Federal jury convicts Ohio executives charged in $1.9 billion fraudCOLUMBUS, Ohio (AP) -- A federal court verdict that convicted five health care executives of defrauding investors of $1.9 billion falls hard on a man who wasn't even in the courtroom.
Lance Poulsen, founder and former chief executive officer of National Century Financial Enterprises, goes on trial Monday in the first of two trials stemming from indictments in what prosecutors liken to other big white collar crime cases like Enron or WorldCom.
At least nine former executives of Poulsen's company, once described as the nation's largest health care financing firm, have now been convicted of numerous charges, including securities and wire fraud and money laundering.
The Justice Department said the five defendants convicted by a jury Thursday could each face several dozen years in prison with exact amounts varying based on the individual counts they were convicted of.
Actual sentences are usually much lower than the maximum penalties. In court, U.S. District Judge Algenon Marbley described a statutory guideline of 20 years.
The defendants and their attorneys listened without emotion as Marbley read the verdicts from a 27-count indictment one by one. Some of the defendants' family members appeared stunned and wept in the courtroom after the jury left.
Convicted of all counts against them were: Donald Ayers, the company's former chief operating officer; James Dierker, the company's former vice president of client development; Roger Faulkenberry, a former executive vice president who raised money from investors; Rebecca Parrett, the company's former vice chairman; and Randy Speer, National Century's former chief financial officer.
Judge Marbley, over the objections of government prosecutors, allowed the defendants to remain free while they await sentencing but required them wear an electronic monitoring devices. Sentencing was expected in two to three months.
Defense attorneys said the jury's verdicts were hard to believe.
"I'm still in shock, to be honest with you," said Javier Armengau, who represents Faulkenberry. Armengau said he'd presented ample evidence that other defendants had hidden fraud from Faulkenberry.
Lawyers said they would appeal.
The government's lead prosecutor said the defendants lied and covered up wrongdoing for years.
The defendants "secured hundreds of millions of dollars of ill-gotten gains, and through those lies concealed those lies and engaged in a massive cover-up," said assistant U.S. attorney Doug Squires.
"Everyone's hurt when an investor's lied to in this country."
Next, the government will ask Marbley to hold the five responsible for the $1.9 billion lost by investors. Marbley scheduled hearings on that request next month.
Prosecutors compared National Century to Enron Corp., an energy trading company, and WorldCom Inc., a telecommunications company, which were both engulfed in corporate fraud scandals that cost investors billions and brought down both public companies.
National Century offered financing to small hospitals, nursing homes and other health care providers by purchasing their accounts receivable, usually for 80 or 90 cents on the dollar, so they wouldn't have to wait for insurance payments. National Century then collected the full amount of the payments.
The company, based in suburban Dublin, raised the money to fund its business by selling bonds to investors.
Prosecutors argued executives of the company authorized millions in unsecured loans to those health care providers, then misled investors about the loans.
Attorneys for the five defendants said prosecutors took the company's activities out of context by showing jurors only a tiny slice of National Century's operations.
The government said the unsecured loans caused shortfalls that the executives covered up by moving money between accounts. The government alleged the executives fabricated data and lied to investors about the shortfalls and loaded false information on a company computer system.
The government's star witness, former executive vice president Sherry Gibson, testified last month that the company kept two sets of books, one for public consumption filled with false information and another that showed the firm's actual shortfalls. Gibson is one of four former National Century executives who previously pleaded guilty to fraud charges and have cooperated with the government.
Missing from the trial was Poulsen, a chief target of the government's allegations.
Before his own trial on similar fraud charges in August, Poulsen is scheduled for trial Monday before Marbley on charges of witness tampering.
Prosecutors say Poulsen and an acquaintance teamed up in an attempt to persuade a government witness to help Poulsen beat the fraud case against him.
Squires, who is prosecuting that trial, would not comment.
"That's a trial for another day," he said.
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