Federal government spent roughly $2 million on forensic accounting, conducted by Navigant Consulting

Investor details loss of millions
Government rests after 12th witness testifies
Tuesday, March 4, 2008 3:10 AM
By Jodi Andes

THE COLUMBUS DISPATCH
Some have called it the largest example of private fraud this country has ever seen. The government rested its case yesterday against five former executives of National Century Financial Enterprises. The defense is up next.

The prosecution is counting on the testimony of a dozen witnesses in the case sparked by the collapse of the former Dublin-based health-care-financing company.

Assistant U.S. Attorney Doug Squires concluded the government's case yesterday afternoon after a Chicago investor, Terrence Glomski, told jurors how his clients lost nearly $50 million when National Century filed for bankruptcy.

Among his clients were New York City firefighters and police pension funds that were hit a little more than a year after the Sept. 11 terrorist attack.

Glomski was the 12th witness called by the government as the trial moved into its fifth week. That number represented about one-fourth of the 45 potential witnesses prosecutors told the court they were prepared to have testify.

National Century was a health-care-financing business that purchased accounts receivable from doctors and small hospitals. Health-care providers received about 83 cents for every dollar of the accounts receivable they sold to National Century. National Century kept the difference, part as profit and part to repay investors who were funding the business model.

But investors lost more than $1.9 billion when National Century filed for bankruptcy in November 2002.

Absent from the group of 12 who testified: former National Century executives John A. Snoble and Brian Stucke.

Snoble, the company's chief finance officer, is serving four years for his involvement, and Stucke, who ran the company's compliance department, has yet to be sentenced after pleading guilty to conspiracy to commit securities fraud.

Prosecutors recommended that both be given lighter sentences for helping the government with the case, and both were expected to testify.

Prosecutors won't say why they weren't called. Throughout the trial, Squires and other prosecutors have declined to comment.

In all, prosecutors called to the stand six former National Century employees, three officials from health-care companies that received funding, two investors and one forensic accountant.

The federal government spent roughly $2 million on forensic accounting, conducted by Navigant Consulting. The firm analyzed National Century's books and summarized the complex case.Yesterday, prosecutors closed with Glomski, who was an asset manager with Lincoln Capital, later known as Lehman Bros.

He said he spent two years observing National Century, ensuring it had a good history of repaying investors, before he felt comfortable investing.

Four of the five defendants on trial face what could amount to life in prison, if convicted. Rebecca S. Parrett, 59; Donald H. Ayers, 71; Roger S. Faulkenberry, 46; and Randolph H. Speer, 57, face 55 years or more each for charges of securities fraud, wire fraud, conspiracy and money laundering.

James E. Dierker, 40, who directed the company's marketing, is facing 25 years in prison if convicted on charges of money laundering and conspiracy.

jandes@dispatch.com