Happ...Look at his prior employer Columbia Homecare Group, Inc. just prior to joining NCFE...

Tuesday, December 2, 2008 - 12:34 PM EST
Happ attorney denies client’s involvement in National Century fraud
Business First of Columbus - by Kevin Kemper


While two juries have concluded that National Century Financial Enterprises Inc. engaged in a multiyear fraud, a defense attorney for the last of the company’s executives to stand trial said in opening remarks that his client believed their actions were above board.Opening arguments in the fraud trial of James Happ over Dublin-based National Century’s 2002 collapse began Tuesday morning in U.S. District Court in Columbus. Craig Gillen, attorney for Happ, told jurors they will hear evidence from the government’s star witness that she falsified investor reports and kept multiple sets of books for a fraud that left investors short $2.84 billion when National Century fell into bankruptcy. What the jury won’t hear, Gillen said, is any evidence that Happ had a hand in the wrongdoing.

“Jim Happ never told a lie to any investors. Period,” Gillen said.

The government has accused Happ of a count each of conspiracy and money laundering conspiracy, plus three counts of wire fraud. He has pleaded not guilty to all charges. The former executive vice president at National Century is standing trial on accusations he was part of an executive-level cabal at the medical financing company that defrauded investors for years. Six former executives have been found guilty of fraud and four have pleaded guilty. Happ is the eleventh and final National Century employee to face criminal charges.

A financier for health-care providers like doctors’ offices and hospitals, National Century’s bread and butter was buying accounts receivable from care providers at a discount, then securitizing the receivables into AAA-rated bonds for sale to investors. At its peak, the company employed more than 350 at its office campus in Dublin while recording annual revenue of more than $250 million.

The government has alleged National Century collapsed after running a sophisticated pyramid scheme that fell apart.

In addition to purchasing legitimate accounts receivable, the government alleged National Century funded companies owned by its founders without getting receivables in return, effectively making risky unsecured loans with investor cash. The company charged its clients for those advances, the government has said, which inflated National Century’s revenue and generated bonuses for senior executives.

A government attorney told jurors Tuesday that Happ, as the firm’s chief accountant and head of servicer operations, was responsible for making sure that purchased accounts receivable were eligible. In its July 2007 indictment of eight National Century executives, the government alleged that Happ improperly advanced as much as $5.4 million to a company owned by NCFE founder Lance Poulsen.

The government also accused Happ of ordering a National Century subordinate to remove safeguards on the company’s computer system relative to a health-care provider he planned to join after leaving National Century.

Happ’s trial began Dec. 1 with jury selection. The trial is expected to last most of the month.