Judge sets $2 billion-plus in restitution .....NOt expecting any repayment

National Century
Two execs get 15, 12 years in prison for huge fraud
Judge sets $2 billion-plus in restitution down to penny
Wednesday, August 6, 2008 12:09 PM
Updated: Wednesday, August 6, 2008 10:30 PM
By Jodi Andes

THE COLUMBUS DISPATCH
It's unlikely that the executives involved in the nation's largest case of private fraud will ever be able to come up with the more than $2.3 billion they've been ordered to repay.

But federal Judge Algenon L. Marbley wanted to make sure they were aware of the exact amount of the bill -- down to the penny -- while they sit in prison.

Yesterday, he ordered Donald H. Ayers and Randolph H. Speer, former executives for National Century Financial Enterprises, to repay investors $2,384,147,105.09.

"Thousands suffered considerable financial losses,'' the judge said. "Ayers, on the other hand, amassed a significant financial fortune."

Ayers, a founder of National Century, could spend the rest of his life behind bars.

Marbley ordered the 72-year-old Ayers, the chief operations officer for National Century, to serve 15 years in federal prison.

"An eight-year sentence for Mr. Ayers, unless he lives longer than any of his family, would be a death sentence," his attorney Brian Dickerson said, arguing for a lighter term.

Speer, 57 and the former chief financial officer of National Century, received a 12-year sentence.

Both men got much less time than they faced: Ayers could have received 55 years in prison, and Speer 125 years.

National Century was a Dublin-based business that touted itself as the nation's largest private handler of medical accounts receivable. For a fee, the company collected the money owed on bills to doctors.

The company used investors' funds to give health-care providers the money upfront.

But when the company went bankrupt in November 2002, investors lost $2.8 billion, and more than 275 health-care providers went out of business.

Ayers and Speer were convicted in March of such charges as securities fraud and money laundering.

They are the first of five defendants scheduled for sentencing this week in the National Century case.



Prosecutors are expected to file paperwork soon, detailing exactly what can be seized to attempt to make repayments on the amount owed to investors. Houses, cars and retirement and savings accounts of those convicted could be considered.

In yesterday's hearing, attorneys for Ayers and Speers argued for leniency, saying the men didn't know all that was going on at National Century.

But Assistant U.S. Attorney Doug Squires said that Speer was the company's chief financial officer.


"He was in charge of money in and money out,'' Squires said. "Just to have him say now, 'I was just following orders' or that 'I'm a rubber stamp' is disingenuous."

Marbley agreed, calling Ayers one of the architects of the fraud, and saying Speer was a "battlefield commander" or "enabler" who authorized 400 transfers in unsecured loans to health-care providers.

Defense attorneys say they will appeal the case, using recent Securities and Exchange Commission rulings that show banks and auditors knew about lies to investors and unauthorized money transfers.
Roger S. Faulkenberry and James E. Dierker Jr., also convicted on fraud-related charges in the National Century case, are expected to be sentenced today. On Friday, former CEO Lance K. Poulsen, convicted of obstructing justice, is to be sentenced. He still must stand trial on fraud charges in October.

Karl A. Demmler, convicted of obstructing justice, is to be sentenced at a later date.

A seventh co-defendant, Rebecca S. Parrett, also a former executive of the company, disappeared after she was convicted and remains at large.