $1, Baxley coasted to a relatively easy primary win of 60% to Siegelman's 36%. She lost the general election for governor later that year to Republican Bob Riley, 42-58 percent. Federal prosecution 2004 trial On May 27, 2004, Siegelman was indicted by the federal government for fraud. The day after his trial began in October 2004, prosecutors dropped all charges after U.S. District Judge U. W. Clemon had thrown out much of the prosecution's evidence, stating that no new charges could be refiled based on the disallowed evidence. 2006 conviction On October 26, 2005, Siegelman was indicted on new charges of bribery and mail fraud in connection with Richard M. Scrushy, founder and former CEO of HealthSouth. Two former Siegelman aides were charged in the indictment as well. Siegelman was accused of trading government favors for campaign donations as lieutenant governor from 1995 to 1999, and as governor from 1999 to 2003. Scrushy was accused of arranging $500,000 in donations to Siegelman's 1999 campaign for a state lottery fund for universal education, in exchange for a seat on a state hospital regulatory board, a non-paying position. Scrushy had been appointed and served on the state hospital regulatory board during the past three Republican administrations. He had been acquitted in 2005 of charges of securities fraud for his part in the HealthSouth Corporation fraud scandal which cost shareholders billions. During his trial, Siegelman continued his campaign for reelection, running in the Democratic primary against Lt. Governor Lucy Baxley and minor candidates. On June 6, despite Baxley's relatively low-profile campaign, she defeated Siegelman with almost 60% of the vote compared to Siegelman's 36%. On June 29, 2006, three weeks after Siegelman lost the primary, a federal jury found both Siegelman and Scrushy guilty on seven of the 33 felony counts in the indictment. Two co-defendants, Siegelman's former chief of staff, Paul Hamrick and his transportation director, Mack Roberts, were acquitted of all