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