The smaller companies didn't have to wait for insurance reimbursement, and National Century kept a fee or percentage of what was collected.

National Century was founded in 1991 to offer financing to small hospitals, clinics, nursing homes and other health-care providers. National Century agreed to buy the providers' debt, or accounts receivable, and give them cash to cover expenses. The smaller companies didn't have to wait for insurance reimbursement, and National Century kept a fee or percentage of what was collected. When National Century went under, at least 275 health-care companies collapsed in its wake.


National Century agreed to buy the providers' debt, or accounts receivable, and give them cash to cover expenses. The smaller companies didn't have to wait for insurance reimbursement, and National Century kept a fee or percentage of what was collected. When National Century went under, at least 275 health-care companies collapsed in its wake.



National century trial
Money questions upset CEO, ex-director testifies
Friday, October 3, 2008 3:10 AM
By Jodi Andes

THE COLUMBUS DISPATCH
One National Century employee said he learned quickly that Chief Executive Lance K. Poulsen did not like to have his company's business practices questioned.

It was in January 1997, William Parizek said, when Poulsen called him. Poulsen, who had named Parizek director of corporate finance for National Century Financial Enterprises two months earlier, wanted to know why Parizek was asking colleagues how much money clients had been loaned.

National Century had become a financing giant by buying accounts receivable from health-care providers such as small hospitals and nursing homes, and collecting the money for a fee. In return, the providers didn't have to wait months for insurance and government medical payments.

Parizek said he was preparing presentations for potential investors in National Century when he noticed that some providers had been given loans "two and three times" what their accounts receivable would cover.

So he began asking more questions. That's when he got a call from Poulsen, Parizek testified yesterday, the second day of Poulsen's trial in U.S. District Court in Columbus.

He is accused of securities and wire fraud and money laundering. He was convicted in March of witness tampering and obstruction of justice for trying to bribe the government's key witness in the fraud case.

Poulsen told his underling he had no business asking those questions and to keep quiet with his "holier-than-thou morality," Parizek said.

Parizek said his attorney negotiated a $50,000 severance package after he resigned, on condition that Parizek not talk about the company's practices.

He hadn't mentioned anything to anybody, he said, until the FBI called.

In all, federal officials have charged 11 National Century executives with fraud, tied to the company's November 2002 collapse that cost investors more than $1.9 billion.

Prosecutors contend that the company used investors' money to offer risky loans to health-care companies in which National Century executives were stakeholders. It was "an outright misuse of investor money," a scheme Poulsen masterminded from "Day One," Assistant U.S. Attorney Doug Squires said.

The defense questioned how such a fraud could have been carried out when some of the nation's most elite banks, rating agencies and auditing firms were constantly watching National Century.

"Things did fall apart, and everyone is just looking for someone to blame," defense attorney William Terpening posed to jurors in his opening statements.

Even investors should have known the risks, Terpening said.

"The bond-holders made mistakes," he said. "If the bond-holders didn't carefully look at NCFE documents and ask questions, then shame on them."

Five other National Century executives have been convicted of fraud in the company's demise and sentenced to prison terms ranging from five to 15 years.

jandes@dispatch.com

The case in brief
• Lance K. Poulsen, former chief executive of National Century Financial Enterprises, is on trial in federal court on fraud and money-laundering charges connected to the collapse of the former health-care financing giant. Investors lost more than $1.9 billion when the Dublin-based company filed for bankruptcy in 2002 in the nation's largest case of private-sector fraud.

• This is Poulsen's second trial this year. He was sentenced in August to 10 years in prison for obstruction of justice and witness tampering for trying to get a key government witness to fake amnesia.

• Five former executives of National Century were convicted on fraud charges in March. Four have pleaded guilty. One has yet to stand trial.

• National Century was founded in 1991 to offer financing to small hospitals, clinics, nursing homes and other health-care providers. National Century agreed to buy the providers' debt, or accounts receivable, and give them cash to cover expenses. The smaller companies didn't have to wait for insurance reimbursement, and National Century kept a fee or percentage of what was collected. When National Century went under, at least 275 health-care companies collapsed in its wake.