The largest case of private fraud in the nation's history

Tuesday, March 4, 2008 - 12:38 PM EST
Judge rules against acquittal motion in National Century case
Business First of Columbus - by Kevin Kemper Business First


Executives standing trial for what has been called the largest case of private fraud in the nation's history began their defense Tuesday morning after losing a motion for acquittal on the argument that the government had not proven its case.

Defense attorneys had filed for a "Rule 29" acquittal for five former National Century Financial Enterprises Inc. executives standing trial on fraud and money laundering charges. Such a motion is made when the defense believes the government did not present enough evidence to convict by the time it rests its case.

The government called its last witness Monday, ending four weeks of testimony in its effort to send Rebecca Parrett, Donald Ayers, Roger Faulkenberry, Randolph Speer and James Dierker to prison for 30 years to life. Jurors heard testimony from former National Century employees William Parizek, Jon Beacham, Jessica Bily and Sherry Gibson, along with others.

U.S. District Court Judge Algenon L. Marbley denied the defense motion, saying he believed the government had presented enough evidence for a conviction. The defendants are facing charges of fraud, conspiracy and money laundering for their alleged involvement in Dublin-based National Century's nearly $3 billion collapse and bankruptcy in 2002.

National Century was a financier of last resort for health-care providers. The firm specialized in buying receivables from medical businesses at a discount, giving them cash up front so they could pay their bills. It then packaged the receivables as asset-backed bonds and sold them to investors.

Once the jury was called back in, the defense called its first witness, Robert J. De Luca, a health-care accounting expert hired by the defense at a rate of $525 per hour. De Luca gave his opinion of National Century's accounting practices.

"I've never seen a receivable defined in so many different ways," said De Luca, a consultant and owner of Chads Ford, Pa.-based IMA Consulting.

In the health-care industry, De Luca said, receivables are generally defined as bills for procedures done or care given in the past - not the future. The government has alleged that National Century illegally gave millions of dollars to clients that were owned by Ayers, Parrett and National Century CEO Lance Poulsen. The defense, meanwhile, has argued that the payments were actually advances for future receivables on care that had not yet been given.

Based on his examination of National Century's contracts with clients and investors, De Luca said the company defined receivables as almost anything, which meant that National Century's governing documents allowed those advances.

Under cross-examination, De Luca admitted that defense attorneys set the parameters of his research into National Century. He also admitted he had no expertise in securities or securities law.