NCFE: Death-Dealing Side of the Bubble

NCFE, National Century Financial Enterprises, Inc., was a private Healthcare FINANCIAL company, the largest 'private' bankruptcy and dubbed by Federal Prosecutors in Columbus Ohio 'larger than Enron'.

NCFE: Death-Dealing Side of the Bubbleby John Hoefle
As a private company not required to make public filings with the Securities and Exchange Commission, much about NCFE remains shrouded in secrecy. But one can tell a lot by looking at its board, which consisted of four of the company's founders and two executives of J.P. Morgan Chase, which controls 16% of the company through its Beacon Group III private equity fund. In addition, Morgan Chase and Bank One are trustees for NCFE's bond trusts. The bonds themselves were underwritten by Crédit Suisse First Boston, the investment-banking arm of Switzerland's Crédit Suisse banking/insurance giant. The top purchasers of the bonds included PIMCO, the world's largest bond fund and a subsidiary of insurer Allianz, the world's third-largest financial institution; Alliance Capital Management, an arm of French insurance giant Axa; and ING, the Dutch insurance/banking conglomerate.

It is this combination of monetary policy, deregulation and financial asset-grabbing which created the dot.com bubble, the related telecom bubble, and the Enron/energy pirates' Wall Street bubble; all of which have subsequently exploded and are now revealed to be what LaRouche had said they were—scams. Now, with the bankruptcy of NCFE, another aspect of this post-1998 looting comes out of the shadows and into the light.

The Asset-Backed Securities Danger
NCFE was basically a financial "factor," advancing cash to hospitals, physicians, and other health-care facilities in exchange for their receivables—the delayed payments made by insurance companies and government agencies for patients' treatment. NCFE would place these receivables into pools, then issue derivative securities—known as asset-backed securities—backed by the expected insurance payments.

All in all, NCFE appears to fit the profile of a looting operation, whose existence served mainly to divert a portion of the health-care income stream into the pockets of some of the biggest financial institutions in the world. Now it has collapsed, leaving a bankruptcy wave which is now spreading among medical providers, with disastrous consequences for the health-care system and its patients.
NCFE serves about 100 healthcare providers nationwide, including hospitals, nursing homes, home healthcare agencies, specialty clinic physician groups, durable medical equipment providers, laboratories and other disciplines within the healthcare
industry. NCFE buys medical providers' bills at a discount (reportedly up to 20% after various fees), securitize those receivables and sell bonds to institutional and other investors.
Collections and insurance reimbursements, in turn, pay down the
bonds. The excess of collections over what it pays to buy the
receivables is NCFE's income. Healthcare providers, when NCFE
pays, receive the benefit of immediate cash to fund their
operations without having to wait for reimbursement.

All of the Debtors' outstanding bonds at this time consist of:

Amount Issuer Indenture Trustee
------ ------ -----------------
$924,995,000 NPF VI, Inc. JP Morgan Chase & Co.

$2,047,500,000 NPF XII, Inc. Bank One, N.A.

In papers filed with the Bankruptcy Court this week, the Company
reports that, as of September 30, 2002, its books and records
reflected approximately $3.8 billion in assets and approximately
$3.6 billion in liabilities.

An Investor Report dated October 23, 2002, and delivered to Bank
One reports that:

(a) NCFE held $851,993 in a Seller Credit Reserve Account as
of October 1, 2002, when there was supposed to be around
$145 million in that account on Oct. 1;

(b) NCFE held $498,321 in an Offset Reserve Account on
Oct. 1, when $44 million should have been on deposit; and

(c) an Equity Reserve Account, supposed to have a $217
million deposit on Oct. 1, only had $10 million on
deposit.

When those facts bubbled to the surface, Bank One ran to the
state and federal courts in Ohio seeking appointment of a
Receiver and prompted agents from the Federal Bureau of
Investigation to descend on NCFE's corporate offices.

Lance Poulsen, the Company's founder, has resigned as chairman
and chief executive. The Company's workforce has fallen from 325
to 103 this week. The Company's main office is located in
Dublin, Ohio, and maintains three regional offices in Scottsdale,
Arizona; Durham, North Carolina; and Port Charlotte, Florida.

NATIONAL CENTURY DEBTORS' CHAPTER 11 DATABASE
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Debtor entites filing separate chapter 11 petitions:

Entity Case No.
------ --------
National Century Financial Enterprises Inc. 02-65235
NPF XII Inc. 02-65236
National Premier Financial Services Inc. 02-65237
NPF VI Inc. 02-65238
Memorial Drive Office Complex LLC 02-65239
National Physicians Funding II Inc. 02-65240
Anesthesia Solutions Inc. 02-65241
NPF-CSL Inc. 02-65242
NPF-LL Inc. 02-65243
NPF-SPL Inc. 02-65244
NPF X Inc. 02-65245
NPF Capital Partners Inc. 02-65246
NPF Capital Inc. 02-65247
NCFE.com Inc. 02-65248

Chapter 11 Petition Date: November 18, 2002

Bankruptcy Court: United States Bankruptcy Court
Southern District of Ohio
Eastern Division
170 North High Street
Columbus, Ohio 43215
(614) 469-6638

Judge: Donald E. Calhoun, Jr.
LIST THE DEBTORS' 40-LARGEST UNSECURED CREDITORS
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Entity Nature Of Claim Claim Amount
------ --------------- ------------
Bank One Trust Company Indenture Trustee $2,047,500,000
N.A. for secured notes
Darlington Cummings issued by NPF
Corporate Trust XII, Inc.
Account Adm.
OH1-0380
255 West Shrock Road
Westerville, OH 43081
Tel: 614-244-9356
Fax: 614-248-1123

J.P. Morgan Chase Bank Indenture Trustee $924,995,000
Structured Finance for secured notes
450 W. 33rd Street issued by NPF
14th Floor VI, Inc.
New York, NY 1001
Tel: 212-946-8600
Fax: 212-946-8302

Pacific Investment NPF XII, Inc. $283,300,000
Management Company Notes (unsecured
Mohan Phansalkar deficiency claim)
840 Newport Center Dr
Suite 300
Newport, CA 92660
Tel: 949-717-7022
Fax: 949-720-4590

Credit Suisse First NPF XII, Inc. $283,000,000
Boston Corp. Notes (unsecured
Michael Criscito deficiency claim)
New York Branch
11 Madison Avenue
New York, NY 10010
Tel: 646-935-0299
Fax: 212-325-8232

Alliance Capital NPF XII, Inc. $188,500,000
Management Corp. Notes (unsecured
Katalin E. Kutasi deficiency claim)
1345 Avenue of
Americas
38th Floor
New York, NY 10105
Tel: 212-969-1000
Fax: 212-969-6820

III Finance, Ltd. NPF XII, Inc. $180,000,000
Julio Maceira Notes (unsecured
c/o AVM, L.P. deficiency claim)
250 S. Australian Ave.
6th Floor
West Palm Beach
FL 33401

Metropolitan Life NPF XII, Inc. $102,600,000
Insurance Notes (unsecured
Charles Scully deficiency claim)
10 Park Avenue
Morristown, NJ 07962
Tel: 866-226-5638
Tax: 973-254-3052

Ambac Insurance Corp NPF XII, Inc. $54,000,000
Joe Ramos Notes (unsecured
One State Street Plaza deficiency claim)
New York, NY 1004
Tel: 212-607-2200
Fax: 212-797-5272

Lincoln Capital NPF XII, Inc. $49,500,000
Management Co. Notes (unsecured
Rick Schneider deficiency claim)
200 S. Wacker Drive
Suite 2100
Chicago, IL 60606
Tel: 3125592880

Howery, Simon, Arnold $2,147,888
& White, LLP
Gary Hall
1299 Pennsylvania Ave.
NW, Washington, DC
20004-2402
Tel: 202-383-7169
Fax: 202-383-6610

Purcell & Scott, LLP $470,801
Cary Purcell
6035 Memorial Drive
Dublin, OH 43017
Tel: 614-761-9990
Fax: 614-761-9474

Gerbig Snell/Weisheimer $413,566
& Associates
Bill O'Dell
500 Olde Worthington Rd.
Westerville, OH 43082
Tel: 614-643-6471
Fax: 614-848-3477

Westcott Strategic $127,273
Management

Novell, Inc. Trade Debt $121,350

Bricker & Eckler Trade Debt $114,290

Peabody & Arnold LLP Trade Debt $98,225

First Merit Bank Trade Debt $90,676

ISHI Systems Inc. Trade Debt $88,049

Crown Partners Trade Debt $87,991

Expert Technical Trade Debt $67,200
Consultants

Object Ovation, Inc. Trade Debt $61,420

Perlman & Assoc Trade Debt $60,646

Freeman & Mills, Inc. Trade Debt $54,354

CNA Insurance Trade Debt $41,450

SARK Trade Debt $39,842

Norman Reitman Company Trade Debt $36,944

Krivcher Magids PLC Trade Debt $34,917

Leitess, Leitess & Trade Debt $32,294
Friedberg

Insight Trade Debt $30,012

Solutions for Manage- Trade Debt $28,998
ment, Inc.

PricewaterhouseCoopers Trade Debt $27,648
LLP

Deloitte & Touche LLP Trade Debt $25,000

Jeanne Cabral Trade Debt $23,566
Architects

Dell Marketing, Inc. Trade Debt $20,209

Biomar Technologies Trade Debt $20,000

IOS Capital Trade Debt $19,627

Abby Lane Temps, Inc. Trade Debt $17,147

Rockey & Wahl, LLP Trade Debt $15,809

Great Lakes REIT Trade Debt $15,679

Results International Trade Debt $14,500
Systems

The Debtors name these known Sellers as Defendants in this
Adversary Proceeding:

Sellers to NPF XII
------------------
* Lincoln Hospital Medical Center, Inc.
* OrthoRehab, Inc.
* RX Medical Services Corp.
* CHC Clintwood Clinics, Inc.
* CareServices of the Heartland, LLC
* CareServices of South Florida, LLC
* CareServices of the Treasure Coast, LLC
* Mobile Medical Industries, Inc.
* Innovative Services, Inc.
* Emergystate, Inc.
* Med Express LLC
* Emergystat of Sulligent
* Extended Emergency Medical Services, Inc.
* ACCI/Allcare of Pennsylvania, Inc.
* BGI of Brandywine, Inc.
* BGI of St. Tammany, Inc.
* BGI of Pensacola, Inc.
* BGI of South Dakota, Inc.
* Comprehensive of Addiction Programs, Inc.
* Glalax Treatment Center, Inc.
* Stonehenge Convalescent Center, Inc.
* Wilmington Treatment Center, Inc.
* Greater Southeast Community Hospital Corporation I
* Pacifica of the Valley Corporation
* Garland Physicians' Hospital, Ltd.
* Thera-Kinetics, Inc.
* International Philanthropic Hospital Foundation
d/b/a/ Granada Hills Community Hospital
* Korman, LLC
* Living Hope Southwest Medical Services LLC
* Locumtenens Acquisition LLC
* Oak Park, Inc.
* Prime Med Pharmacy Services, Inc.
* Quantum Health
* Rock Glen Healthcare, Inc.
* SCCI Hospitals of America, Inc.
* SCCI Hospital Ventures, Inc.
* SIS Acquisition, LLC
* Safecare Ambulance Services, Inc.
* Braintree Manor Nursing, LLC
* Fall River Nursing LLC
* Hollingsworth Nursing LLC
* South Boston Nursing LLC
* Stoughton Nursing LLC
* PriMed Medical Corporation
* Pain Net Northern California Management Corporation
* National Psychiatric Services, Inc.
* Infusion Management Systems, Inc.
* Aurora Home Care, Inc.

Sellers to NPF VI
-----------------
* Chartwell Pennsylvania, LLC
* Chartwell Diversified Services, Inc.
* Chartwell Southern New England, LLC
* Chartwell Midwest Wisconsin
* Chartwell Home Therapies Limited Partnership
* Chartwell Midwest Indiana, LLC
* Chartwell UC Davis, LLC
* Chartwell Michigan, LLC
* Chartwell Mountain Regional Services
* Chartwell Ohio
* Chartwell Care Givers, Inc.
* Chartwell Care Givers of New York, Inc.
* Atlis Health Services, Inc.
* Hunt Country Home Health, Inc.
* Hunt Country Nursing Services, Inc.
* National Nurses Service, Inc.
* Oak Springs Nursing Home, LP
* ACCI/AllCare, Inc.
* ACCI/AllCare of Massachusetts, Inc.
* Brea Community Hospital
* Michael Reese Medical Center Corporation
* Pacin Healthcare-Hadley Memorial Hospital Corporation
* Highland Behavioral Health Services, Inc.
* Highland Hospital Association
* Lifecare Solutions East, Inc.
* Lifecare Solutions, West, Inc.
* New England Home Therapies, Inc.
* P.N.A.
* Pain Net of Arizona, Inc.
* Pain Net, Inc.
* Rovertown Surgery Center, LLC
* PhyAmerica Correctional Healthcare, Inc.
* Texas NPI, Inc.
* Home Medical of America, Inc.
* Nations Healthcare of California, Inc.
* Nations Healthcare of Florida, Inc.
* Nations Healthcare of Greenville, Inc.
* Nations Healthcare of Northern California, Inc.

Other Sellers
-------------
* Advance Home Medical, Inc.
* AllMed Services, Inc.
* Bay Cities Pharmaceutical Services
* Bayer Restorative Center, Inc.
* Care Home and Healthcare Services, Inc.
* Care Medical Group, Inc.
* Care Nursing Associates
* Consolidated Health Corp. of Pittsburgh, Inc.
* Consolidated Health Corporation Management, Inc.
* Continuecare, Inc.
* Florida Health Plan Management, Inc.
* Habitat Healthcare, Inc. dba Procare Home Health
* Health Care Funding Corp.
* Health Management Southeast, Inc.
* Healthplan Southeast, Inc.
* Interstate Environmental Medical Group, P.S.
* Louisiana Helping Hands, Inc.
* Managed Patient Care
* Med Four, LLC
* Medical Management Consulting Group
* Medimanager, Inc.
* Miami Valley Respiratory Care, Inc.
* National Corrections and Rehabilitation Corporation
* National Rehab of Florida, Inc.
* Nations Healthcare of Tampa Bay, Inc.
* Needham/Hamilton House Convalescent Center, Inc.
* Northern Indiana Interim Healthcare Company, LLC
* Orlando Interim Acquisition Company, LLC
* Pain Control Consultants, Inc.
* Pine Grove Hospital Corporation
* Procare of Tennessee, Inc.
* Quality Health Initiatives, Inc.
* Quality Health Systems, Inc.
* Quality Lifestyles, Inc., dba Quality Lifecare, Inc.
* Quest Staffing Solutions, Inc.
* Robertson Interim Acquisition Company LLC
* Schillinger Emergency Physicians Medical Group, P.C.
* Spectrum Medical Care
* Strongin Health Services Corporation
* Sunrise Regional Medical Center, Ltd.
* Superior Home Health Care of Livingston, Inc.
* Tailored Care, Inc.
* Tampa Interim Acquisition Company, LLC
* Tennessee Homecare, Inc.
* The Nurses Station of America, Inc.
* Triad Health Management of Georgia, LLC

and name the five Lockbox Custodians as Defendants in their
lawsuit:

* Huntington National Bank
* Wachovia Bank, NA
* PNC Bank
* Bank of America
* Bank One, NA

Without this injunctive relief, Judge Calhoun sees, the Debtors
face an immediate and substantial threat to the preservation of
their estates' going-concern value and an unwarranted and
irreversible dissipation of their estates. Accordingly, Judge
Calhoun issued a Temporary Restraining Order at a hearing
yesterday in Columbus. The Court directs each Defendant to file
an Answer to the Debtors' Complaint by December 18, 2002, and
will convene a hearing thereafter to consider entry of a
permanent injunction.


*** End of Issue No. 1 ***