National Century was advancing more money to ...

I wonder..what companies were those?

Maybe we can ask James K Happ? The ex-employee of NCFE and HCA INC/TN!
(Richard Rainwater)

National Century was advancing more money to certain companies than it should have. The government has alleged National Century overfunded health-care companies owned by Poulsen and other company

"...boss put investors’ money at risk by providing excessive financing to some health-care firms out of the company’s reserves."

Friday, October 3, 2008 - 1:10 PM EDT | Modified: Friday, October 3, 2008 - 4:30 PM
Testimony: Poulsen put investors' money at risk
Business First of Columbus - by Kevin Kemper

Painting a portrait of a CEO at the center of an alleged fraud, a former National Century Financial Enterprises Inc. executive told jurors Friday his boss put investors’ money at risk by providing excessive financing to some health-care firms out of the company’s reserves.
Jon Beacham, National Century’s former director of securitization, was on the stand a second day in the criminal fraud trial of National Century founder Lance Poulsen, 65, who grew Dublin-based National Century to become the nation’s largest financier of medical providers before it collapsed into bankruptcy in 2002. Poulsen’s on trial in U.S. District Court in Columbus on conspiracy, wire fraud, money laundering and securities fraud charges amid accusations he headed a fraud that resulted in the loss of as much as $2.84 million in investor funds.

Beacham told jurors he began noticing problems at National Century in July 2001. He testified he found what investors were being told was different than what was happening at the firm – specifically, Beacham said National Century was advancing more money to certain companies than it should have. The government has alleged National Century overfunded health-care companies owned by Poulsen and other company principals in a ploy to enrich themselves. By overfunding certain companies, Beacham told jurors, reserve accounts designed to protect investors were being depleted.

Recounting a meeting he had with Poulsen at a conference in the Bahamas in fall 2002, Beacham said the CEO told him he made an “executive decision” to fund certain companies from reserve accounts because National Century was facing a liquidity crunch. Beacham advised Poulsen that investors had to know about that, and he said he told Poulsen to inform the company’s attorneys and bankers.

Beacham admitted he never told investors about the irregularities despite knowing for more than a year that National Century wasn’t operating correctly, which he acknowledged was a lie by omission.

Beacham has been cooperating with the prosecution since pleading guilty to a count each of conspiracy and securities fraud. He testified in the February trial of five other National Century executives accused of similar crimes. Those executives were convicted.

Peter Anderson, Poulsen’s attorney, tried to show the jury that National Century was heavily regulated and under the scrutiny of outside businesses by asking Beacham about National Century’s trustees and the companies that rated its securities. Beacham said National Century was subject to random inspections and audits by securities ratings firms.

“There were certainly many sets of eyes looking at the company and the programs while I was there,” he said.

To drive home his point, Anderson also asked Beacham about anonymous letters someone began sending to ratings agencies in April 1999 that suggested National Century was operating fraudulently. Beacham said he heard about the series of three letters immediately after he started at National Century that year because industry journals were reporting on them.

“What ultimately happened?” Anderson asked.

“I think the ratings (of National Century securities) were affirmed,” Beacham said.

Building on the defense’s strategy of focusing on the complex details of National Century’s business, Anderson also questioned Beacham about the company’s governing documents and if Beacham understood all the definitions in them.

“There was some vagueness in the documents,” Beacham said, noting that he needed to ask for an explanation by the company’s attorneys at times. “The documents themselves can be pretty flexible in certain areas.”

Poulsen’s attorneys argued in opening statements that the government has misinterpreted National Century’s governing documents, which actually make everything Poulsen did legal.

Defense lawyers are expected to conclude their cross examination of Beacham when court reconvenes Monday.

National Century packaged medical practice receivables into bonds and sold them to investors. It bought the receivables at discounts, which allowed doctors and other health care providers to quickly secure the cash they needed to run their businesses, rather than waiting for payments, especially delayed ones from insurers.