Once again, JPMorgan, and all the BIG BANKS get a walk!

This is questionable: "...hastened the bankruptcies of 275 hospitals, clinics, nursing homes and other health-care providers, ..."

Fraud Case Against National Century's Poulsen Goes to Ohio Jury

By Denise Trowbridge and David Voreacos

Oct. 31 (Bloomberg) -- Jurors began deliberating fraud charges against Lance Poulsen, the National Century Financial Enterprises Inc. founder accused of leading a $2.9 billion fraud before the company's bankruptcy in 2002.

Poulsen, 65, is accused of cheating investors who bought National Century bonds and believed they backed the purchase of unpaid insurance bills from medical providers that needed cash. Prosecutors said Dublin, Ohio-based National Century advanced $2.2 billion to six companies in which Poulsen owned a stake.

Federal jurors in Columbus, Ohio, began weighing fraud, conspiracy, and money-laundering charges this morning after U.S. District Judge Algenon Marbley instructed them on the law last night. Poulsen faces between 30 years and life in prison if convicted. He is already serving 10 years in prison for tampering with a witness against him.

Poulsen testified in his own defense at the trial, which began Oct. 2. He said he never intended to defraud investors, and that all of his actions were permitted by indentures, private-placement memos and other legal documents.

National Century's collapse hastened the bankruptcies of 275 hospitals, clinics, nursing homes and other health-care providers, according to prosecutors and regulators. Victims included investment firms and pension funds such as Pacific Investment Management Co., the world's largest bond fund.

Pimco lost $283 million and Credit Suisse Group AG lost $257 million, Justice Department Trial Attorney Leo Wise told jurors yesterday in closing arguments.

JPMorgan Chase & Co., the largest U.S. bank by market value, agreed to pay $425 million in 2006 to settle claims by Arizona noteholders. The noteholders said JPMorgan and other banks underwrote or were trustees of the notes used to defraud investors.

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: David Voreacos in Newark, New Jersey, at dvoreacos@bloomberg.net; Denise Trowbridge in Columbus, Ohiot .

Last Updated: October 31, 2008 10:00 EDT

"...nation's largest private fraud case ..."

"...chief executive's criminal culpability in the nation's largest private fraud case depended..."

Maybe a look into the 'private' fraudulent financing company will reveal all the PUBLICLY TRADED companies 'DUMPING' their losing entities into NCFE!
Hint: James K Happ

Attorneys battle it out over Poulsen tapes
Alleged bribery of National Century exec at issue
Thursday, October 23, 2008 3:17 AM
By Jodi Andes


THE COLUMBUS DISPATCH
Lance K. Poulsen's recorded conversations were offered as evidence yesterday in his trial in connection with the collapse of his company, National Century Financial Enterprises.

But whether they proved the former chief executive's criminal culpability in the nation's largest private fraud case depended on who was asking the questions.

Peter Anderson, one of Poulsen's defense attorneys, said that the tapes showed Poulsen wasn't trying to bribe Sherry Gibson, a former vice president of the health-care lender, to forget certain facts when testifying against Poulsen.

She's the government's key witness in the fraud case.

Prosecutor Leo Wise used his questioning of FBI Special Agent Jeff Williams to try to show otherwise.

Wise said Poulsen's use of coded language, evident on tapes made by the FBI, along with the use of a middle man in conversations with Gibson and attempts to use phone lines thought to be secure show that Poulsen was trying to conceal the bribe.

Poulsen is being tried in U.S. District Court in Columbus on fraud charges tied to the company's implosion. When Dublin-based National Century filed for bankruptcy in November 2002, investors lost nearly $2 billion.

Poulsen's taped conversations with his friend Karl A. Demmler show that Poulsen believed Gibson got bad advice from her attorney when he advised her to plead guilty in connection with her role in the company's collapse, Anderson said.

In addition, Poulsen never met with Gibson or gave her any money, Anderson noted. Poulsen could be heard on the tape telling Demmler that he didn't want Gibson to lie, the defense attorney pointed out.

Poulsen's own taped statements show he did want Gibson to forget how she plugged investor reports with false numbers, the FBI agent testified.

In return, the National Century founder said he would also loan her money, "but of course that loan never needs to be repaid," Williams said, quoting Poulsen.

Furthermore, Poulsen did tell his attorney that he wanted to help Gibson find a new lawyer, but it's clear Poulsen didn't tell his own attorney everything he was offering to do for Gibson, Williams said.

"Only the three amigos know about the three amigos," Poulsen said on the tapes referring to himself, Demmler and Gibson.

Both Poulsen and Demmler were convicted in March of witness tampering and obstruction of justice in connection with their contacts with Gibson. Poulsen was sentenced to 10 years in prison; Demmler has yet to be sentenced.

The federal prosecution team of Wise, Doug Squires and Kathleen McGovern are expected to rest their case today after presenting one more witness.

jandes@dispatch.com

"...illegally funding some firms ..." Which firms were illegally funded?

Which firms were illegally funded without buying eligible accounts receivable. That resulted in more than $1 billion? Which firms were these? Look at James K Happ! The last indicted executive?

Now this is the big news in this testimony:

'Terpening said it was because National Century couldn’t get a clean audit that it collapsed. Gibson answered that National Century fell apart because it had been illegally funding some firms without buying eligible accounts receivable. That resulted in more than $1 billion that couldn’t be accounted for, which is why Deloitte would not give the firm a clean audit, Gibson said. When that happened, she said, National Century went under because it couldn’t raise money from new investors to pay off old investors.

Terpening also asked Gibson about bank trustees who oversaw lock boxes National Century used to collect accounts receivable. After getting Gibson to admit that the trustees were a watchdog of sorts, he asked Gibson if those trustees had a responsibility to double check reports National Century sent to them.'

After telling jurors about her central role in an alleged $2.84 billion fraud and Lance Poulsen’s attempt at bribery in 2007, Sherry Gibson faced questions Tuesday from a defense attorney determined to pick her story apart.

Gibson, the former executive vice president of compliance at National Century Financial Enterprises Inc., sparred with William Terpening over her knowledge of the firm’s governing documents and Poulsen’s intentions when he contacted her through an intermediary in 2007.

Poulsen is the cofounder and former CEO of Dublin-based National Century, a health-care financing firm that collapsed into bankruptcy in 2002. He is standing trial in U.S. District Court in Columbus on charges he ran a fraud that resulted in billions of investor dollars going missing. He is accused of one count each of conspiracy, wire fraud and money laundering conspiracy, four counts of concealment of money laundering and six counts of securities fraud. He has pleaded not guilty to all the charges.

Earlier in the trial, Gibson told jurors that Poulsen had directed her to alter the company’s books and create fraudulent investor reports so National Century could hide the more than $1 billion in advances it had given to companies owned by Poulsen and others without collateral.

But on Tuesday, Terpening did his best to sow doubt in the minds of jurors. In one exchange, Terpening suggested that because Gibson hadn’t read all of National Century’s governing documents, she didn’t know for sure that the advances the company made were illegal. National Century purchased health-care providers’ accounts receivable in exchange for quick cash, then securitized the debt into AAA-rated bonds for investors.

In another exchange, Terpening attempted to pin the blame for National Century’s collapse on auditors who would not give the company a clean report. National Century needed clean audits on an annual basis from accounting firm Deloitte & Touche LLP if it wanted to issue new bonds. In 2002, however, Gibson said Deloitte would not give National Century a clean bill of health, which resulted in the firm’s unwinding.

Terpening said it was because National Century couldn’t get a clean audit that it collapsed. Gibson answered that National Century fell apart because it had been illegally funding some firms without buying eligible accounts receivable. That resulted in more than $1 billion that couldn’t be accounted for, which is why Deloitte would not give the firm a clean audit, Gibson said. When that happened, she said, National Century went under because it couldn’t raise money from new investors to pay off old investors.

Terpening also asked Gibson about bank trustees who oversaw lock boxes National Century used to collect accounts receivable. After getting Gibson to admit that the trustees were a watchdog of sorts, he asked Gibson if those trustees had a responsibility to double check reports National Century sent to them.Earlier in the day, Terpening also attacked Gibson on her contention that Poulsen attempted to bribe her into changing her testimony in the summer of 2007. Typical of the back-and-forth was this:

“It was very easy for you to act naturally while you were lying?” Terpening asked.

“No it was very hard,” Gibson said.

Or this:

“This was sort of joint effort ... to trap Mr. Poulsen, is that right?” Terpening asked.

“No,” Gibson answered.

Under earlier questioning from the government, Gibson told jurors that Poulsen used a mutual friend, Karl Demmler, as an intermediary. Demmler asked Gibson to have “amnesia” about allegedly fraudulent activity that took place at National Century in exchange for $1 million.

After Demmler extended the bribery offer, Gibson decided to work with the government to secretly record the bribery conversations in an effort to convict Poulsen and Demmler.

On cross examination, Terpening focused on the fact that Gibson never spoke with Poulsen or received any money from him.

“As I’ve previously stated, I never spoke with Mr. Poulsen directly,” Gibson said.

Thanks to testimony and cooperation from Gibson, Poulsen and Demmler were convicted in March by a separate jury of attempting to bribe Gibson.

The fraud trial continues Wednesday with the government expected to call its last witness, then rest its case.

“Money laundering is my business on private contracts,” Demmler said. “It’s nobody’s business but mine.”

Note, the $3Billion dollar figure is just what they can prove!
This is BIGGER THAN ENRON!!! Who is following the real money? How much was given to HCA & Family?


Lance Poulsen allegedly offered a potential witness against him up to $2 million to change her testimony, a riveted jury heard Monday morning.

Backed up by secretly recorded tapes of their conversations, Sherry Gibson, a former executive vice president of National Century Financial Enterprises Inc., told jurors that her former boss used an intermediary to try to convince her to lie during Poulsen’s trial on fraud charges. Gibson is the government’s star witness in its case against Poulsen, the former CEO and part-owner of the Dublin-based firm.

Gibson worked her way up from receptionist to senior executive a National Century, becoming a linchpin in the nearly decade-long fraud the government has alleged went on at the company. She told a jury Monday that she participated in what was essentially a massive Ponzi scheme at the company. She pleaded guilty in 2003 to conspiracy to commit securities fraud.

“I pled guilty because I was guilty,” Gibson said. “... I entered a plea agreement to minimize my exposure to prison.”

Gibson spent three years in prison, repaid $420,000 to the government and agreed to cooperate with the Justice Department’s investigation into National Century.

While in prison, Gibson said Karl Demmler, a mutual friend of hers and Poulsen’s, asked her if she would be interested in recovering the money she had paid to the government. Gibson told the jury that she was more interested in moving on with her life.

“If there was a way to reclaim my assets without nullifying, voiding or in any way imperiling my plea agreement, that would be something to check out,” Gibson read from a Jan. 25, 2007, letter she wrote to Demmler. “I have no intention of starting a fight over my current sentence because the alternative is much worse.”

Thinking that the matter was dropped, Gibson told the jury she then met Demmler for dinner after she got out of prison. But Demmler brought up the subject again, she said. Demmler told her that Poulsen thought the government had given Gibson a “raw deal,” she said, and Poulsen wanted to make Gibson “whole.”

“I was somewhat taken aback that I had just been offered a bribe and changed the subject,” Gibson said.

Gibson said she told her attorney about the offer the next day. After a few days, Gibson made an agreement with the government to record any conversations she had with Demmler.

Prosecutors played for the jury the first conversation Gibson recorded between herself and Demmler.

“I told him you would want at least a million bucks,” the jury heard Demmler say. In that same conversation, Demmler also told Gibson that for a 10 percent fee, he would manage all aspects of the money exchange for her.

“Money laundering is my business on private contracts,” Demmler said. “It’s nobody’s business but mine.”

Between June and October 2007, Gibson said she met with Demmler eight times about a possible bribe, as well as receiving several voice messages from him. In each of the recorded conversations, Demmler told Gibson that he was in touch with Poulsen and attempting to work out payments for her.

In one recorded conversation, Demmler even played a voice message Poulsen had left him that Gibson alleged referred to the bribery attempt.

“There are some ways for our friend to recover our friend’s losses,” Poulsen said in the message he left with Demmler.

Under cross-examination, Gibson admitted to Poulsen’s attorney William Terpening that she never spoke with Poulsen directly. Gibson also said she never met with Pouslen or received any money from him.

Terpening also suggested that Demmler’s reliability was questionable by asking Gibson what she knew about his political views. Gibson admitted that Demmler had some “interesting” ideas, including that any federal government taxation is illegal.

When Terpening suggested that Gibson’s only contact with Poulsen in 2007 was through a “crazy” man, Gibson responded that her contact was through an “intermediary” that was well known to both her and Pouslen. She said she couldn’t comment on Demmler’s psychological health because she is not a doctor.

Both Demmler and Poulsen were found guilty in March by a separate jury of attempting to bribe Gibson.

Poulsen is standing trial in U.S. District Court in Columbus on charges he ran a fraud that resulted in as much as $2.84 billion in investor funds going missing after National Century collapsed into bankruptcy in 2002. Poulsen is accused of one count each of conspiracy, wire fraud and money laundering conspiracy, four counts of concealment of money laundering and six counts of securities fraud. He has pleaded not guilty to all the charges.

Defense attorneys are expected to continue their cross examination of Gibson on Tuesday.

National Century had advanced millions of dollars to health-care providers who had no collateral or means to pay back the money

But the real question should be: What "PROVIDERS" received the money and why were they chosen? Where does James K Happ come from? Oh yes, Columbia Homecare Group.
HCA & family dumped/sold their losing entities (Homecare)onto NCFE, shortly after the Healthcare Reform Bill passed !

"...National Century had advanced millions of dollars to health-care providers who had no collateral or means to pay back the money..."

"Auditors and ratings agencies were never allowed in the building unescorted and were never told that National Century had advanced millions of dollars to health-care providers who had no collateral or means to pay back the money,"

Audit data falsified, former VP tells court
National Century execs faked case folders, Gibson testifies
Tuesday, October 21, 2008 3:14 AM
By Jodi Andes

THE COLUMBUS DISPATCH
Employees of health-care lender National Century Financial Enterprises developed many ways to circumvent ratings agencies and auditors, the government's key witness said yesterday in the trial of its former leader, Lance K. Poulsen.

Jurors in the federal fraud trial in Columbus also learned from former company Vice President Sherry Gibson that she had been offered a bribe by Poulsen to "develop amnesia."

Poulsen, former chief executive of Dublin-based National Century, is accused of several counts of fraud in the company's 2002 collapse that cost investors close to $2 billion.

In March, Poulsen was convicted of witness-tampering and obstruction charges, with federal prosecutors presenting evidence that Poulsen used Karl A. Demmler, a mutual friend, to offer Gibson a bribe to "forget" information that could be used against Poulsen in the current trial.

However, Poulsen attorney William Terpening questioned yesterday whether his client was involved, given that Gibson didn't talk to Poulsen directly. He also questioned Demmler's mental stability.

After also being convicted of witness-tampering and obstruction charges, Demmler has become increasingly paranoid and has drunk his own urine in jail, Demmler's attorney has said in court documents.

"So, your only contact with Mr. Poulsen was with a crazy guy who thinks the government is out to get him," Terpening said.

Gibson said she hadn't talked to Poulsen directly since before the company collapsed in November 2002. At that time, she was overseeing the company's compliance department and was in charge of handling random audits.

National Century bought accounts receivable from health-care providers to give them operating money. Money for the purchases came from the sale of notes to private investors.

The investors required National Century to undergo audits from rating agencies and auditors. National Century's financial books had been falsified for years, Gibson said, and executives had ways to get around the audits.

For example, she would escort ratings-agency staff members through the building and take them to a National Century processor who had been chosen in advance, Gibson told government attorney Leo Wise.

The processor would have what appeared to be a file of a health-care-company client, but Gibson and others had put in false numbers that concealed the amount of money National Century had advanced the client, she said.

"Oh, here's Nikki. I see she's working on something. Let's see what she is doing," Gibson said, giving jurors an example of the tours. "I made it seem like it was a normal day for these processors."

Auditors and ratings agencies were never allowed in the building unescorted and were never told that National Century had advanced millions of dollars to health-care providers who had no collateral or means to pay back the money, she said.

jandes@dispatch.com

Instead of focusing on Freddie and Fannie. why don’t you go further?

Take a look at the trial, that has resumed TODAY, 10-20-08, inCOlumbus Ohio? National Century Financial Enterprises , Inc. dubbed by Federal Prosecutors as ‘larger than Enron’ !

Do you have a clue what this is all about? Do you know who the last executive in this trial, James K Happ, is? Or where he came from?

More importantly, who he worked for prior to his employment at NCFE?

Missing Executive not on TRIAL...WHY??

WHERE IS JAMES K HAPP?
The ex-Executive of Richard Rainwater's Columbia Homecare Group, NCFE and Med Diversifired! Why does he go last? Who does he know?




National Century's bad loans total $1,297,721,675
Wednesday, October 8, 2008 3:04 AM
By Jodi Andes

THE COLUMBUS DISPATCH
Federal authorities have long asserted that National Century Financial Enterprises' $1.9 billion in losses could largely be blamed on unsecured loans being doled out, one after another.

Yesterday, prosecutors quantified for jurors just what those loans totaled in the last four years of the company's operation -- down to the penny.

National Century executives gave $1,297,721,675.28 in unsecured loans to six companies they either owned or had a significant financial stake in, FBI Special Agent Jeffrey Williams testified yesterday at former Chief Executive Lance K. Poulsen's fraud trial.

There was no collateral to secure the loans, hence, no likelihood that they would be repaid, Williams said.

Poulsen, 65, one of three founders of National Century, is being tried in U.S. District Court in Columbus on fraud charges stemming from the company's November 2002 collapse.

The company's two other founders, Rebecca S. Parrett and Donald H. Ayers, were convicted of fraud in March. Ayers, 72, is serving a 15-year sentence. Parrett disappeared while free on bond and remains at large.

The FBI agent's testimony yesterday came after Judge Algenon L. Marbley suggested that one of Poulsen's defense attorneys, John E. Haller, recuse himself from questioning a witness.

Haller was an attorney for Purcell & Scott, a law firm that represented National Century until the company filed for bankruptcy. He also helped represent Home Healthcare of America, a client of National Century's, when a medical supplier sued Home Health and National Century in 1999.

When Assistant U.S. Attorney Doug Squires announced that he would call Home Healthcare's former Chief Executive Craig Porter as a witness, Marbley said Haller could not cross-examine him because that would be a conflict of interest.

He gave Poulsen's two other defense attorneys two hours to prepare, a time window that did not please Poulsen.

"This is a matter critical to my defense," Poulsen said. "I see how this protects Mr. Porter's rights. But I don't see how this protects my rights, and I'm on trial here."

Marbley ended the discussion, saying, "One of the things the court advised you at the outset was the conflict of Mr. Haller, but you waived that. Now this is a consequence of your waiver."

Porter testified that his company acquired home health-care companies and was owned by a company whose principal shareholders were Poulsen, Ayers and Parrett.

Despite National Century's loans, Home Healthcare still struggled, Porter testified.

"The company was really hemorrhaging cash and struggling as a company. It had a hard time paying its bills," Porter said.

jandes@dispatch.com

FBI and White Collar Crime in South Carolina ...Really? Take a look at the SC resident, Queen of Bankruptcy.

Posted On: October 12, 2008 by Russell Mace

FBI and White Collar Crime in South Carolina

The Federal Bureau of Investigation has several programs in South Carolina that they have instituted to combat white collar crime. Their white collar crime program covers a variety of related federal offenses.

The following are examples of what is covered by the White Collare Crime Program:
Insurance Fraud
Money Laundering (Usually Related to Drugs)
Financial Institution Fraud (FIF, i.e. Bank Fraud)
Telemarketing Fraud (Especially against Seniors)
Environmental Crimes (Dumping and Polution)
Public Corruption (Bribes)
Health Care Fraud (Medicare Fraud)(Medical Over Billing)
Bankruptcy Crimes (Usually Business Related)
Securities Fraud (Mortgage Fraud could be included here)

These criminal investigations in South Carolina are prosecuted by the United States Attorney in South Carolina. Walter Wilkins is the current United States Attorney in South Carolina. There is also a Federal Public Defender in South Carolina. Parks Smalls is the Federal Defender for South Carolina. The FBI has field offices in most of the cities in South Carolina. The FBI has offices in Myrtle Beach, Florence, Charleston, Columbia (Main Office), Greenville, Aiken and several other smaller cities in South Carolina.

Most of the high profile cases are listed on the FBI's website and the United States Attorney website for South Carolina. These press releases give the public a view as to what is being investigated and prosecuted by the government. All of these listed investigations have been indicted by the government. Defendants are indicted in the region in which the government feels the crime has been committed. Our office defends federal indictments all across the country. Defending a federal indictment takes experience, hard work and a willingness to communicate with a client about the government and its policies on white collar crime. A good Federal Defense Attorney in Columbia can help minimize your exposure to a federal indictment.

We have Columbia defense attorneys that are willing to help defend any federal indictment. We also handle appeals from the federal courts. Our Charleston defense attorneys handle indictments in Hilton Head and Beaufort. We also defend criminal cases in Georgetown and Surfside Beach.

Posted by Russell Mace
http://www.southcarolinacriminallawyerblog.com/2008/10/fbi_and_white_collar_crime_in.html

JPMorgan Chase "...some of the nation's largest banks, rating agencies and auditors knew of and approved of National Century's business practices."

In 1999, company officials realized that bank trustees at JPMorgan Chase and Bank One were verifying how much money was in National Century's reserve accounts based on what was being reported in investor reports.

Former worker: I faked figures for National Century's CEO: Chief Executive Lance K. Poulsen on trial for fraud in $1.9 billion collapse [The Columbus Dispatch, Ohio]

Oct. 10--Few figures in National Century Financial Enterprise's investor reports were not falsified, the government's key witness testified today in the fraud trial of the company's chief executive.

Report by report, and sometimes line by line, former company Vice President Sherry Gibson testified in U.S. District Court in Columbus how she falsified information at Lance K. Poulsen's request. The numbers were "made up," "manipulated," "changed," "shuffled," "falsified" and "inflated," Gibson said.

"It was always to make the data look proper and to keep rating agencies and investment agencies from asking questions," she said.

Asked by a prosecutor what years the reports were falsified, Gibson said, "practically all of them."

She said she can recall falsifications back to the early 1990s when she started with the company, including one in 1994.

"The reason I remember that one so clearly," she said, "the reserves were zero, but I was told to make the reserves to look like they were 17 percent."

Assistant U.S. Attorney Leo Wise showed several memos written by Brian J. Stucke, the company's former director of compliance, who had documented how National Century was trying to keep outsiders from learning about the shortages.

In 1999, company officials realized that bank trustees at JPMorgan Chase and Bank One were verifying how much money was in National Century's reserve accounts based on what was being reported in investor reports.
So National Century had the auditing date of one program moved so it would fall on a different date from other programs. Then executives moved money among the various programs so it would "fill the shortfalls," Stucke wrote.

His subsequent memos showed how the reserve accounts continued to shrink. In early 2000, the accounts were losing about $11 million a week because of loans given with no collateral and poor performance of accounts receivable, a memo stated.

The Dublin-based company was bankrupt in November 2002, costing investors $1.9 billion.

Poulsen's defense attorneys have argued that some of the nation's largest banks, rating agencies and auditors knew of and approved of National Century's business practices.Questioned by Wise, Gibson disagreed that agencies that rated the company's bonds for investors or agencies such as Credit Suisse of Boston that sold the notes to investors could have known the numbers had been falsified.

The only source of National Century financial data was National Century, she said.

Poulsen is being tried on securities fraud, wire fraud, conspiracy and money-laundering charges. If convicted, he faces a sentence that could amount to life in prison.

Judge Algenon L. Marbley said the trial will resume Oct. 20 because of the Columbus Day holiday on Monday and other business he must handle next week.

jandes@dispatch.com

To see more of The Columbus

"...clients that included pension systems and churches." What no 'mortgage backed' securites?

"...Glomski's company invested in National Century beginning in 1999 on behalf of clients that included pension systems and churches."

Oct 10, 2008 (The Columbus Dispatch - McClatchy-Tribune Information Services via COMTEX) -- CYFL | Quote | Chart | News | PowerRating -- By the time Lance K. Poulsen left National Century Financial Enterprises, the company had advanced $1 billion to health-care companies with no collateral for the loans That was the testimony yesterday of Sherry Gibson, a former vice president of National Century and the star prosecution witness in Poulsen's fraud trial in U.S. District Court in Columbus.

Those kinds of loans were not allowed under National Century's rules, Gibson said. But she said Poulsen approved them anyway as the company's chief executive.

Gibson testified late yesterday and is scheduled to return to the stand again today for extensive questioning in front of Judge Algenon L. Marbley.

FBI Special Agent Jeffrey Williams testified Tuesday that his investigation uncovered $1.3 billion in unsecured loans that National Century had provided for companies in which senior executives had financial stakes.

Earlier yesterday, Terry Glomski recounted how his company, Lincoln Capital Management, lost nearly $47 million for his investors because of National Century, a Dublin health-care-financing company.

Glomski's company invested in National Century beginning in 1999 on behalf of clients that included pension systems and churches. He said he learned through phone conversations and letters from Poulsen in the fall of 2002 that the bonds Lincoln had bought from National Century were in default.

"At that point, I was shocked," Glomski said.

Despite the problems, Poulsen urged him to continue to invest in National Century. Glomski refused.

Defense attorney Pete Anderson tried to paint Poulsen as a victim of "watchdog" companies such as banks that, he said, should have been making sure that National Century was solvent. He said Glomski should have checked out National Century more extensively.

"Once the problems hit, it's in everyone's best interests to point the finger," he said as he cross-examined Glomski. "You could have done more due diligence."

Glomski countered that Poulsen should have known about the financial integrity of his own company.

When National Century went bankrupt, Glomski said his investors got 6 cents on the dollar for their money.

"You're here because it's a way to settle the score, isn't that right?" Anderson asked Glomski.

Glomski shot back: "My point here is to help provide the truth."

kgray@dispatch.com

To see more of The Columbus Dispatch, or to subscribe to the newspaper, go to http://www.columbusdispatch.com. Copyright (c) 2008, The Columbus Dispatch, Ohio Distributed by McClatchy-Tribune Information Services. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

For full details for CYFL click here.

'Private non-bank lenders enjoyed a regulatory gap' ...Pay attention to 'PRIVATE'

"...private non-bank lenders enjoyed a regulatory gap, allowing them to be regulated by 50 different state banking supervisors instead of the federal government."



Data prove untrue charges that push for affordable housing caused crisis
By DAVID GOLDSTEIN AND KEVIN G. HALL
McClatchy Newspapers
WASHINGTON -- As the economy worsens and Election Day approaches, a conservative campaign that blames the global financial crisis on a government push to make housing more affordable to lower-class Americans has taken off on talk radio and e-mail.

Commentators say that's what triggered the stock market meltdown and the freeze on credit. They've specifically targeted the mortgage finance giants Fannie Mae and Freddie Mac, which the federal government seized on Sept. 6, contending that lending to poor and minority Americans caused Fannie's and Freddie's financial problems.

Federal housing data reveal that the charges aren't true, and that the private sector, not the government or government-backed companies, was behind the soaring subprime lending at the core of the crisis.

Subprime lending offered high-cost loans to the weakest borrowers during the housing boom that lasted from 2001 to 2007. Subprime lending was at its height from 2004 to 2006.

Federal Reserve Board data show that:

-More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.

-Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.

-Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that's being lambasted by conservative critics.

The "turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007," the President's Working Group on Financial Markets reported Friday.

Conservative critics claim that the Clinton administration pushed Fannie Mae and Freddie Mac to make home ownership more available to riskier borrowers with little concern for their ability to pay the mortgages.

"I don't remember a clarion call that said Fannie and Freddie are a disaster. Loaning to minorities and risky folks is a disaster," said Neil Cavuto of Fox News.

Fannie, the Federal National Mortgage Association, and Freddie, the Federal Home Loan Mortgage Corp., don't lend money, to minorities or anyone else, however. They purchase loans from the private lenders who actually underwrite the loans.

It's a process called securitization, and by passing on the loans, banks have more capital on hand so they can lend even more.

This much is true. In an effort to promote affordable home ownership for minorities and rural whites, the Department of Housing and Urban Development set targets for Fannie and Freddie in 1992 to purchase low-income loans for sale into the secondary market that eventually reached this number: 52 percent of loans given to low-to moderate-income families.

To be sure, encouraging lower-income Americans to become homeowners gave unsophisticated borrowers and unscrupulous lenders and mortgage brokers more chances to turn dreams of homeownership in nightmares.

But these loans, and those to low- and moderate-income families represent a small portion of overall lending. And at the height of the housing boom in 2005 and 2006, Republicans and their party's standard bearer, President Bush, didn't criticize any sort of lending, frequently boasting that they were presiding over the highest-ever rates of U.S. homeownership.

Between 2004 and 2006, when subprime lending was exploding, Fannie and Freddie went from holding a high of 48 percent of the subprime loans that were sold into the secondary market to holding about 24 percent, according to data from Inside Mortgage Finance, a specialty publication. One reason is that Fannie and Freddie were subject to tougher standards than many of the unregulated players in the private sector who weakened lending standards, most of whom have gone bankrupt or are now in deep trouble.

During those same explosive three years, private investment banks - not Fannie and Freddie - dominated the mortgage loans that were packaged and sold into the secondary mortgage market. In 2005 and 2006, the private sector securitized almost two thirds of all U.S. mortgages, supplanting Fannie and Freddie, according to a number of specialty publications that track this data.

In 1999, the year many critics charge that the Clinton administration pressured Fannie and Freddie, the private sector sold into the secondary market just 18 percent of all mortgages.

Fueled by low interest rates and cheap credit, home prices between 2001 and 2007 galloped beyond anything ever seen, and that fueled demand for mortgage-backed securities, the technical term for mortgages that are sold to a company, usually an investment bank, which then pools and sells them into the secondary mortgage market.

About 70 percent of all U.S. mortgages are in this secondary mortgage market, according to the Federal Reserve.

Conservative critics also blame the subprime lending mess on the Community Reinvestment Act, a 31-year-old law aimed at freeing credit for underserved neighborhoods.

Congress created the CRA in 1977 to reverse years of redlining and other restrictive banking practices that locked the poor, and especially minorities, out of homeownership and the tax breaks and wealth creation it affords. The CRA requires federally regulated and insured financial institutions to show that they're lending and investing in their communities.

Conservative columnist Charles Krauthammer wrote recently that while the goal of the CRA was admirable, "it led to tremendous pressure on Fannie Mae and Freddie Mac - who in turn pressured banks and other lenders - to extend mortgages to people who were borrowing over their heads. That's called subprime lending. It lies at the root of our current calamity."

Fannie and Freddie, however, didn't pressure lenders to sell them more loans; they struggled to keep pace with their private sector competitors. In fact, their regulator, the Office of Federal Housing Enterprise Oversight, imposed new restrictions in 2006 that led to Fannie and Freddie losing even more market share in the booming subprime market.

What's more, only commercial banks and thrifts must follow CRA rules. The investment banks don't, nor did the now-bankrupt non-bank lenders such as New Century Financial Corp. and Ameriquest that underwrote most of the subprime loans.

These private non-bank lenders enjoyed a regulatory gap, allowing them to be regulated by 50 different state banking supervisors instead of the federal government. And mortgage brokers, who also weren't subject to federal regulation or the CRA, originated most of the subprime loans.

In a speech last March, Janet Yellen, the president of the Federal Reserve Bank of San Francisco, debunked the notion that the push for affordable housing created today's problems.

"Most of the loans made by depository institutions examined under the CRA have not been higher-priced loans," she said. "The CRA has increased the volume of responsible lending to low- and moderate-income households."

In a book on the sub-prime lending collapse published in June 2007, the late Federal Reserve Governor Ed Gramlich wrote that only one-third of all CRA loans had interest rates high enough to be considered sub-prime and that to the pleasant surprise of commercial banks there were low default rates. Banks that participated in CRA lending had found, he wrote, "that this new lending is good business."

JPMorgan and Citigroup? This is our confidence?

The push to credit 'mortgage-back securities' as the causal effect of our financial crisis is very troubling and misleading.
Yes,the home mortgage crisis is a huge contribution, however do you honestly believe Iceland, a Country, has gone bankrupt because of 'low income'or 'mortgage backed securitues'?

We cannot continue to allow the false rhetoric to soar and the truth to be buried. If we continue to blame 'mortgage-backed securites" as the root of the problem, justice will never be ceased.

We need to get to the root of this Global Financial Crisis, whatever the outcome.

Remember, Corporate Bankruptcy,Debtor in Possession Financing,(Darla Moore's invention-Richard Rainwater's wife), Healthcare Fraud and REIT's would be a great start.

I believe we should go back to 1997. The year Healthcare Reform was passed.

In 1997, the largest healthcare company in the nation was the "Frist Family" and friends' Hospital Corporation of America , HCA, or any one of their affiliates...There are many players here so try to keep up!

FOR IMMEDIATE RELEASE
THURSDAY, JUNE 26, 2003
WWW.USDOJ.GOV
LARGEST HEALTH CARE FRAUD CASE IN U.S. HISTORY SETTLED
HCA INVESTIGATION NETS RECORD TOTAL OF $1.7 BILLION

WASHINGTON, D.C. - HCA Inc. (formerly known as Columbia/HCA and HCA - The Healthcare Company) has agreed to pay the United States $631 million in civil penalties and damages arising from false claims the government alleged it submitted to Medicare and other federal health programs, the Justice Department announced today.

One must wonder about the mortgage-related securities JPMorgan is taking onto its books. The following are not the only questionable liabilities JPMorgan has taken on that Richard Rainwater was directly involved with and I am not referring to oil.

JPMorgan is taking on about $176 billion of WaMu home loans, and marking down almost $31 billion of that right off the bat.

Just before the Real Estate crash in 2007, JPMorgan Chase financed Richard Rainwater’s REIT, Crescent (CEI) sale. (Many investors wondered about this move)

Jul 28, 2003
2003-87
SEC Settles Enforcement Proceedings against J.P. Morgan Chase and Citigroup
FOR IMMEDIATE RELEASE
J.P. Morgan Chase Agrees to Pay $135 Million to Settle SEC Allegations that It Helped Enron Commit Fraud
Citigroup Agrees to Pay $120 Million to Settle SEC Allegations that It Helped Enron and Dynegy Commit Fraud

The following is an excerpt from a 10-K SEC Filing, filed by J P MORGAN CHASE & CO on 3/9/2006: Enron litigation. JPMorgan Chase and certain of its officers and directors are involved in a number of lawsuits arising out of its banking relationships with Enron Corp.

The three current or former Firm employees are sued in their roles as former
members of NCFE's board of directors
National Century Financial Enterprises litigation. JPMorgan Chase, JPMorgan
Chase Bank, JPMorgan Partners, Beacon Group, LLC and three current or former
Firm employees have been named as defendants in more than a dozen actions filed in or transferred to the United States District Court for the Southern District of Ohio (the "MDL Litigation"). In the majority of these actions, Bank One, Bank One, N.A., and Banc One Capital Markets, Inc. are also named as defendants.
JPMorgan Chase Bank and Bank One, N.A. are also defendants in an action brought by The Unencumbered Assets Trust ("UAT"), a trust created for the benefit of the creditors of National Century Financial Enterprises, Inc. ("NCFE") as a result
of NCFE's Plan of Liquidation in bankruptcy.

"...the Order finds that JPMorgan Chase was a cause of NCFE's violations of Section 17(a)(3) of the Securities Act, requires JPMorgan Chase to cease and desist from committing or causing any violations and any future violations of Section 17(a)(3) of the Securities Act, and orders JPMorgan Chase to pay disgorgement of $1,286,808.82 and prejudgment interest of $711,335.76. JPMorgan Chase consented to the issuance of the Order without admitting or denying any of the findings therein."

JP Morgan Settles SEC Proceeding Relating to Activities as Trustee to National Century Financial Enterprises

The SEC settled administrative proceedings against JPMorgan Chase & Co relating to its activities as an asset-backed indenture trustee for certain special-purpose subsidiary programs (programs) of National Century Financial Enterprises, Inc. (NCFE), formerly a Dublin, Ohio healthcare financing company, during the approximate period 1999-2002. According to the SEC's Order, JPMorgan Chase and Bank One Corporation, which merged into JPMorgan Chase in 2004, at the instruction of NCFE, made transfers between reserve accounts in the programs that contradicted NCFE's representations to investors about how the reserve accounts would be used and contravened the requirements of the indentures governing the programs. In addition, the Order finds that pursuant to NCFE's instructions, JPMorgan Chase and Bank One made month-end transfers of huge amounts of reserve account funds and that these transfers helped NCFE mask substantial and growing reserve account shortfalls. Based on the above, the Order finds that JPMorgan Chase was a cause of NCFE's violations of Section 17(a)(3) of the Securities Act, requires JPMorgan Chase to cease and desist from committing or causing any violations and any future violations of Section 17(a)(3) of the Securities Act, and orders JPMorgan Chase to pay disgorgement of $1,286,808.82 and prejudgment interest of $711,335.76. JPMorgan Chase consented to the issuance of the Order without admitting or denying any of the findings therein. In the Matter of JPMorgan Chase & Co.

A little history of National Century Financial Enterprises (NCFE):

Prior to bankruptcy, NCFE provided financing to various healthcare providers through wholly-owned special-purpose vehicles,including NPF VI and NPF XII, which purchased discounted accounts receivable to be paid under third-party insurance programs. NPF VI and NPF XII financed the purchases of such receivables, primarily through private placements of notes.

TUESDAY, JULY 10, 2007
FOR IMMEDIATE RELEASE
http://www.usdoj.gov/usao/ohsn
SUPERSEDING INDICTMENT CHARGES FORMER EXECUTIVES OF HEALTH CARE FINANCING COMPANY WITH CONSPIRACY, FRAUD, MONEY LAUNDERING

COLUMBUS – A federal grand jury here today returned a superseding indictment charging eight former executives of National Century Financial Enterprises (NCFE) with conspiring to defraud investors by diverting millions of dollars in investors’ funds, fabricating data in investor reports, and moving money back and forth between accounts in order to conceal investor fund shortfalls. NCFE, based in Dublin, Ohio, was one of the largest healthcare finance companies in the United States until it filed for bankruptcy in November, 2002.

All defendants, except for James K Happ, were initially indicted in May, 2006. United States District Judge Algenon L. Marbley will preside over the case which is scheduled for trial on November 5, 2007.

“All defendants, except for Happ...”
Who is James K Happ?

James K Happ has an interesting employment history.

SEPTEMBER 9, 2003
Source: ANNUAL MEETING OF STOCKHOLDERS-SEPTEMBER 9, 2003-Med Diversified Inc.
JAMES K. HAPP has served as chief executive officer of our subsidiary,
Tender Loving Care Health Care Services, Inc., since October 2002.
Previously, Mr. Happ served for three years as executive vice president of NCFE,
during which time he restructured the servicer department to improve operational
Performance and accelerated the utilization of technology to increase operational
efficiency. Mr. Happ also served as chief financial officer of the
Dallas-based Columbia Homecare Group, Inc., a home care company with more than 500 locations nationwide and more than $1 billion in revenue in 1997.

In this role, he directed the company through the challenging reimbursement climate, known as the interim payment system, and participated in the divestiture of all of Columbia/HCA's home care operations. (All of which are in the Bankruptcy case in Tennessee) Who owned Columbia Homecare Group, Inc.?

Lincoln Capital and its successor, Lehman Brothers Inc...

"...relied on the ratings of National Century bonds ..."

"...a former investment manager argued ..."
"...investment firm whose clients lost $49.8 million ..."


Thursday, October 9, 2008 - 5:40 PM EDT |
Modified: Friday, October 10, 2008 - 9:45 AM
Attorney: NCFE investor partially to blame
Business First of Columbus - by Kevin Kemper

When National Century Financial Enterprises Inc. collapsed into bankruptcy in 2002, as much as $2.84 billion of investor money was lost.

Thursday afternoon, a former investment manager argued with an attorney representing National Century’s former CEO over whether or not losses were the fault of investors who didn’t do enough research, or National Century executives who sent money out the door without collateral.

“The experts that we all relied on were given information they believed was true, but it turns out it wasn’t,” said Terrence Glomski, a former principal of Lincoln Capital Management, an investment firm whose clients lost $49.8 million when National Century collapsed.

"...Lincoln Capital and its successor, Lehman Brothers Inc., were able to recover just 6 cents on the dollar of its clients’ ..."


Glomski was testifying as a government witness Thursday in the criminal fraud trial of Lance Poulsen, a former owner and chief executive of National Century.

Under cross examination by Poulsen attorney Peter Anderson, Glomski said that when he made the decision to invest his clients’ money in National Century’s bonds, he had relied on the opinion of ratings agencies who gave the bonds their safest and highest ratings possible.

When Glomski testified at a similar trial against other National Century executives in February, he told the jury that Lincoln Capital and its successor, Lehman Brothers Inc., were able to recover just 6 cents on the dollar of its clients’ investments, or about $2.9 million. Lehman Brothers filed for Chapter 11 bankruptcy protection in September and was subsequently sold to Barclays Plc.

Although Glomski relied on the ratings of National Century bonds to help make investments, Anderson suggested he should have done more. He asked Glomski if he had fully researched National Century by reading all of its governing documents, or researched the individual companies whose debt National Century was securitizing into bonds.

To both questions, Glomski answered that he had not. With all of your experience and expertise, Anderson said, you could have done far more due diligence.

“I wish I had,” Glomski responded.

National Century was a financier of last resort for health-care providers such as hospitals and urgent-care centers. It purchased accounts receivable from the providers at a discount in exchange for quick cash the providers could use to pay bills. National Century then packaged the receivables as bonds which it sold to investors.

The government has alleged the investor funds were only allowed to be used to purchase accounts receivable, but National Century executives used some of that money instead to give no-collateral funding to health-care providers owned by Poulsen and other National Century executives.

The government has called that funding a fraud, and accused Poulsen of running it. Poulsen is standing trial in U.S. District Court in Columbus on charges of conspiracy, securities fraud and wire fraud, among others. He has pleaded not guilty to all charges.

“Hsu and his company used investor funds to make significant political contributions to prominent politicians,”

"Ponzi scheme that raised $60 million from investors across the country"

"...SEC claims that Hsu’s business was a complete and total fraud..."

SEC Hits $60M Fraud That Used Pols as Props
By Aaron Seward
October 10, 2008

The SEC has charged Norman Hsu and his company Next Components with operating a Ponzi scheme that raised $60 million from investors across the country. The Commission claims that Hsu violated a bevy of federal securities laws by using investor funds for purposes other than those he promised.

Paying sales agents, making illegal political campaign contributions, paying the returns of earlier investors, and supporting a luxurious lifestyle all came before investors, according to the Commission. From 2003 to 2007, Hsu offered and sold securities through his companies Next Components and its predecessor, a company called Components.

Hsu presented himself as an international businessman with high-level contacts with overseas companies, particularly in the Chinese apparel and technology industries. In selling securities, he would tell investors that an unspecified company needed a bridge loan to finance a short-term business deal, such as an agreement to manufacture a set amount of designer clothing pieces for delivery to a retail outlet on a specific date. He went on to tell investors that their money would be pooled to finance the bridge loans and that they would receive a portion of the interest generated by the loan. Hsu said that the loans would mature in 70 to 130 days and that they would generate returns of 14% to 24%. Hsu told investors that he was responsible for arranging the terms of the loans and that his knowledge about foreign business practices allowed him to develop profitable financing deals. At no point did investors play a role in reviewing the loans or evaluating the participants in the supposed venture.

Hsu gave investors a contract drafted on Next Components letterhead that identified the amount invested and promised payment of “all the principal, profit sharing, interest and participating fee.” The contract did not mention any other uses of investor funds, such as payment of sales agents, personal expenses, or political donations.

Along with the contract, investors received a check in the amount of the principal plus the promised interest, post-dated to the time of the investment’s maturity. But time and again, Hsu convinced investors not to cash their checks and instead talked them into reinvesting their money in Next Components.

The SEC claims that Hsu’s business was a complete and total fraud. He had no connections with foreign companies and never made a bridge loan to anyone. The returns that he paid to customers were, in classic Ponzi scheme fashion, taken out of funds collected from new investors.

Instead, Hsu used investor funds to support his lavish lifestyle, which included the maintenance of two homes, one in California and one in New York, as well as travel and entertainment expenses. He also used investor money to make significant campaign contributions to prominent politicians, the fringe benefits of which he used to create a aura of good repute. For example, he took one potential investor to a fundraising event for a presidential primary candidate in Orange County, California. While there, Hsu sat next to the host of the event, a well-known local businessman, who appeared to know and respect Hsu.

“Hsu and his company used investor funds to make significant political contributions to prominent politicians,” said Linda Chatman Thomsen, Director of the SEC’s Division of Enforcement. “He allegedly then used the veneer of respectability created by his political connections to persuade his investors that the investments he offered were legitimate. This deception convinced investors to continue to invest with Hsu, even as he and his company allegedly siphoned away investor funds to pay for his own extravagant lifestyle and to finance a Ponzi scheme.”

The Commission’s suit seeks permanent injunctions, disgorgement, prejudgment interest, and civil penalties against Hsu and Next Components. Hsu is currently in custody awaiting trial on federal criminal charges of investment fraud and wire fraud in connection with his investment scheme.

Remarks by Secretary Henry M. Paulson, Jr. in 2007

"...Remarks by Secretary Henry M. Paulson, Jr.
on Current Housing and Mortgage Market Developments"

"...I will spend my time this morning reviewing the current state of the housing and mortgage markets, the implications for our capital markets and economy, and the role government and the private sector should play as we go forward.

The ongoing housing correction is not ending as quickly as it might have appeared late last year."



"...Our bank regulators must evaluate regulatory capital requirements applicable to bank exposures to off-balance sheet vehicles."

"The housing correction has its roots in an eight-year period of exceptional home price appreciation which was fueled by an increased demand for..."

"...abundant supply of easy credit. Speculation also played a significant role, as the share of buying activity by investors or individuals buying second homes more than doubled from 2000 to 2005."


BETWEEN 2000 & 2005!!! HELLO!!!!!October 16, 2007
"...As demand for housing began to slow in 2004,originators, eager to maintain high mortgage origination volumes, further lowered their underwriting standards..."



HP-612

Remarks by Secretary Henry M. Paulson, Jr.
on Current Housing and Mortgage Market Developments
Georgetown University Law Center

Washington, DC--Good morning. As students of law, business and public policy, you have an interest in real life case studies that combine financial markets and policy issues. Current developments in the housing and mortgage markets provide such an example. I will spend my time this morning reviewing the current state of the housing and mortgage markets, the implications for our capital markets and economy, and the role government and the private sector should play as we go forward.

The ongoing housing correction is not ending as quickly as it might have appeared late last year.
And it now looks like it will continue to adversely impact our economy, our capital markets, and many homeowners for some time yet. Even so, I believe we have a healthy, diversified economy that will continue to grow.

The housing correction has its roots in an eight-year period of exceptional home price appreciation which was fueled by an increased demand for, and an abundant supply of easy credit. Speculation also played a significant role, as the share of buying activity by investors or individuals buying second homes more than doubled from 2000 to 2005. Homebuilders responded to the extraordinary demand for more and larger homes as if it would last forever.

As mortgage lenders and investors reached for higher returns this "demand" pressure, coupled with our fragmented mortgage origination process, led to a decline in underwriting standards and a sharp increase in the issuance of riskier mortgage products. As demand for housing began to slow in 2004, originators, eager to maintain high mortgage origination volumes, further lowered their underwriting standards.
While adjustable-rate mortgages (ARMs) are not new, recent years saw an increase in hybrid-ARMs with low teaser rates, interest-only features, low- or no-down payments, and even negative amortization. In fact, about one-quarter of mortgage originations were non-traditional ARMs in 2005 and 2006, exposing mortgage holders to much greater risk than the traditional 30-year fixed rate mortgage with a 20 percent down payment.

This decline in lending standards was not limited to, but was most pronounced, in the case of subprime lending, which grew from only about 2 percent of mortgages in 1998 to nearly 14 percent in mid-2007. A significant percentage of the non-traditional ARMs were marketed and sold to subprime borrowers. Predictably, the result has been progressively higher rates of default on subprime mortgages.

The inevitable correction began in early 2006. Today, average nationwide home prices are barely up in the year through June, sales of existing single-family homes are down by nearly 25 percent from the peak in 2005, and the inventory of unsold homes has increased to levels last seen in the early 1990s. Housing should be analyzed by local or regional markets; averages can be misleading. Areas with the greatest price appreciation prior to the correction, such as Las Vegas, San Diego, central California and a number of cities in Florida, have seen declines. And prices are falling in other parts of the country where economic growth is slower, such as Michigan and parts of Ohio. Working through the housing correction will continue to take time.

As I mentioned earlier, mortgage defaults and foreclosures are rising. While the delinquency rate today is near the 2001 rate, there are over seven times more subprime mortgages today than there were in 2001. At the end of the second quarter of this year, more than 900,000 subprime loans were at least 30 days delinquent. Foreclosures are also up significantly – increasing about 50 percent from 2000 to 2006. Foreclosures on subprime loans are up over 200 percent in that same period. Current trends suggest there will be just over 1 million foreclosure starts this year - of which 620,000 are subprime.

Of the approximately 50 million outstanding mortgages in the U.S. today, approximately 10 million are subprime loans. Many have cited the statistic that 2 million of those subprime mortgages will reset to higher rates in the next 18 months. That statistic is true, relevant, and troubling, but it is not the complete picture of the risk going forward. Many of those borrowers will be able to afford their new mortgage payment or they will be able to refinance into another more affordable mortgage. Yet, the problem today is not limited to subprime mortgages as the number of homeowners having trouble making payments on prime mortgages is also increasing. And finally, the wide geographic variation in home price trends adds to the complexity of sizing this problem with any certainty.

While innovation in the mortgage sector has brought benefits to our economy, the industry and homeowners, it has also introduced some challenges. Gone are the days when a homebuyer only went to the corner bank to take out a mortgage. Today, the mortgage process is disaggregated and less personal. A mortgage loan is likely to be originated, serviced, and owned by three different entities. Originators often sell mortgages to securitizers who package them into mortgage-backed securities, which are then divided and sold again to a global network of investors.

In today's decentralized system, a homeowner having trouble making payments often does not know where to turn for assistance.

In addition to affecting individual homeowners, the housing correction is also having a real impact on our economy. Annual housing starts peaked at an annual rate of almost 2.3 million units in early 2006 before falling off more than 40 percent through August of this year. Employment in residential building, including specialty trade contractors, has dropped by almost 200,000 since early 2006, offsetting about one-quarter of the jobs gained in the housing boom. It looked like housing construction had reached a bottom in the first half of this year, but starts have declined again since June and data on permit applications and inventories of unsold homes suggest further declines lie ahead.

We confront these current challenges against the backdrop of a strong economy – not just in the U.S., but globally. Indeed, this is the first housing downturn in the past three decades in which U.S. GDP growth has not turned negative. Business investment has expanded in recent months, our exports are being boosted by the strong economic growth of our trading partners and the healthy job market has helped consumer spending continue to grow.

But let me be clear, despite strong economic fundamentals, the housing decline is still unfolding and I view it as the most significant current risk to our economy. The longer housing prices remain stagnant or fall, the greater the penalty to our future economic growth.

So where do we go from here and what is the proper role for government?

First, our immediate concern must be for struggling borrowers whose primary residence is at risk. We must help as many able homeowners as possible stay in their homes. Foreclosures are costly and painful for homeowners. They are also costly for mortgage servicers and investors. They can have spillover effects into property values throughout a neighborhood, creating a downward cycle we must work to avoid.

Second, we must minimize the impact of the current downturn on our economy, recognizing the tension between such actions and the possibility of moral hazard.

When investors are relieved of the costs of bad decisions, they are more likely to repeat their mistakes. I have no interest in bailing out lenders or property speculators. Still, we must recognize the very real harms to families affected by the housing downturn. We must take steps to minimize the neighborhood effects and the macroeconomic effects of this housing market correction.

Third, we need to identify public policy changes that will reduce the likelihood of repeating some of the excesses of recent years while maintaining access to credit for able homeowners.

Helping Struggling Homeowners

Today's mortgage market is different than in the past and it requires policymakers to think and act creatively.

A first and important step is to bring mortgage servicers and the mortgage investors together in a coordinated effort to identify struggling borrowers early, connect them to a mortgage counselor and find a sustainable mortgage solution. In August, the President charged Secretary Alphonso Jackson and me to lead this effort. HUD and Treasury have been working closely with mortgage market participants to address the complexities of the modification process, especially in a mortgage market primarily based on a securitization model. The breadth of disaggregation in the mortgage market today is unprecedented, presenting a fundamental, practical problem that does not lend itself to an easy solution.


Recent surveys have shown that as many as 50 percent of the borrowers who have gone into foreclosure never had a prior discussion with a mortgage counselor or their servicer. That must change. Early intervention is critical – the earlier borrowers explore alternative options, the more likely they will find a workable solution and keep their home. We cannot expect to avert every foreclosure and, indeed, some are warranted. Even in years of strong housing performance, we witness several hundred thousand foreclosures. But today many homeowners out there can be helped, and we are committed to efforts designed to do just that.

Last week, I joined a group of mortgage servicers, counselors and investors as they launched a bipartisan alliance, called Hope Now, to coordinate efforts to reach more homeowners and find affordable solutions. I applaud this effort. This challenge is significant and only by working together will we reach more homeowners in need.

We have an immediate need to see more loan modifications and refinancing and other flexibility. For many families, this will be the only viable solution. The current process is not working well. This is not about finger pointing; it is about putting an aggressive plan together and moving forward. This alliance is dedicated to seeing that happen, and I expect to see results. I also call on those servicers who are not yet a part of this alliance to join. You have an obligation to help meet this challenge, and you can do so more effectively as part of an integrated effort.


Not all servicers are staffed for aggressive loss-mitigation. Preventing foreclosures is in investors' interest and investors must take an active role in demanding that all servicers, large or small, are pursuing all available loss-mitigation strategies. Today the industry doesn't have a thorough, standardized set of loss-mitigation metrics with which to evaluate servicers' performance. I expect the Hope Now alliance to quickly develop and begin reporting those metrics so investors, policy makers, and homeowners can measure results.

The efforts of this private sector alliance alone will not solve the problem. But it is a critical piece of the solution. As we work with them, we will all learn and improve the means of reaching and helping homeowners to prevent foreclosures.

We must also take steps to make more affordable mortgage products available for struggling homeowners. In August, the President renewed his call on Congress to pass FHA modernization to make affordable FHA loans more widely available. To facilitate mortgage workouts, the President has also called on Congress to temporarily eliminate taxes on mortgage debt forgiven on a primary residence.

FHA reform is moving through Congress, and I am hopeful that it will reach the President's desk soon. The tax relief proposal has cleared the House and is awaiting further action in the Senate. GSE reform has cleared the House, and also awaits action in the Senate. Congress should enact these bills as quickly as possible.

The GSEs also have a role to play in making affordable mortgage products more widely available. It is their mission. The secondary market in GSE mortgage-backed securities is functioning well. The GSEs could increase the flow of mortgage capital to refinance subprime borrowers if they securitized a greater number of these mortgages. To accomplish this, the GSEs must work closely with their private mortgage insurance company partners in the development of new products. The GSEs have additional capacity to help more blemished-credit struggling homeowners and we are hopeful that they will step up to this challenge.

In addition to these current initiatives, we welcome further input and will openly consider other ideas to assist struggling homeowners.

Public Policy Questions

We also need to make some changes in our laws and rules in order to prevent some of the excesses and abuses of the last few years from happening again. We must do so in a balanced, thoughtful way so as to avoid overreacting and introducing unintended consequences such as those that might shut off credit to able borrowers.

Homeownership brings substantial benefits to our society. For millions of Americans, their home is their largest financial asset, the key to their future financial security. And homeownership gives people a stake in their community that often leads to more civic involvement, better schools and safer neighborhoods.

While financial innovation has helped increase the homeownership rate in recent years, it has also introduced new complexities. Homebuyers today have more choices than ever before in finding a mortgage that best suits their circumstances. Yet, comparing the attractiveness of one mortgage product to another can be difficult. Homebuyer education and effective disclosure are critical to helping borrowers understand the risks of innovative mortgage products.

Furthermore, our complex and fragmented regulatory system complicates an already difficult situation. Existing federal laws address mortgage fraud, disclosures, fair lending, unfair and deceptive practices, and other aspects of the mortgage process. But the regulatory and enforcement authority varies across different federal agencies. States have also enacted an additional layer of regulation, typically applied only to certain institutions that operate within that state and enforced by the state agencies.

This patchwork structure should be streamlined and modernized.

Treasury is already spending considerable energy in developing ideas on how to improve the financial regulatory structure more broadly and, early next year, we will release a blueprint for comprehensive overhaul. Our goal is to improve oversight and allow our financial services industry to better adapt and compete in the global marketplace. However, fundamental changes to our regulatory system will take years to consider and implement. Homeowners should not wait years - we need to move now to make interim improvements to our current mortgage regulatory system.

We can do so by focusing on four key issues: disclosure, origination, predatory lending and liability.

We need simple, clear, and understandable mortgage disclosure. We must identify what information is most critical for borrowers to have so that they can make informed decisions. At closing, homebuyers get writer's cramp from initialing pages and pages of unintelligible and mostly unread boilerplate that appears to be designed to insulate the originator or lender from liability rather than to provide useful information to the borrower. We can and must do better.

The most critical facts, including potential future monthly payments, should be on a single page in clear, easy-to-understand language, to be signed by the borrower and the lender. In my judgment, this may have prevented many of the problems that we are seeing today.

The Federal Reserve is leading on this issue through a comprehensive review of the disclosure regime underlying the Truth in Lending Act. As part of this review, the Federal Reserve is engaged in extensive consumer testing to determine what types of disclosures provide the best information to consumers. I support the Federal Reserve's consumer-oriented approach -- this testing is critical to determining what improved disclosures are going to be most useful. This is hard and necessary work, but it is very important.

Borrowers have responsibility as well. Mortgage providers must offer clear, transparent and understandable information on the mortgage products they sell. And homebuyers have a responsibility to use that information. Buying a home today is a complex process, but that in no way excuses homebuyers from their obligation for due diligence. Just as investors in the stock market have a responsibility to understand the risks associated with their investment, homebuyers have a responsibility to understand their mortgages.

Secondly, we need to bring a higher level of integrity to the mortgage origination process. The development of a uniform national licensing, education, and monitoring system for all mortgage brokers is worth considering.

Some of the conduct and practices that I have learned about are shameful. It is no secret that, while not the norm, some fraudulent activity on behalf of mortgage brokers occurred.

Today, mortgage brokers are regulated at the state level, and the rigor of that regulation varies from state to state. State regulators have begun an effort geared toward uniform licensing and education requirements for mortgage brokers. We support this effort, but since other brokers are employed by federally-regulated entities, this effort will not cover the full universe of mortgage originators. We need to consider a national approach that builds upon the state efforts that are currently underway.

Licensing requirements should take into account prior fraudulent or criminal activity, and should require initial and ongoing education. At a minimum mortgage originators should be able to demonstrate a sound understanding of the products that they will be selling.

Common sense licensing requirements that are uniformly enforced could greatly help in weeding out the bad actors. A nationwide monitoring system that covers all mortgage originators could help prevent unscrupulous mortgage originators from moving across state lines or switching employers to evade detection. This is worth considering.

The third area that also warrants our focus is predatory lending.

Homebuyers must not be subject to unfair and deceptive lending practices. Here too, the Federal Reserve is engaged in a comprehensive review of its authority under the Home Ownership and Equity Protection Act, including its authority to broadly define unfair and deceptive practices. These rules would apply to the entire mortgage industry.

The Federal Reserve can inject greater uniformity and objective standards into the mortgage origination process, and I encourage them to do so.

In addition, there have been calls for legislation to address certain practices that are often associated with predatory lending, such as prepayment penalties or stated-income loans. There are clearly circumstances in which these product features are marketed inappropriately. There are also clearly circumstances in which any one of these features can make sense for the borrower and significantly improve credit availability.

We need to strike a careful balance of providing adequate consumer protection without limiting overall credit availability or consumer choice, especially for those who most need that flexibility.

This is a difficult balance to achieve because each lending determination is relatively unique based on the different facts and circumstances associated with each borrower. Yet, I am hopeful that we can do it.

In my view, it makes a great deal of sense to recognize that certain products are right for some borrowers and not for others. The Federal Reserve has already stated that it will examine some of these specific issues including prepayment penalties, stated-income loans, escrow accounts and ability-to-repay considerations.

The fourth issue that has garnered attention is whether greater liability should be imposed on securitizers and investors. In my view, this is not the answer to the problem. Imposing broad liability provisions on investors and securitizers would very likely generate significant unintended consequences. It would potentially paralyze securitization, a process that has been extremely valuable in extending the availability of credit to millions of homeowners nationwide and lowering the cost of financing. Again, balance is critically important. Congress should proceed with extreme caution so as to avoid cutting off investment inflows to the housing market.

Before concluding I will briefly summarize two other broad-based capital markets related initiatives under way that will also address some of the problems which have arisen in the mortgage market.

Broader Capital Markets Issues

The President's Working Group (PWG) – chaired by Treasury and consisting of the Federal Reserve, the SEC, and the CFTC -- is leading a comprehensive review into the policy implications resulting from current challenges in the credit markets. A number of these issues are directly tied to the mortgage markets; others affect the capital markets more broadly. Given the global nature of our financial markets, I will also work with the G7 and through the Financial Stability Forum to address several of these issues.

One area the PWG has already addressed is hedge funds. Back in February, the PWG produced forward-leaning guidance for the industry and its participants including regulated financial institutions which serve as prime brokers and counterparties to hedge funds. Our principles and guidelines serve as a foundation to enhance vigilance and market discipline, strengthen investor protection and guard against systemic risk. While a small number of hedge funds were forced to wind down in recent months, there were no systemic events associated with their closure, and hedge funds have not proven to be a significant problem.

The real irony is that the material problems arising in recent months were in regulated institutions in certain markets. Many regulated institutions, both in the U.S. and elsewhere, appear not to have fully appreciated all of the risks associated with the securitized assets on their balance sheets or the many risks associated with commitments to provide liquidity to off-balance sheet vehicles, such as conduits and structured investment vehicles.

Deteriorating subprime mortgage performance over the last several months led investors to question their assumptions about the credit quality and value of many assets. In July, as default rates surpassed their models' projections, ratings agencies downgraded billions of dollars worth of subprime mortgage backed securities.

The statement by ratings agencies that they were unable to accurately characterize the default probabilities of subprime mortgages created broader uncertainties in financial markets. Not surprisingly, investors reacted by reassessing and repricing risk across all market segments that relied heavily on the use of ratings, particularly in complex, structured credit products. Predictably, given the interconnectedness of our capital markets, the influence of this development was global.

The reassessment of risk has played out more rapidly in some markets than in others. In certain asset classes, risk has been reassessed and repriced fairly quickly as investors gained confidence in their fundamental assessments. In such markets, liquidity has returned and markets are operating normally. Good examples would include world equity markets, sovereign debt markets, and investment grade corporate debt.

On the other hand, some sectors that are characterized by more complex securities or that rely more heavily on securitization and ratings -- such as the jumbo mortgage market, the leveraged loan market, and the asset backed commercial paper market -- are still operating under some stress with impaired liquidity. Conditions are better than they were a few weeks ago, and we continue to see improvements, but it will take longer for these sectors to fully recover.

Market–based efforts and initiatives are emerging to address some of the current challenges in the capital markets. I am pleased that yesterday a group of commercial banks announced their intent to establish a master conduit to help improve liquidity in the asset-backed commercial paper marketplace. The market participants and investors who may voluntarily participate in this enhanced facility recognize the benefit of such a structure. The leading financial institutions as well as investors realize the importance of improved liquidity in the high quality, asset backed commercial paper sector – a sector of the market with great importance for securitized assets such as mortgages, as well as for the broader capital markets.

This is promising. Just as in the mortgage market, we need to work on parallel tracks, addressing current concerns as well as addressing policy issues to avoid repeating the recent market turmoil.

Treasury and the President's Working Group are conducting a comprehensive review of such issues, including two areas that have a direct relationship to the events in the mortgage markets.

First, it is clear that we must examine the role of credit rating agencies including transparency and potential conflicts of interest. We must also assess if regulations and supervisory policies are encouraging an over-reliance on ratings by financial institutions and investors.

Second, we must continue to address financial institution risk management and related regulatory issues. In particular, we must ensure that they adequately take into account the risks posed by protracted periods of market illiquidity or the risks posed by a reduced ability to securitize and sell loans, including leveraged syndicated loans and mortgages.

Our bank regulators must evaluate regulatory capital requirements applicable to bank exposures to off-balance sheet vehicles. Transparency is important here, so we will also review the accounting rules that are applicable to off-balance sheet vehicles.

We will examine other areas that are indirectly related to the mortgage market which nevertheless impact our capital markets, ranging from enhancing the management of counterparty credit risks, to market infrastructure issues, to issues surrounding reporting and risk disclosure, to evaluating the important role of investors and, finally, how our long-standing regulatory structure and tools respond to today's continuously evolving financial system.

Conclusion

Innovation is the hallmark of our capital markets and it brings with it significant benefits to individual investors and our overall economy. However, innovation often outpaces regulation. That is not surprising, and we would not want it the other way around. If it were, we would have less competitive and efficient markets, which would ultimately stifle economic growth. It would mean fewer jobs and lower wages.

However, when problems arise, we need to shine a light on them and move to address them in a balanced way. Today it is clear that we need to do just that. We have a lot of work to do. We need to ensure yesterday's excesses are not repeated tomorrow.

As the mortgage and credit markets continue to adjust, all of us – policymakers and market participants -- will no doubt learn new lessons. Through a dedicated effort by all parties, we will work to strike the right balance, protect consumers and make mortgage capital widely available to Americans ready to be homeowners.



-30-

After the sale transaction between HCA and Medshares...

http://bankrupt.com/TCR_Public/040922.mbx

How is HCA still allowed to do business in our healthcare system? How could Medshares have utilized their provider number?

This allowance of HCA to use HCA's Medicare/Medicaid provider number questions a sale at all? Why has the Government allowed this? Why was HCA allowed todo business with the US Government? Why do they still own Medicare/Medicaid provider numbers?


"...After the sale transaction between HCA and Medshares,
Medshares continued to receive periodic interim payments
from Medicare under HCA's provider number."

The actual sale of HCA was never recorded properly with the SEC.I wonder why.Alledgedly, thesale was in October 1998. Funny,three months later:
"...On February 2, 1999, HCA made a demand on NCFE for payment under
the Collection Agreement.

"...As part of the Asset Purchase Agreement, Medshares agreed to purchase assets of certain home healthcare agencies owned by HCA and certain subsidiaries and
joint ventures, ..."

"JOINT VENTURES and subsidiaries"....hmmmmm

(c) The post-sale periodic interim payments After the sale transaction between HCA and Medshares,
Medshares continued to receive periodic interim payments
from Medicare under HCA's provider number. The Post-Sale
interim payments were then remitted to NCFE, which in turn
credited Medshares and advanced substantial funds to
Medshares to purchase additional accounts receivable.


HCA sued NCFE in Tennessee state court in a case
styled Columbia Healthcare Corp. v. Medshares Consolidated, Inc.,
et al.

On May 4, 1999, NCFE made a demand on HCA for the return of the
$1,305,137. HCA has never returned the money. NCFE filed
counterclaims in the Tennessee Litigation to recover the
$1,305,137 amount.

NATIONAL CENTURY: Trust Wants HCA Claim Reduced to $1,992,756


-------------------------------------------------------------
David A. Beck, Esq., at Jones Day, in Chicago, Illinois, relates
that in the Summer of 1998, Medshares Consolidated, Inc., entered
into an agreement to purchase certain home health agencies from
Columbia/HCA, now known as HCA, Inc. As part of the Asset
Purchase Agreement, Medshares agreed to purchase assets of certain
home healthcare agencies owned by HCA and certain subsidiaries and
joint ventures, which assets included accounts receivable
outstanding at the time of closing.

At the time of the sale transaction between Medshares and HCA, the
valuation of the purchase accounts receivable was uncertain.
Under the Medshares Purchase Agreement, Medshares agreed to
purchase the "Threshold Amount" of the accounts receivable. If
more than the Threshold Amount was collected, the excess funds
would be returned to HCA.

To facilitate the collection of the accounts receivable, Debtor
National Century Financial Enterprises, Inc., Medshares and HCA
entered into a Collection Agreement pursuant to which NCFE was to
receive payments on the accounts receivable. The collections were
then remitted to HCA to the extent they exceeded the Threshold
Amount.

The Collection Agreement defines the Threshold Amount as "sixty
percent (60%) of the Value of the Receivables." The Value of the
Receivables is defined as "the amount of the book value of the
Receivables, determined based upon a 150 day bad debt reserve
policy, adjusted by those reserves or assets which have the nature
of being a reserve or asset for a cost report purpose." The
Collection Agreement required NCFE to pay HCA money only if and as
the collections exceeded the Threshold Amount. The Collection
Agreement was to be in effect for a period of six months.

On February 2, 1999, HCA made a demand on NCFE for payment under
the Collection Agreement. Subsequently, Greg Gerkin, Assistant
Vice President of HCA, contacted NCFE to discuss HCA's demand for
payment. Mr. Gerkin asserted that NCFE owed HCA more than
$1 million and that HCA would sue NCFE if NCFE did not pay HCA
approximately $1.3 million.

Because NCFE had not yet received all of the patient-specific data
regarding the accounts receivable, which presumably was in HCA's
possession, NCFE was unable to perform a complete accounting of
the collections in its possession at that time. Nevertheless, on
March 5, 1999, NCFE remitted $1,305,137 to HCA. Notwithstanding
the payment, HCA sued NCFE in Tennessee state court in a case
styled Columbia Healthcare Corp. v. Medshares Consolidated, Inc.,
et al.

After the remittance of the $1,305,137 payment, NCFE received the
patient-specific data regarding the purchased accounts receivable
and then was in a position to complete a comprehensive accounting
of the collections received. In that accounting, NCFE determined
that the Threshold Amount had not been exceeded at that time and
that the $1,305,137 had been paid to HCA in error.

On May 4, 1999, NCFE made a demand on HCA for the return of the
$1,305,137. HCA has never returned the money. NCFE filed
counterclaims in the Tennessee Litigation to recover the
$1,305,137 amount.

HCA asserted Claim No. 121 for $10,611,222, broken into three
categories:

(a) The deposits that can be definitely linked to pre-
acquisition services

This component of the HCA Claim consists of accounts
receivable with definitive pre-acquisition dates of
service that were deposited into the NCFE lockboxes. HCA
asserts that it has a $2,368,113 claim for Definitive Pre-
Acquisition Receivables. However, NCFE collected only
$206,479, after the $1,305,137 payment is taken into
account, in Definitive Pre-Acquisition Receivables.
Accordingly, the HCA Claim with respect to the category
should be reduced to $206,479.

(b) The deposits for which documentation has not been
produced

HCA asserts that there is insufficient documentation to
identify $5.17 million in NCFE lockbox collections as pre-
or post-acquisition accounts receivable. HCA proposes to
divide the Unidentified Lockbox Collections between pre-
and post-acquisition accounts receivable by a procedure
conducted by Ernst & Young based on an estimation of the
allocation of pre- and post-acquisition accounts
receivable, resulting in an allocation of $2,765,275 to
pre-acquisition accounts receivable payable to HCA. In
addition, HCA asserts a claim for another $1,682,948 of
pre-sale accounts receivable received by NCFE through
"some mechanism other than the lockbox accounts."

Mr. Beck argues that HCA's $2,765,275 claim for
Unidentified Lockbox Collections greatly overstates the
amount that actually represents pre-acquisition
receivables. NCFE's analysis indicates that the actual
amount allocable to pre-acquisition accounts receivable is
$1,786,277. Accordingly, the portion of the HCA Claim
relating to the Unidentified Lockbox Collections should be
reduced to $1,786,277.

With respect to HCA's $1,682,948 claim for Unidentified
Collections, HCA does not provide any evidence that these
funds were received by NCFE. NCFE's books and records
also do not indicate the receipt of any of those funds.
Indeed, these amounts may have been paid directly to
Medshares, in which case HCA may have a claim against
Medshares. Because it did not receive these funds, Mr.
Beck contends that NCFE is under no obligation to pay the
Unidentified Collections to HCA.

(c) The post-sale periodic interim payments

After the sale transaction between HCA and Medshares,
Medshares continued to receive periodic interim payments
from Medicare under HCA's provider number. The Post-Sale
interim payments were then remitted to NCFE, which in turn
credited Medshares and advanced substantial funds to
Medshares to purchase additional accounts receivable.

HCA asserts a claim for $1,913,543 with respect to the
post-Sale interim payments. However, HCA provides no
basis for why the post-Sale interim payments give rise to
a claim against the Debtors' estates. Whether or not HCA
was or may be required to reimburse Medicare for these
funds, NCFE is not liable to HCA under the Collection
Agreement or otherwise with respect to these amounts.

HCA also asserted a claim for $1,881,343 in interest on
the amounts it alleges it is owed from the Debtors. HCA
has not provided any basis for asserting a claim for
interest against the Debtors.

Thus, the only portions of the HCA Claim that should be allowed
are reduced amounts for the Definitive Pre-Acquisition Receivables
for $206,479, and for the Unidentified Lockbox Collection for
$1,786,277.
Accordingly, the Unencumbered Assets Trust, the successor-in-
interest to certain rights and assets of National Century
Financial Enterprises, Inc., and its debtor-affiliates, asks the
U.S. Bankruptcy Court for the Southern District of Ohio to reduce
the HCA Claim from $10,611,222 to $1,992,756.

Headquartered in Dublin, Ohio, National Century Financial
Enterprises, Inc. -- http://www.ncfe.com/-- is the market leader
in healthcare finance focused on providing medical accounts
receivable financing to middle market healthcare providers. The
Company filed for Chapter 11 protection on November 18, 2002
(Bankr. S.D. Ohio Case No. 02-65235). The healthcare finance
company prosecuted its Fourth Amended Plan of Liquidation to
confirmation on April 16, 2004. Paul E. Harner, Esq., at Jones
Day represents the Debtors. (National Century Bankruptcy News,
Issue No. 46; Bankruptcy Creditors' Service, Inc., 215/945-7000)

One week into the trial for the CEO Lance Poulsen, yes. However, this case has been ongoing since February. However, there is an ex executive, James J Happ that has yet to go on trial. His is scheduled for December 2008.
Funny, all the other executives and partners/founders have been sentenced except other than the one on 'America's Most Wanted' list.

Who is James K Happ, perhaps the most important criminal of all?
If only reporters would follow the money with this ex-CFO of Columbia Homecare Group, Inc., NCFE and Med Diversified Inc. (Can you follow the money?)

In 1998, a time when no one wanted homecare companies, stated in SEC records, James K Happ assisted with the divestiture of the losing homecare group within HCA/TN Inc.: Columbia Homecare Group Inc. And who is related to that group? Richard Rainwater and Richard Scott. Who is Richard Rainwater? G W Bush's ex-partner)
Who financed this divestiture? NCFE, National Century Financial Enterprises Inc.