Gibson had served her prison sentence

Thomson Financial News
Tape played in witness tampering case
03.21.08, 11:54 AM ET
COLUMBUS, Ohio (AP) - A former health care executive accused of witness tampering in a $1.9 billion corporate fraud case suggested that a key witness tell prosecutors that she wasn't familiar with the charges against him, according to a taped phone conversation played in federal court Friday.

Lance Poulsen, founder and former chief executive officer of National Century Financial (other-otc: CYFL.PK - news - people ) Enterprises, said on the tape that the star witness should explain that her previous statements to prosecutors were based on old facts.

Poulsen said the witness should say, 'But now, there is a new set of charges and it's a new indictment and I'm not familiar with it,' Poulsen said on the recording.

Prosecutors say the witness, Sherry Gibson, a former National Century executive vice president, was offered hundreds of thousands of dollars if she could 'have amnesia' when it came time to testify.

Before its 2002 bankruptcy, the suburban Dublin-based company was described as the largest health care financing company in the country.
Poulsen goes on trial in August on multiple charges of conspiracy, securities and wire fraud and money laundering. The government alleges he misled investors about unsecured loans his company was providing health care companies such as hospitals and nursing homes.

Before that trial, he is defending himself against charges that he and longtime acquaintance Karl Demmler, a Columbus bar and restaurant owner, teamed up to persuade the witness to help Poulsen beat the fraud case against him.

Poulsen and Demmler have both pleaded not guilty.

Gibson pleaded guilty in 2003 to a lesser charge of securities fraud in exchange for helping prosecutors.

Gibson had served her prison sentence and was back in Columbus last summer when she had dinner on June 19 with Demmler and he proposed she help Poulsen, Gibson testified this week.

Demmler said, 'that Lance wanted to make me whole,' Gibson said Tuesday under questioning by federal trial attorney Leo Wise.

Gibson said she was under no illusions about what Demmler meant.

'The only thing I had to do with Lance Poulsen was to be a material witness in his trial,' Gibson testified Tuesday.

After that meeting, Gibson contacted the FBI and agreed to help them investigate Poulsen, she said. Over the next several weeks she met with Demmler at area restaurants for hours at a time while investigators recorded their conversations.

'I'm not asking you to lie,' Demmler says in a recording played Tuesday. 'You just got a mental lapse.'

Gibson 'could have amnesia,' Demmler says in another recording played Wednesday.

Prosecutors allege Poulsen promised Gibson $500,000 in monthly payments of $5,000.

National Century offered financing to health care providers by purchasing at a discount the debt owed the companies -- also known as accounts receivable -- so the companies wouldn't have to wait for insurance payments. National Century then collected the full amount of the payments.

The government says company officials moved money between accounts to cover shortfalls, fabricated data and loaded false information on a company computer system.

Earlier this month, a federal jury convicted five former National Century executives of fraud charges stemming from their role in the scheme.



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