"...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.