National Century Executives Sentenced to Prison Time....(but only some)

Not all of them tho......some have yet to even go to trial.....and we need
to ask ourselves WHY?


National Century Executives Sentenced to Prison Time (Update3)

By Sophia Pearson and Denise Trowbridge

Aug. 6 (Bloomberg) -- National Century Financial Enterprises Inc. co-founder Donald Ayers and former executive Randolph Speer were sentenced to 15 years and 12 years in prison, respectively, for their roles in bilking investors out of $2.9 billion before the health-care financing company's bankruptcy in 2002.

U.S. District Judge Algenon Marbley in Columbus, Ohio, imposed the sentence today, rejecting defense lawyers' arguments that the men led exemplary lives and had family responsibilities. Ayers, 72, Speer, 57, and three other executives were convicted in March of securities fraud, conspiracy and money laundering.

``This company was a poster child for a sophisticated scheme,'' the judge said. ``It was a high-level shell game. Everyone knew, but they were hedging their bets that they wouldn't be discovered. But they were.''

National Century, based in Dublin, Ohio, loaned money to struggling health-care providers, including hospitals and clinics, and claimed to secure the loans with incoming payments that backed bonds sold to investors. Many receivables were worthless IOUs, forcing National Century to use new money to pay old investors.

Ayers and the other executives, Roger S. Faulkenberry, Speer, James Dierker and Rebecca Parrett, lied to auditors and in monthly reports to bondholders, prosecutors said. The company advanced funds to providers owned by former Chief Executive Officer Lance Poulsen, Ayers and Parrett, letting them pay debts, settle lawsuits and buy other companies. National Century's collapse led to bankruptcies by 275 providers.

Concurrent Sentences

Ayers was sentenced to 15 years for money laundering and five years for securities fraud, with the sentences to run concurrently. Marbley ordered Ayers, who faced up to 55 years in prison, and the other executives to pay $2.3 billion in restitution.

Speer received concurrent sentences of 12 years for money laundering and five years for securities and wire fraud. He faced a maximum of 125 years in prison. Faulkenberry and Dierker are to be sentenced tomorrow.

Ayers must liquidate his Merrill Lynch money-market and retirement accounts and sell all his vehicles but one within 30 days. If employed, the men will have to pay as much as 50 percent of their earnings toward restitution, Marbley said.

Speer, Ayers and Faulkenberry have been behind bars since April after prosecutors uncovered a plot to flee to Aruba. Dierker was released on house arrest.

Parrett a Fugitive

Parrett, who was once married to Ayers, was declared a fugitive on March 27 after failing to report for an electronic ankle bracelet to monitor her movements. She is still missing.

Defense lawyer Brian Dickerson urged Marbley to consider Ayers's age and exemplary life. The former executive, who has been divorced twice, is a stay-at-home father to two adopted children from his current wife and recently suffered a stroke. His medical needs should be considered, Dickerson said.

``There should be another category for someone who is 72 years old who doesn't have a blemish on his record,'' Dickerson said.

Marbley rejected those claims along with Ayers's denial of the fraud.

``The court cannot find any evidence to believe that Mr. Ayers did not know what was going on,'' Marbley said. ``I believe he along with Becky Parrett and Lance Poulsen were the architects of this scheme and perpetuated it. Evidence of the defendant's guilt in this case is overwhelming.''

Wife's Testimony

Speer's wife, Kathy, testified that her husband of 20 years was ``soft-spoken and down to earth.''

``He is the center of my family,'' she said. ``His absence from home has been absolutely devastating to our family.''

Speer, the company's chief financial officer from 1999 to 2002, should have been sentenced to seven to 10 years, attorney Fred Benton argued. He asked that Speer be placed at a low- security facility in the Talladega, Alabama, area.

Ayers requested placement at the Eglin Federal Prison Camp in Eglin, Florida. That facility was named one of the best places to go to prison by Forbes Magazine in 2006.
National Century's fraud claimed among its victims Pacific Investment Management Co., the world's largest bond fund, and the state of Arizona.

JPMorgan Chase & Co., the third-largest U.S. bank, agreed to pay $425 million in 2006 to settle with Arizona noteholders who claimed it and other banks underwrote or were trustees of the notes used to defraud investors.

Prosecutors previously secured four guilty pleas from executives at National Century, including Sherry Gibson, a former vice president of compliance. Gibson, who spent almost three years in prison, was the main government witness at the trial.

Poulsen will face fraud charges at a separate trial later this year. He was convicted in March of trying to bribe a witness to change her testimony against him.

The case is U.S. v. Poulsen, 06-129, U.S. District Court, Southern District of Ohio (Columbus).

To contact the reporters on this story: Sophia Pearson in Wilmington, Delaware, at spearson3@bloomberg.net; Denise Trowbridge in Columbus, Ohio, t .