National Century described itself as the country's largest health care finance company before its 2002 bankruptcy.

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Closing remarks in National Century case
03.10.08, 6:14 PM ET

COLUMBUS, Ohio (AP) - Executives of a failed health care company turned a good business into 'a pack of lies' as part of a scheme that defrauded investors of $1.9 billion, a federal prosecutor said Monday during closing statements in a month-old white collar crime trial.

Two former owners and three former executives of National Century Financial (other-otc: CYFL.PK - news - people ) Enterprises broke promises, misled investors and tried to cover up wrongdoing, Assistant U.S. Attorney Wes Porter said in U.S. District Court.

'These defendants directed the course of National Century and turned an otherwise good business model into a pack of lies and a constant need to cover up how this business actually worked,' Porter told jurors.

Prosecutors argue executives of the company, based in suburban Dublin, authorized millions in unsecured loans to health care providers, then misled investors about those loans.

Attorneys for the five defendants say the government used an incorrect definition to determine what patients and insurance companies owed health care providers.

They also argue the prosecutors are taking the company's activities out of context by showing jurors only a tiny slice of National Century's operations.

'They don't want you to look at the whole company,' said defense attorney Javier Armengau. 'If you look at the whole company, you will never find an attempt to defraud.'

Armengau represents Roger Faulkenberry, a former executive vice president who raised money from investors. Armengau said executives of the company already convicted of fraud charges did not tell Faulkenberry the company's information was bad.

Prosecutors detailed only 400 of 300,000 financial transactions, said defense attorney Frederick Benton in his closing statement.

He accused the government of basing its case on 'a bogus foundation' involving 'a partial and manipulative presentation of facts' and witnesses who didn't understand the evidence they testified about.

Benton represents Randy Speer, National Century's former chief financial officer. He said Speer was not responsible for the investor reports. Benton said authority for those reports fell to Sherry Gibson, a former company executive vice president who has pleaded guilty to charges of conspiracy to commit fraud, and Lance Poulsen, the company's founder and president.

Poulsen faces a trial on similar fraud charges later this year.

Defense arguments were scheduled to continue Tuesday, followed by the government's chance to respond.

National Century described itself as the country's largest health care finance company before its 2002 bankruptcy.The company offered financing to small hospitals, nursing homes and other health care providers by purchasing their debt -- also known as accounts receivable -- and giving them cash to cover expenses.

Under the arrangement, the smaller companies didn't have to wait for reimbursement from a patient's insurance company, and National Century kept a fee or percentage of what was collected.


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