Federal jury on Wednesday convicted ....

Federal Jury Convicts Nat'l Century Exec
By ANDREW WELSH-HUGGINS
Associated Press Writer

COLUMBUS, Ohio — A federal jury on Wednesday convicted the founder of a failed health care company of trying to bribe a witness in an upcoming $1.9 billion fraud trial.

The jury took one day to deliver its decision against Lance Poulsen, former chief executive officer of National Century Financial Enterprises, described as the nation's largest health care financing firm before its 2002 bankruptcy.

Poulsen was accused of offering a former company executive $500,000 to give misleading testimony during Poulsen's fraud trial scheduled for August.

The executive, Sherry Gibson, told jurors that Karl Demmler, a long time friend to her and Poulsen, told her that Poulsen "wanted to make me whole."

The jury also convicted Demmler, who prosecutors had accused of acting as an intermediary for Poulsen to contact Gibson.

Poulsen said Gibson misunderstood his attempts to help her. He said he was only trying to provide her with a new attorney because he believed she'd been wrongly convicted based on bad legal advice.

Gibson pleaded guilty in 2003 for her role in the National Century fraud case in exchange for cooperating with prosecutors.

The government said the defendants could each face 35 years in prison on all counts of the four-count indictment alleging conspiracy, two counts of witness tampering and obstruction of justice. In court, U.S. District Judge Algenon Marbley referred to as many as 55 years. Actual sentences are usually much lower than the maximum penalties.

Marbley ordered Demmler taken into custody, citing comments he'd made while under investigation that he wanted to kill and dismember a federal bankruptcy judge. Poulsen has been held in a jail in Chillicothe.

Prosecutors were satisfied with the verdict. "The jury indicated that witness tampering would not take place in this courtroom or any other," said federal prosecutor Douglas Squires. "The case was a matter of money for lies."

The verdict could play a role in Poulsen's August fraud trial.

"What we proved is that the witness tampering was related to that scheduled jury trial of Lance Poulsen, and that trial is pending," Squires said.

Poulsen looked down briefly as Marbley read the guilty verdicts, while Demmler stared straight ahead. Poulsen's lawyers said they were taken aback by the verdict and would consider an appeal.

"The evidence pretty strongly demonstrated that he tried to set the record straight and encouraged the witness to tell the truth," said attorney Peter Anderson.

The government wouldn't say whether it would consider a plea deal ahead of the August trial. Poulsen's attorney said that decision would be up to Poulsen.

"Mr. Poulsen has been adamant about his innocence with regard to the allegations in that matter, and will take all the appropriate measures to try to clear his name in that case," said attorney William Terpening.

On a phone call with Demmler recorded by the government, Poulsen said Gibson should explain that her previous statements to prosecutors were based on old facts.

Poulsen said Gibson 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.

In other recordings, Demmler suggests to Poulsen that Gibson could "have amnesia."

Prosecutors portrayed Gibson as a repentant ex-felon who'd served her time after pleading guilty to corporate fraud.

"How can I make you understand that I just want this whole situation behind me so I can get on with my life," Gibson said in a Jan. 29 letter to Demmler quoted by prosecutors.

Poulsen wanted to pay Gibson for one reason, U.S. trial attorney Leo Wise told jurors: to help him win his fraud case.

Defense attorneys characterized Gibson as an angry woman with an ax to grind who turned on Demmler and Poulsen when they were just trying to help her.

They quoted a different part of the same letter in which Gibson suggests that figuring out a way to get back what she lost would be "something to check out."

Poulsen testified he never tried to influence Gibson. "I never asked Sherry to lie," he told jurors during testimony that stretched over several hours. "I never asked her to forget anything."

In his August trial, Poulsen faces multiple counts of wire and securities fraud and money laundering.

The government alleges Poulsen misled investors about unsecured loans his company was providing health care companies such as hospitals and nursing homes. Prosecutors accuse Poulsen and other former executives of the suburban Dublin-based company of moving money to cover up shortfalls and fabricating data. The company filed for bankruptcy following an FBI raid.

At least nine former National Century executives have been convicted of corporate fraud related to the case to date, including Gibson.

The witness tampering case began after Gibson invited Demmler to dinner at a Don Pablo's restaurant in Columbus June 19.

"Business first," Demmler said when they met that night, then proceeded to explain that Poulsen wanted to "make her whole" based on what she'd been through, prosecutors said.

Gibson testified she understood that to mean she was being offered a bribe to change her testimony. She informed the government, turned down their request to investigate the allegation, then changed her mind after Demmler contacted her about another meeting.

Poulsen said the phrase had a different meaning.

"I felt she had been shafted royally," Poulsen told jurors. "I wanted to make her whole."


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March 26, 2008 - 5:53 p.m. CDT

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