Leo Wise- PROSECUTOR DID NOT DO HIS JOB

I want to know what Leo Wise's role is in the Heatlhcare Reform of CBO's analysis?

Will it be like this?

November 2002, FBI raided offices in Dublin Ohio at National Century Financial Enterprise.

“This case is one of the largest corporate fraud investigations involving a privately held company headquartered in small town America,” said Assistant Director Kenneth W. Kaiser of the FBI Criminal Investigative Division.

'Ladies and gentlemen, this is a case of staggering fraud,' Leo Wise said. 'It is one of the largest frauds the FBI has ever investigated.

All of Columbia Homecare Group units were at National Century Financial Enterprises, the Largest fraud case the FBI has ever investigated

Remember – Columbia/HCA is a partnership of financier Richard Rainwater of Ft. Worth and lawyer Richard Scott.
Richard rainwater was GW Bush’s partner with the Texas Rangers.

Twelve executives were already found guilty.

ONE month before GW Bush leaves office- December 2008 –

The last person to stand trial was James K Happ, the former CFO of Columbia Homecare Group.

James K Happ, 48, is charged with conspiracy, money-laundering conspiracy and three counts of
wire fraud. Also today, a former friend of Happ's testified that, while working at National Century, Happ boasted that he never could be charged with any fraud because he didn't sign anything.


December 2008 - the largest fraud case the FBI has ever investigated-Only one acquittal-

James K Happ - the ex-CFO of Columbia Homecare Group

Jurors stated; "PROSECUTOR DID NOT DO HIS JOB"

Coincidence? Or just rampant fraud beginning with Healthcare fraud but continuing the fraud within the SEC, Bankruptcy Courts and Financial Fraud- all for the sake of profits to the rich and powerful?

Rick Scott- Conservatives for Patients Rights

Thursday, May 28, 2009
HCA International- Conservatives for Patients Rights
Conservatives for Patients' Rights commercial with the Doctor in England?

2008--- HCA International

Welcome to London's leading private hospitals- HCA International

Why we are London's No. 1 private hospital group- HCA International

� More than 3,000 top London and UK specialists in private practice- HCA International

No. 1 private hospital?- HCA International

This is what STUPID AMERICA gets:

LARGEST HEALTH CARE FRAUD CASE IN U.S. HISTORY SETTLED; HCA INVESTIGATION
Note: Hospital Corporation of America (HCA) was acquired by Columbia in 1994.

1997- As part of Richard Scott's severance package from Columbia he was paid $5.13 million and given a five year consulting contract at $950,000 per year.

1997+5 years consulting =2002

In 2002 FBI raided the offices of National Century Financial Enterprises in Dublin, Ohio.

National Century Financial Enterprises

Guess where ALL of Rick Scott’s Columbia homecare units were? National Century Financial Enterprises.

Largest fraud case the FBI has ever investigated-one acquittal- James K Happ, the ex-CFO of Columbia Homecare Group, Inc.

Jurors stated; "PROSECUTOR DID NOT DO HIS JOB"�hmm

Leo Wise , now at the ethics CBO ---jurors stated 'PROSECUTOR DID NOT DO HIS JOB'

"Ladies and gentlemen, this is a case of staggering fraud," 'It is one of the largest frauds the FBI has ever investigated. (Leo Wise )

The ONLY acquittal; James K Happ--the CFO of Columbia Homecare Group.
Leo Wise , (now at the ethics CBO) stated "Ladies and gentlemen, this is a case of staggering fraud," 'It is one of the largest frauds the FBI has ever investigated.

Then- low and behold: December 18, 2008 The ONLY acquittal; James K Happ!...belief that federal prosecutors had not done their job, the juror said.

Columbia/HCA is a partnership of financier Richard Rainwater of Ft. Worth and lawyer Richard Scott. Scott was recently terminated by Darla Moore, the wife of Richard Rainwater.

Richard Rainwater, ex-partner of GW Bush with the Rangers

Leo Wise, now at the ethics CBO ---jurors stated 'PROSECUTOR DID NOT DO HIS JOB'

In 2002 FBI raided the offices of National Century Financial Enterprises in Dublin, Ohio

"This case is one of the largest corporate fraud investigations involving a privately held company headquartered in small town America," said Assistant Director Kenneth W. Kaiser of the FBI Criminal Investigative Division.

Richard Scott -- sometimes called "the Bill Gates of health care" -- quit as chairman of Columbia/HCA Healthcare Corp. amid a massive federal investigation into the Medicare billing, physician recruiting and home-care practices of the nation's largest for-profit health care company.

Columbia/HCA is a partnership of financier Richard Rainwater of Ft. Worth and lawyer Richard Scott. Scott was recently terminated by Darla Moore, the wife of Richard Rainwater.

Rainwater also owned a large stake in Magellan Health Care which controls Charter Medical. Magellan, run by Darla Moore, is the largest network of psychiatric hospitals in the country. They are becoming more and more involved in obtaining government money for services formerly not covered as health care, according to Fortune Magazine.

1997 - Columbia/HCA Healthcare Corp. - the nation's largest for-profit health care company

My comment to Tom Daschle's Op-Ed in WaPO

OBAMA says: The epitome of Fraud Waste and Abuse….

I SAY: Root that out and we can afford much more to spend!

PAY ATTENTION PEOPLE

Are you aware of the largest private financial fraud in our country's history that ended December 2008?

WHY?

It was not 'low income housing' mortgages; it was HEALTHCARE FINANCIAL FRAUD; the largest private "FINANCIAL INSTITUTION“in our country.

JULY 10, 2007 - SUPERSEDING INDICTMENT CHARGES EIGHT FORMER EXECUTIVES OF HEALTH CARE FINANCING COMPANY WITH CONSPIRACY, FRAUD, MONEY LAUNDERING

"This case is one of the largest corporate fraud investigations involving a privately held company headquartered in small town America," said FBI Criminal Investigative Division. (Because it was private, no one has ever heard of this case, cried one prosecutor)

A reminder relating to the NEED for ‘healthcare financial service’ i.e. (NCFE) National Century Financial Enterprises; home health - which was struggling under the Balanced Budget Act of 1997; about 1,400 agencies closed nationwide in 1998.

Recall in 1998: On Sept 8, 1998 Standard and Poors downgraded the bonds of Charter/HCA …

The following is an excerpt from a 10-K SEC Filing, filed by J P MORGAN CHASE & CO on 3/9/2006:
the three current or former Firm employees are sued in their roles as former members of NCFE's (National Century Financial Enterprises) board of directors

2002 FBI Raids NCFE headquarters in Dublin Ohio

Prior to the exposure of ‘some’ of the fraud at NCFE, the same entities were also involved in the "LARGEST PRIVATE" Bankruptcy Court in Memphis, TN in 1999. (Another “private’ company; remember, home health - which was struggling under the Balanced Budget Act of 1997)

Guess what this LARGEST PRIVATE Company filing bankruptcy in Tennessee was--- HOME HEALTHCARE!

The SEC NEVER received documentation of the publicly traded companies allegedly selling or divesting their home health units to this private company.
Six months or so later after the acquisition of all the losers, this private healthcare company filing bankruptcy in Tennessee held much of if not ALL of Columbia/HCA Homecare’s losing' assets, home health- financed by the largest fraudulent private "FINANCIAL INSTITUTION “in our country, NCFE.

Tennessee Bankruptcy court transcripts reveal lawyers crying Fraud only to be reprimanded by the appointed corporate bankruptcy judge. She forbade the lawyers from using the ‘F’ (fraud) word in her court. (Got to love those appointed judges) Guess what tool was used in this corporate bankruptcy court in TN? DIP FINANCE TOOL.


March 26, 2008; By Jodi Andes; THE COLUMBUS DISPATCH
Nine other executives have been convicted or pleaded guilty in National Century's collapse. Only Poulsen and executive James Happ still await trial.

Only CEO and ONE EXECUTIVE –JAMES K HAPP await trial? JAMES K HAPP –LAST PERSON ON TRIAL—

WHY?
Who is James K Happ? Where was James K Happ when Richard Scott was at Columbia in 1997?

In 1997 James K Happ was the CFO of the Dallas-based Columbia Homecare Group, Inc. “In this role, he directed the company through the challenging reimbursement climate, known as the interim payment system, and participated in the divestiture of all of Columbia/HCA's home care operations” (SEC Form)


Let me remind you the size and TOO BIG TO FAIL mentality for HCA-Hospital Corporation of America is in Nashville, TN. Remember Senator Bill Frist- Leader of the Senate- HOLY COW!

December 9, 2008. James K. Happ, 48, is charged with conspiracy, money-laundering conspiracy and three counts of wire fraud; the 11th National Century executive to be tried or admit guilt. , Also today, a former friend of Happ's testified that, while working at National Century, Happ boasted that he never could be charged with any fraud because he didn't sign anything.

(Just like Madoff’s sons never signed anything therefore they are not involved.)

December 18, 2008 - The ONE AND ONLY acquittal; James K Happ!

By Jodi Andes THE COLUMBUS DISPATCH
Prosecutors' case fell short, juror says National Century fraud case produces 1st acquittal; The "not guilty" verdicts that came in federal court yesterday were not so much a vindication of the last National Century Financial Enterprises executive to stand trial, a juror said.

Instead, they were more a belief that federal prosecutors had not done their job, the juror said after he and his fellow jurors acquitted James K. Happ of five counts after 12 hours of deliberation. "He very well may have been guilty. A lot of us thought he was," said the juror who wouldn't give his name. "But if he was, you gotta have the evidence."

“Federal prosecutors had not done their job” in 2008?

To be continued…..

made loans to inner-city Medicare hospitals....HEALTH and FINANCIAL FRAUD connection

The treasurer has stated on numerous occasions that a Texas law firm helped recover funds from the NCFE case, and has said he is not sure whether Goddard's office is entitled to the full 35 percent.

The state treasury lost $14.3 million to NCFE. So far, the state has recovered about 53 percent of $131 million in losses, Martin said.

An accompanying provision was touted by Martin as a means to ensure independent attorneys could be hired only to handle complex cases such as securities, bankruptcy matters and to offer financial advice.

The fraud, committed in 2002 by National Century Financial Enterprises, cost Arizona governments approximately $131 million. Two-hundred local Arizona governmental entities and many governments in other states invested in NCFE, which made loans to inner-city Medicare hospitals,...



January 27, 2009
Breaking News
Changes coming for bill on state Treasurer’s legal counsel

By Christian Palmer, christian.palmer@azcapitoltimes.com


A bill intended to allow the Office of the State Treasurer to hire his own attorney to handle complex financial cases was held by a House committee on Jan. 27 after its sponsor raised concerns the legislation would have more sweeping effects.The decision to hold H2103 came from Rep. Sam Crump, the chairman of the House Government Committee. Crump also was the prime sponsor of the proposal, which State Treasurer Dean Martin told committee members could cut costs and help end a longstanding "political turf war."

In official capacity, Martin is represented by the Attorney General's Office, but Crump's bill would attach the Treasurer's Office to a list of nine agencies allowed to hire and pay for their own representation.

An accompanying provision was touted by Martin as a means to ensure independent attorneys could be hired only to handle complex cases such as securities, bankruptcy matters and to offer financial advice.
However, House analysts contested Martin's translation of the bill. They said the measure, as written, would allow the state treasurer to secure lawyers separate from the Attorney General's Office for any matters.

David Gass, a legislative liaison for the Attorney General Terry Goddard, told committee members the option to hire outside legal counsel should not be extended to the Treasurer's Office, which conducts business with almost all state agencies on a daily basis.

The frequent interaction - and the prospect of differing opinions on legal matters - can provide the foundation for interagency conflict, he said.

"You create a conflict that's statewide," Gass said.

Yet, Martin said the benefits to the state presented by the law change are apparent. State law dictates the attorney general is entitled to collect a 35-percent fee on recovered funds, an amount Martin regards as outlandish and far more expensive than bills that would be incurred through specialized private-sector attorneys.

Crump said he will amend the bill and give it another try.

"Let's get it right and bring it back," he told members of the committee.

The issue of the treasurer's access to independent counsel stems from a years-long dispute between Goddard and Martin over a legal bill Martin's office was asked to pay in return for money recouped in a national fraud settlement.

The fraud, committed in 2002 by National Century Financial Enterprises, cost Arizona governments approximately $131 million. Two-hundred local Arizona governmental entities and many governments in other states invested in NCFE, which made loans to inner-city Medicare hospitals, before collapsing in 2002 in a fraud scandal involving $3 billion in lost investments.

After the legal battle, then-Chief Deputy Treasurer Blaine Vance refused to transfer payment for the attorney general's legal services without written approval from the state solicitor general. But in June of 2006, the state Treasurer's Office agreed to pay the Attorney General's Office $1.9 million for legal expenses associated with recouping the lost investments.

The payment was not disclosed to the state Board of Investment, which oversees the state's investment portfolio.

The deal came months after agents with Goddard's office seized computers, 15,000 pages of documents and other materials from the Treasurer's Office as part of an investigation into allegations that Petersen had committed several felonies by using his office to promote character-building teaching materials sold by Character First.

Initially, Petersen faced charges of theft, fraud and conflict of interest. But weeks after resigning in October 2006, he pleaded guilty to a single misdemeanor count for failing to disclose a $4,200 commission he received for selling Character First products.

Martin, as a candidate running for treasurer in 2006, cast suspicions on the payment and criticized Petersen's sentence, which included three years of probation, as a "slap on the wrist."

Goddard has defended the payment repeatedly; pointing out that state law authorizes the Attorney General's Office to receive 35 percent of all state funds it recovers.

Upon taking office, Martin stopped issuing Goddard's office a portion of the fraud settlement, which was being distributed to the state periodically, and asked Maricopa County Attorney Andrew Thomas and Maricopa County Sheriff Joe Arpaio to investigate the payment.

Martin has asked for separate legal counsel to review the deal and to conclude how much the Attorney General's Office should be paid. The treasurer has stated on numerous occasions that a Texas law firm helped recover funds from the NCFE case, and has said he is not sure whether Goddard's office is entitled to the full 35 percent.

The state treasury lost $14.3 million to NCFE. So far, the state has recovered about 53 percent of $131 million in losses, Martin said.

Oh! Did I mention? James K. Happ, arrived at NCFE after dumping Columbia's losing assets into the largest Bankruptcy case in Tennessee only to be ,,,

...financed by National Centruy Finanacial Enterprises, Inc. (NCFE)
Funny, he was the one to divest the losing assets dragging HCA's stock price to its lowest in years. Shall I continue?

If I could only reach Bob Woodward!

Jury acquits last National Century exec
Wednesday, December 17, 2008 1:54 PM
By Jodi Andes

THE COLUMBUS DISPATCH
James K. Happ, the last National Century Financial Enterprises executive charged in the multibillion-dollar fraud that damaged pensions across the country, has been found not guilty on all charges by a jury in U.S. District Court in Columbus.

The verdicts came shortly before 2:30 p.m. after about 12 hours of deliberation.

Happ, 48, had been charged with conspiracy, money-laundering conspiracy and three counts of wire fraud in connection with advances he authorized while he was in charge of purchasing National Century's accounts receivable.

He was a vice president of the Dublin-based company, which collapsed in 2002. Close to $2 billion in investors' money was lost, and 275 health-care businesses went bankrupt.

Using cash generated by the sale of bonds to investors, National Century bought accounts receivable from health-care providers and collected them for a fee. But investors were never told about money being given to providers without National Century getting the accounts receivable in return, prosecutors said.

Ten former executives were convicted or pleaded guilty on fraud charges tied to the company's collapse.

Columbia Hospital Corporation & National Century Finanacial Enterprises & James K Happ

The one and only executive from NCFE who by the way came from Columbia to NCFE before the FBI raided their offices, was acquitted.
Funny, he was the last person to go on trial.

How convenient!

Undercover: How I Went from Company Man to FBI Spy -- and Exposed the Worst Healthcare Fraud in US History (Hardcover)

Review


“…[an] exciting story of an ordinary man who finds himself in extraordinary circumstances. You could say it’s a rags-to-riches morality tale, with good emerging victorious (up to a point) over bad.” Milwaukee Journal Sentinel


When John Schilling, an unassuming mid-level accoun­tant, went to work for the Columbia Hospital Corporation, he never expected to become the catalyst for the series of “whistleblower” cases that ripped through the healthcare industry in the late 1990s. But when he unwittingly discovered that the company was siphoning billions of dollars away from Medicare and stealing from American taxpayers, he was faced with a choice: Speak up for what he believed to be right, or remain silent. Undercover tells the story of Schilling’s harrowing journey from ordinary citizen to federal informant. The book recounts how Schilling allied himself with the FBI and the Justice Department and–unable to confide in friends or family–journeyed into an undercover world in which he carried a wire and mapped out offices for secret government raids. Suspenseful and provo­ca­tive, Undercover chronicles Schilling’s nine-year ordeal that eventually led to the resignation of high-level executives and forced Columbia to return $1.7 billion dollars to the federal government. A compelling account of one man’s decision to risk everything for the greater good, this book reveals the personal side of a thankless role that resulted, ultimately, in justice.


See all Editorial Reviews


order Undercover: How I Went from Company Man to FBI Spy — and Exposed the Worst Healthcare Fraud in US History: John W. Schilling form Amazon.

FBI reports when case is not over...why is that?

This report, released in March of 2008, implied that this case was over yet the CEO and the 'ONLY' Ex-Executive that was acquitted had gone on trial.

Funny, the FBI assumed it was over.
Now, the Ex-Executive that was acquitted,James K Happ and last to go on trial early December 2008. Hmm.....

James K Happ , who by chance, arrived at National Century Finanacial Enterprises, Inc. in Columbus, Ohio from the CFO position at HCA/Columbia 'family and friends' along with Richard Rainwater in Ft. Worth, Texas.

Funny how that works. !!!



FOR IMMEDIATE RELEASE CRM

THURSDAY, MARCH 13, 2008 (202) 514-2007

WWW.USDOJ.GOV TDD (202) 514-1888

FORMER NATIONAL CENTURY FINANCIAL ENTERPRISES EXECUTIVES FOUND GUILTY ON ALL CHARGES IN $3 BILLION SECURITIES FRAUD SCHEME
Defendants Guilty of Conspiracy, Fraud and Money Laundering


WASHINGTON – A federal jury has found five former executives of National Century Financial Enterprises (NCFE) guilty of conspiracy, fraud and money laundering, following a six-week trial and less than two days of deliberation, Assistant Attorney General Alice S. Fisher and U.S. Attorney Gregory G. Lockhart of the Southern District of Ohio announced today. The Columbus, Ohio, jury returned the guilty verdict on all charges contained in a 27-count superseding indictment stemming from a scheme to deceive investors about the financial health of NCFE. The company, which was based in Dublin, Ohio, was one of the largest healthcare finance companies in the United States until it filed for bankruptcy in November 2002.

Donald H. Ayers, 71, of Fort Meyers, Fla., an NCFE vice chairman, chief operating officer, director and an owner of the company, was found guilty on charges of conspiracy, securities fraud and money laundering.

Rebecca S. Parrett, 59, of Carefree, Ariz., an NCFE vice chairman, secretary, treasurer, director and an owner of the company, was found guilty on charges of conspiracy, securities fraud, wire fraud and money laundering.

Randolph H. Speer, 58, of Peachtree City, Ga., NCFE’s chief financial officer, was found guilty on charges of conspiracy, securities fraud, wire fraud and money laundering.

Roger S. Faulkenberry, 46, of Dublin, Ohio, a senior executive responsible for raising money from investors, was found guilty on charges of conspiracy, securities fraud, wire fraud and money laundering.

James E. Dierker, 40, of Powell, Ohio, associate director of marketing and vice president of client development, was found guilty on charges of conspiracy and money laundering.

“These convictions send a clear message to corporate America that executives will be brought to justice for lying to investors and misrepresenting the actions taken in their normal course of business,” said Deputy Attorney General Mark Filip, chairman of the President’s Corporate Fraud Task Force. “These are the latest successes in our efforts to improve the integrity of our financial markets.”

“By holding accountable those who break the law, today’s convictions help restore some of the faith and trust the public loses every time corporate executives defraud their investors. The jury’s verdict demonstrates that the public will not stand by while company executives commit billion dollar frauds, leaving the honest investors to bear the losses they create,” said Assistant Attorney General Alice S. Fisher. “I would like to thank the trial attorneys from the Fraud Section and the U.S. Attorney’s Office as well as the FBI, IRS, Immigration and Customs Enforcement and U.S. Postal Inspection Service for their diligent and successful work on this case.”

“The jury convicted company executives of building a financial house of cards and deceiving investors using financial sleight of hand,” said Gregory G. Lockhart, United States Attorney for the Southern District of Ohio. “I commend the agents, investigators and prosecutors from the Fraud Section and our office for their hard work on this lengthy and complex case.”

“This case is one of the largest corporate fraud investigations involving a privately held company headquartered in small town America,” said Assistant Director Kenneth W. Kaiser of the FBI Criminal Investigative Division. “The FBI continues to leverage its corporate fraud expertise gained through large-scale investigations such as Enron and WorldCom, to ensure that corporations represent their true health. From Dublin, Ohio, to Houston, Texas to New York, New York, the message is clear that the FBI will not stand by as corporate executives manipulate their financial statements and conceal illegal activities from criminal and regulatory authorities.”

“IRS aggressively pursues corporations and their officers who use their positions of trust for illegal activities. This kind of fraud touches the lives of many unsuspecting citizens and the public should know that the government is serious about holding corporations and their executives accountable,” said Eileen C. Mayer, chief, Internal Revenue Service Criminal Investigation.

At trial, the government presented evidence that the defendants engaged in a scheme to deceive investors and rating agencies about the financial health of NCFE and how investor monies would be used. Between May 1998 and May 2001, NCFE sold notes to investors with an aggregate value of $4.4 billion, which evidence presented at trial showed were worth approximately six cents on the dollar at the time of NCFE’s bankruptcy in November 2002.

NCFE presented a business model to investors and rating agencies that called for NCFE to purchase high-quality accounts receivable from healthcare providers using money NCFE obtained through the sale of asset-backed notes to institutional investors. The evidence at trial showed that NCFE advanced money to health care providers without receipt of the requisite accounts receivable, oftentimes to healthcare providers that were owned in whole or in part by the defendants. The evidence further showed that the defendants lied to investors and rating agencies in order to cover up this fraud.

The evidence at trial showed that NCFE concealed from investors the shortfalls produced by this fraud by moving money back and forth between accounts, fabricating data in investor reports, incorporating false information into the accounting system, and making other false statements to investors and rating agencies. Moreover, the defendants’ compensation was tied to the amount of money they advanced to healthcare providers and those providers’ outstanding balance owed to NCFE. The government presented evidence at trial that showed that the defendants knew that the business model NCFE presented to the investing public differed drastically from the way NCFE did business within its own walls and that NCFE was making up the information contained in monthly investor reports to make it appear as though NCFE was in compliance with its own governing documents.

Defendants face the following maximum penalties: Donald H. Ayers, 55 years in prison and $2.25 million in fines; Rebecca S. Parrett, 75 years in prison and $2.5 million in fines; Randolph H. Speer, 140 years in prison and $4.25 million in fines; Roger S. Faulkenberry, 85 years in prison and $2.5 million in fines; James E. Dierker, 65 years in prison and $1.75 million in fines.

The case was prosecuted by Assistant U.S. Attorney Douglas Squires of the Southern District of Ohio, Senior Trial Attorney Kathleen McGovern and Trial Attorney Wes R. Porter of the Fraud Section, with assistance from Fraud Section Paralegal Specialists Crystal Curry and Sarah Marberg, FBI agents Matt Daly, Ingrid Schmitt, and Tad Morris, IRS Inspectors Greg Ruwe and Mark Bailey, U.S. Postal Inspector Dave Mooney and ICE Agent Celeste Koszut.



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James K Happ...From Columbia HCA to NCFE....NO CONFLICT? NO SALE of Columbia to NCFE...via Bankruptcy Court in Western Tennessee

Wednesday, December 17, 2008
Final National Century exec acquittedBusiness First of Columbus


James Happ will not share his former work colleagues’ fate.

Happ, an accountant and former vice president of servicer operations for Dublin-based National Century Financial Enterprises Inc., has been found not guilty of a count each of conspiracy and money laundering conspiracy and three counts of wire fraud.

A 12-member jury at the U.S. District Court in Columbus returned the verdict Wednesday afternoon after a day-and-a-half of deliberations.

Happ was the seventh former executive from National Century to go to trial and the only one to be acquitted. Six former executives were convicted of fraud and four pleaded guilty. Happ was the eleventh and final National Century employee to face criminal charges.

Happ’s trial began Dec. 1 and ended just two weeks later after his defense attorneys declined to put any witnesses on the stand.

In opening arguments, attorney Craig Gillen told jurors that Happ never had a hand in any wrongdoing at the company.

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

Happ stood trial on accusations he was part of an executive-level cabal at the medical financing company that defrauded investors for years. 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.

Government attorneys argued 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 a July 2007 indictment, 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.

February 2003, Amedisys sued JP Morgan Chase Manhattan Bank

February 2003, Amedisys sued JP Morgan Chase Manhattan Bank

Amedisys was a third-party beneficiary of the trust indenture between NPF
VI and JP Morgan.

JP Morgan’s duties as trustee of the collection accounts were outlined in Section 6.5 of the Sale and Subservice Agreement

JP Morgan was labeled a trustee in this arrangement only because of its fiduciary duty toward holders of the notes. The bankruptcy court, in a different decision from the one appealed here, has determined that JP Morgan bore no fiduciary duty toward Amedisys.

In a different decision? What case was that? maybe Medshares in Tennessee related to HCA Columbia Home Health Care Group?

The bankruptcy court determined that although NCFE did not pay for the disputed $7.3 million in accounts receivable, it “did actually purchase Amedisys’s accounts receivable.” Therefore, Amedisys would have only a “general contractual claim [against NCFE] for nonpayment”; Amedisys’ assertions that it owned the accounts receivable at the time of NCFE’s bankruptcy, and therefore that the $7.3 million in the JP Morgan collection account was not part of the bankruptcy estate, were unfounded.2 By joint agreement of the parties, Count VII was dismissed on April 14, 2005. At this point, the bankruptcy court’s grant of partial summary judgment became a final, appealable order. Amedisys filed a notice of appeal on April 22, 2005, and the appeal is now before the United States District Court for the Southern District of Ohio.



RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
File Name: 05a0388p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
In re: NATIONAL CENTURY FINANCIAL ENTERPRISES,
INC.,
Debtor.
__________________________________________
AMEDISYS, INC., et al.,
Appellants,
v.
NATIONAL CENTURY FINANCIAL ENTERPRISES, INC.,
Appellee.
X----
>,----------N

No. 04-3365
Appeal from the United States District Court for the Southern District of Ohio at Columbus.

No. 03-00947—James L. Graham, District Judge.
Argued: June 1, 2005

Decided and Filed: September 13, 2005
Before: MARTIN and ROGERS, Circuit Judges; FORESTER, District Judge.*
_________________
COUNSEL
ARGUED: Stephen E. Chiccarelli, BREAZEALE, SACHSE & WILSON, Baton Rouge, Louisiana,
for Appellants.

Matthew A. Kairis, JONES DAY, Columbus, Ohio, for Appellee.

ON BRIEF:

Daniel A. DeMarco, HAHN, LOESER & PARKS, Cleveland, Ohio, Marc J. Kessler, HAHN,
LOESER & PARKS, Columbus, Ohio, for Appellants.

Matthew A. Kairis, Chad A. Readler, Ryan D. Walters, JONES DAY, Columbus, Ohio, for Appellee.
1 No. 04-3365 In re Nat’l Century Financial Enterprises Page 21
The related entities are Amedisys Home Health, Inc. of Alabama; Clinical Arts Home Care Services, Inc.;Central Home Health Care; Togaloo Home Health Agency; North Georgia Home Health Agency; Coosa Valley Home Health; Amedisys Home Health, Inc. of Louisiana; Amedisys Home Health, Inc. of North Carolina; Amedisys Home Health, Inc. of Oklahoma; Amedisys Home Health, Inc. of Tennessee; Amedisys Home Health, Inc. of Virginia; Superior Home Health Care; Amedisys Northwest Home Health, Inc.; Northwest Home Health; Amedisys Specialized Medical Services, Inc.; Precision / Amedisys Specialized Medical Services; Amedisys Alternate-Site Infusion Therapy Services,
Inc.; Home Health of Alexandria, Inc.; Cornerstone Home Health; Quality Home Health Care, Inc.; PRN, Inc. d/b/a Amedisys Alternate-Site Infusion Therapy Services; and Amedisys Surgery Centers, L.C.
_________________
OPINION
_________________
ROGERS, Circuit Judge. Amedisys, Inc., and its related entities1 appeal an order enforcing the automatic stay in bankruptcy, 11 U.S.C. § 362(a), against a civil action in which Amedisys is the plaintiff. National Century Financial Enterprises, Inc. (“NCFE”), the debtor, before its bankruptcy, supplied financing to the health care industry. NCFE bought accounts receivable from hospitals and other health care providers. The arrangement shortened the providers’ waiting period for payment by insurance companies, Medicare, and Medicaid. Amedisys is a Louisiana corporation
supplying home nursing services.

Amedisys participated in a financing plan sponsored by one of NCFE’s subsidiaries. NCFE and its subsidiaries, including National Premier Financial Services (“NPFS”), NPF VI, and NPF XII (collectively, “the NCFE entities”), filed for Chapter 11 bankruptcy in November 2002.

In February 2003, Amedisys sued JP Morgan Chase Manhattan Bank (“JP Morgan”) in Louisiana, seeking to recover about $7.3 million in accounts receivable held in a JP Morgan collection account in the name of NPF VI. Upon NCFE’s motion, the bankruptcy court applied the automatic stay in bankruptcy, 11 U.S.C. § 362(a), to the Louisiana action.

Amedisys appealed this decision; the district court affirmed. Because the Louisiana action is an “act to obtain possession of property of the [bankruptcy] estate,” 11 U.S.C. § 362(a)(3), we affirm the bankruptcy court’s and district court’s conclusions that the automatic stay applies.

I.
The appeal hinges on the questions of (1) whether Amedisys, through the Louisiana action, seeks to obtain possession of accounts receivable funds that NPF VI, an NCFE entity, held in a JP Morgan account; and (2) whether in fact these accounts receivable constitute property of the bankruptcy estate. NCFE is an Ohio Corporation which, until its bankruptcy, was, along with its subsidiaries, the country’s largest provider of healthcare accounts receivable financing. JA 556.

The district court fully described the contractual relationship between Amedisys and the NCFE entities:
Amedisys, Inc., and its corporate subsidiaries provide home nursing services
throughout the southeastern United States. Amedisys participated in a funding
program operated by [NCFE], a company that finances health care providers by
purchasing . . . their accounts receivable at a discount. NCFE purchased the
receivables with funds raised through selling notes that were backed by the
receivables themselves.

NCFE created numerous wholly-owned subsidiaries, known as “programs,”
for the purpose of issuing notes that were secured by pools of receivables and other
collateral. The two largest such programs were NPF VI, administered by JP Morgan
Chase Bank as indenture trustee, and NPF XII, administered by Bank One, N.A. as
indenture trustee. Under the sale and subservice agreements into which NCFE
programs and health care providers entered, receivables would be remitted directly

No. 04-3365
In re Nat’l Century Financial Enterprises Page 3
into lockbox accounts and the NCFE program would advance funds to the provider
on a weekly basis in payment of the receivables. Amedysis participated in the NPF VI program, and its accounts receivable went into lockbox accounts at Huntington National Bank. The lockbox accounts were in the name of [NPFS]—an NCFE entity—and Amedisys or one of its subsidiaries. Those funds were then swept into a Collection Account at JP Morgan in the name of NPF VI. Though accounts receivable went into the Collection Account, NPF VI did not purchase every account receivable it collected.

Section 6.1
of the Sale and Subservice Agreement provided:

The Purchaser and the Seller acknowledge that certain amounts deposited in the Collection Account may relate to Receivables other than Purchased Receivables and that such amounts continue to be owned by the Seller. All such amounts shall be returned to the Seller in accordance with Section 6.3.

The amounts in the Collection Account representing receivables that NPF VI did not
purchase were called “overage funds.” The Trustee (JP Morgan) was supposed to
transfer such funds to Amedisys on NPFS’s instruction. Amedisys states that it
normally would receive electronic notice of the amount of any overage funds on
Tuesdays.

In late October 2002, Amedisys became concerned after hearing reports that
NCFE was experiencing financial difficulties. On the final Thursday of the month,
Amedisys did not receive the overage funds it expected NPF VI would transfer to it.

On November 6, 2002, the Chief Financial Officer of Amedisys performed an
accounting and determined that NPF VI owed Amedisys approximately $7.3 million.
Dist. Ct. Op. at 3–5, JA 515–517. JP Morgan’s duties as trustee of the collection accounts were outlined in Section 6.5 of the Sale and Subservice Agreement (“the sale agreement”), which provided, “On each purchase date for [Amedisys] . . ., [NPF VI] shall deliver to [JP Morgan] a written statement setting forth the amount to be paid to [Amedisys] from the purchased account in respect of the purchased receivables and [JP Morgan] shall make such payment in accordance with [NPF VI’s] instructions.” Supp. JA 13. JP Morgan was labeled a trustee in this arrangement only because of its fiduciary duty toward holders of the notes. The bankruptcy court, in a different decision from the one appealed here, has determined that JP Morgan bore no fiduciary duty toward Amedisys.
On November 8, 2002, Amedisys sued JP Morgan, NPF VI, NPFS, NCFE, and Lance
Poulsen, the president of NFP VI, in the United States District Court for the Southern District of Ohio (“the Ohio action”). In the complaint, Amedisys demanded the return of the $7.3 million in accounts receivable held in the JP Morgan collection account.

On November 18, 2002, NCFE and its subsidiaries filed for chapter 11 bankruptcy.

On December 19, 2002, the district court transferred the Ohio action to the bankruptcy court, as an adversary proceeding in the bankruptcy case.

On January 16, 2004, Amedisys filed a second amended complaint in the bankruptcy court naming JP Morgan, NPF VI, NCFE, and NPFS as defendants, asserting the following claims:

I. Actual controversies exist between Amedisys and JP Morgan, and between
Amedisys and NCFE, concerning Amedisys’ right to have a total of more
than $7.3 million in accounts receivable returned to it. Amedisys seeks a
declaratory judgment holding that the sale agreement and trust indenture

No. 04-3365 In re Nat’l Century Financial Enterprises Page 42

The parties disagree over whether, as NCFE argues, NPF VI had earmarked the $7.3 million in accounts receivable for purchase, and had simply not yet paid Amedisys for the accounts; or whether, as Amedisys argues, the accounts were not designated for purchase, but had merely been swept into the JP Morgan account. See Appellant’s Br.at 28; Appellee’s Br. at 20. represent one contractual relationship among Amedisys, JP Morgan, and NCFE.

II. Amedisys seeks a declaratory judgment stating that JP Morgan, as an escrow
agent, owed fiduciary obligations to Amedisys and violated those
obligations.

III. The $7.3 million in accounts receivable is subject to an express trust
established by the sale agreement.

IV. Amedisys’ cash in the possession or control of the NCFE entities,
approximately $7.3 million, is an unjust enrichment occurring by mistake or
fraud. The funds should be impressed with a constructive trust requiring that
the funds be returned to Amedisys.

V. The $7.3 million in accounts receivable is subject to a resulting trust.

VI. Amedisys is entitled to an immediate turnover of its property under 11 U.S.C.
§ 542.

VII. NCFE breached the Amedisys-NCFE sales agreement by failing to return
timely and properly non-purchased receivables. NCFE also breached the
agreement by failing to maintain a detailed accounting record.

VIII. Amedisys is entitled to specific performance of the agreement mandating
NCFE to remit $7,337,569 to Amedisys.

IX. NCFE owed to Amedisys a fiduciary duty pursuant to the sale agreement to
ensure that Amedisys’ interests in the accounts were properly protected.
NCFE breached this duty.

X. NCFE repeatedly made intentional misrepresentations to Amedisys, stating
that it would ensure that Amedisys’ funds would be timely released to it.
Amedisys justifiably relied on these misrepresentations and has been directly
injured as a result of the reliance.

On May 27, 2004, the bankruptcy court granted NCFE’s and JP Morgan’s motions for
summary judgment as to all counts in the adversary proceeding except for Count VII (alleging that NCFE breached the sale agreement). The bankruptcy court determined that although NCFE did not pay for the disputed $7.3 million in accounts receivable, it “did actually purchase Amedisys’s accounts receivable.” Therefore, Amedisys would have only a “general contractual claim [against NCFE] for nonpayment”; Amedisys’ assertions that it owned the accounts receivable at the time of NCFE’s bankruptcy, and therefore that the $7.3 million in the JP Morgan collection account was not
part of the bankruptcy estate, were unfounded.2 By joint agreement of the parties, Count VII was dismissed on April 14, 2005. At this point, the bankruptcy court’s grant of partial summary judgment became a final, appealable order. Amedisys filed a notice of appeal on April 22, 2005, and the appeal is now before the United States District Court for the Southern District of Ohio.No. 04-3365 In re Nat’l Century Financial Enterprises Page 53

The parties noted at oral argument that the action has since been consolidated into a multidistrict litigation in the United States District Court for the Southern District of Ohio.

The motion argued, inter alia, that the Louisiana action “plainly violates section 362(a)(3) of the Bankruptcy Code.” JA 576. The prayer for relief sought an order
(i) finding that the automatic stay has been violated by the Louisiana action; (ii) declaring the filing of the Louisiana action to be invalid and void, as violative of the automatic stay; (i0ii) directing the Amedisys Entities to immediately cease and desist from any further prosecution of the Louisiana Action, absent further order of this court. . . .

On February 21, 2003, Amedisys brought a state court action in Louisiana against JP
Morgan, certain JP Morgan employees, and NCFE’s insurer (“the Louisiana action”). JA 559. On March 24, 2003, the defendants removed the action to the United States District Court for the Middle District of Louisiana.3 Amedisys asserted the following claims in the Louisiana action: I. The sale agreement between NPF VI and Amedisys created an implied contract relating to the course of dealing among JP Morgan, NPF VI, and Amedisys. Amedisys seeks specific performance, including “refund of the nonpurchased receivables and overage funds.”

II. Amedisys was a third-party beneficiary of the trust indenture between NPF
VI and JP Morgan. JP Morgan had a duty to return to Amedisys “receivables
and overage funds that were never purchased by NPF VI in the first place.”

III. JP Morgan breached its fiduciary duty to Amedisys to ensure that Amedisys’
rights in the accounts at JP Morgan were adequately protected.

IV. JP Morgan intentionally misrepresented the truth to Amedisys when it
claimed that it had taken all actions necessary to release the $7.3 million in
accounts receivable.

V. Amedisys detrimentally relied on JP Morgan’s agreement to comply with
NPF VI’s instructions to wire Amedisys’ funds to it. Amedisys is therefore
entitled to all damages attributable to JP Morgan for Amedisys’ detrimental
reliance.

VI. JP Morgan wrongfully converted the funds owned by Amedisys when it
refused to remit the funds following Amedisys’ request. Amedisys is
“entitled to any and all damages resulting in [sic] the conversion of its
funds.”

VII. “[T]he funds owned by the Amedisys Entities, over which [JP Morgan] has
dominion and control, are impressed with a constructive trust in favor of
Amedisys.”

VIII. JP Morgan’s conduct violated the Louisiana Fair Trade Practices Act.

IX. JP Morgan was unjustly enriched by its wrongful retention of the $7.3
million in accounts receivable belonging to Amedisys.
Complaint at 17–23, Supp. JA 22–28.
On June 23, 2003, NCFE moved the bankruptcy court for an order enforcing the Bankruptcy Act’s automatic stay, 11 U.S.C. § 362(a), against the Louisiana action. JA 569–580.4 The motion No. 04-3365 In re Nat’l Century Financial Enterprises Page 6
JA 579-80. alleged, “The actions taken by the Amedisys Entities in connection with the commencement of the Louisiana Action plainly suggest a coordinated strategy to forum shop and to avoid the application of the automatic stay.” JA 575. NCFE noted that Amedisys’ claims in the Louisiana action were virtually identical to those in the Ohio action, save for the omission of NCFE and its subsidiaries as defendants in the Louisiana action. Id. The bankruptcy court, in an opinion dated August 19, 2003,
ordered that Amedisys immediately cease and desist from any further prosecution of the Louisiana action. The court gave two reasons. First, all of the claims in Amedisys’s complaint “require a determination of ownership of funds alleged to be [NCFE’s] funds.” JA 564. Therefore, a finding for Amedisys would result in the “automatic creation of liability against the debtor because of a judgment against [JP Morgan].” Id. Second, the court found, “the involvement in the Louisiana
Action effectively will act to diminish this bankruptcy estate by causing a duplication of efforts and a waste of judicial time and resources.” JA 564.
Amedisys appealed the bankrupty court’s determination to the United States District Court for the Southern District of Ohio. The district court affirmed the bankruptcy court. The district court, noting that “it is the bankruptcy court’s province to determine whether [the $7.3 million in accounts receivable] is part of the estate,” concluded that the Louisiana action amounted to no more than an attempt to prove that Amedisys owned the accounts at the time of NCFE’s bankruptcy petition. Assuming that Sixth Circuit precedent requires “unusual circumstances” in order to extend
the scope of the automatic stay to an action against a non-debtor, the court found that requirement met here, because NCFE constituted the real party in interest in the Louisiana action. JA 541. Amedisys timely appealed the district court’s decision.

II.
We affirm the decision of the district court. The bankruptcy court had jurisdiction to enforce the automatic stay against the Louisiana action because, as Amedisys concedes in its brief, the motion to enforce constitutes a “core proceeding” as defined in 28 U.S.C. § 157(b)(2). Further, the bankruptcy court correctly concluded that the automatic stay in bankruptcy, 11 U.S.C. § 362(a), applies to the Louisiana action.

A.
Amedisys first argues that, in globally staying the Louisiana action, the bankruptcy court exceeded its jurisdiction. The bankruptcy court held that it had jurisdiction to enforce the stay because the matter was a core proceeding. JA 554. Amedisys argues that in order for jurisdiction to be proper, the bankruptcy court was required to find that the Louisiana action was “related to” the bankruptcy case. See 28 U.S.C. § 1334(b). Further, Amedisys urges, in the event of a judgment against JP Morgan in the Louisiana action, JP Morgan likely would not obtain indemnity from
NCFE or its subsidiaries; therefore the Louisiana action is not related to the bankruptcy case.

The bankruptcy court had jurisdiction to enforce the stay, because NCFE’s motion to enforce constituted a core proceeding. 28 U.S.C. § 1334(b) provides exclusive district court jurisdiction over “all cases under title 11,” and concurrent jurisdiction over “civil proceedings arising under title 11, or arising in or related to cases under title 11.” In turn, 28 U.S.C. § 157(a) permits district courts
to refer bankruptcy cases brought under their original jurisdiction to bankruptcy courts. Section 157(b) of the same chapter defines “core proceedings arising under title 11, or arising in a case under title 11” to include “matters concerning the administration of the estate,” “motions to terminate, annul, or modify the automatic stay,” and “other proceedings affecting the liquidation of assets of

No. 04-3365 In re Nat’l Century Financial Enterprises Page 75

Amedisys argues that in order to find that the bankruptcy court had jurisdiction, this court must analyze whether the subject matter of the Louisiana action is “related to” the bankruptcy case. This would be the proper inquiry in evaluating whether the Louisiana action itself could be transferred to the bankruptcy court, in order for the bankruptcy court to hear the claims and submit proposed findings of fact to the district court. 28 U.S.C. § 157(c)(1); cf. Lindsey v. O’Brien (In re Dow Corning), 86 F.3d 482, 489-91 (6th Cir. 1996) (setting forth factors to be used in determining whether a civil case is sufficiently “related to” the bankruptcy case to give the district court subject-matter jurisdiction over state law tort claims pending against nondebtor defendants). Here, because this appeal concerns only the
enforcement of the automatic stay, and because the parties concede that a motion to enforce the stay constitutes a core proceeding, it is unnecessary to assess the relatedness of the Louisiana action to the bankruptcy case. the estate or the adjustment of the debtor-creditor or the equity security holder relationship. . . .”

28 U.S.C. § 157(b)(2)(A), (G), (O).

Amedisys concedes in its jurisdictional statement, “This matter is a core proceeding pursuant to § 157(b)(2)(G).” Appellant’s Br. at 1. Therefore, NCFE’s motion to enforce the automatic stay by definition met a narrower jurisdictional test than the “related to” basis for jurisdiction over noncore proceedings. See In re Combustion Eng’g, Inc., 391 F.3d 190, 225-26 (3d Cir. 2004) (“Cases under title 11, proceedings arising under title 11, and proceedings arising in a case under title 11 are referred to as ‘core’ proceedings; whereas proceedings ‘related to’ a case under title 11 are referred to as ‘non-core’ proceedings.”).5 NCFE’s motion to enforce arose under title 11, and the bankruptcy court therefore had jurisdiction to enforce the stay.

B.
Amedisys argues that the Louisiana action does not fall within the automatic stay provisions of 11 U.S.C. § 362(a). In order to enjoin the Louisiana action against JP Morgan, Amedisys argues, the bankruptcy court necessarily relied upon its equitable powers under 11 U.S.C. § 105(a) to issue orders “necessary or appropriate to carry out the provisions of [chapter 11].” Amedisys also argues that the bankruptcy court failed to identify “unusual circumstances” justifying a preliminary injunction under § 105(a), and that NCFE improperly failed to initiate an adversary proceeding to
obtain an injunction under § 105(a). These arguments lack merit, because the stay fell within § 362(a). The bankruptcy court observed the correct procedures in enforcing the stay.

The courts below properly held that the Louisiana action is covered by the automatic stay in bankruptcy. Under 11 U.S.C. § 362(a), a bankruptcy petition
operates as a stay, applicable to all entities, of . . . (1) the commencement or
continuation . . . of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title; . . . (3) any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate.

“Property of the estate” includes “all legal or equitable interests of the debtor in the property as of the commencement of the case.” 11 U.S.C. § 541(a)(1). The bankruptcy court also has the authority to “issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of [the Bankruptcy Code].” Id. § 105(a).

Because the Louisiana action seeks to obtain the accounts receivable held in a JP Morgan account in the name of NPF VI, and because the accounts receivable likely constitute property of the bankruptcy estate, the bankruptcy court properly enforced the automatic stay under 11 U.S.C. § 362(a)(3). The district court held that “the Louisiana complaint, though naming non-debtor JP Morgan as a defendant, seeks a determination that the money in the Debtors’ bank accounts belongs

No. 04-3365 In re Nat’l Century Financial Enterprises Page 86

It is unclear whether, if Amedisys were allowed to proceed with its constructive trust claim in the Louisiana action and prevailed on it, such a judgment would result in the exclusion of the disputed accounts receivable from the bankruptcy estate. This court has criticized constructive trust claims in the bankruptcy context as a backdoor means for a creditor to avoid waiting for ratable distribution of the estate, by characterizing common contract claims as fraud. See XL/Datacomp, Inc. v. Wilson (In re Omegas Group), 16 F.3d 1443, 1449-50 (6th Cir. 1994). Since constructive trust claims involve assertions of fraud, an allegedly defrauded creditor should more properly initiate an adversary proceeding to except from discharge, under 11 U.S.C. § 523, a debt procured by fraud. In re Omegas Group, 16 F.3d at 1451. Only if a creditor has obtained prepetition a judgment imposing a constructive trust, see In re Omegas Group, 16 F.3d at 1449, or if state law clearly gave the creditor, prepetition, a right to conveyance of the property, see In re Morris, 260 F.3d at 668, may the property be excluded from the bankruptcy estate. A judgment in Amedisys’ favor in the Louisiana action would not fall under the former category, but could conceivably fall under the latter one. Notably, however, in neither Omegas Group nor Morris did the creditor seek to make an end run around the bankruptcy process to obtain a constructive trust judgment. In Omegas Group, the creditor initiated an adversary proceeding to assert the constructive trust claim; in Morris, the creditor moved the bankruptcy court to lift the automatic stay in order for the creditor to complete state court proceedings on a constructive trust claim against the debtor. In re Omegas Group, 16 F.3d at 1446;
In re Morris, 260 F.3d at 659. It is unnecessary to determine whether Amedisys, if it prevailed in the Louisiana action, could successfully obtain exclusion of the accounts receivable from the bankruptcy estate. A separate civil action for constructive trust, initiated postpetition, is an inappropriate forum for Amedisys’ assertion that it has a rightful claim to to Amedisys.” JA 525. The bankruptcy court similarly concluded that Amedisys, through the Louisiana action, sought to obtain ownership rights of the disputed accounts receivable. Amedisys, on appeal, contends that these holdings were misguided, because the Louisiana action concerns only
JP Morgan’s failure to follow NPFS’s instructions to remit $7.3 million to Amedisys.

Amedisys argues that it merely seeks money damages from JP Morgan, because JP Morgan breached a duty to transfer the property to Amedisys. This argument is unpersuasive.

While NCFE is a named defendant only in the adversary proceeding, and not in the Louisiana action, this is irrelevant, because Amedisys in both actions seeks to obtain possession of the disputed accounts receivable. Count I of the Louisiana action asserts that the Amedisys-NCFE sales agreement created duties in JP Morgan and seeks specific performance of that agreement, including “refund of the nonpurchased receivables.” Supp. JA 25.

Similarly, Count II avers that Amedisys is a third-party beneficiary of the JP Morgan-NCFE trust indenture, and that therefore JP Morgan has a duty to return the receivables to Amedisys. Count VII requests the court to impress the funds in the collection account with a constructive trust in favor of Amedisys. Supp. JA 26. The district court correctly found that while only some counts in the complaint pray the court to order JP Morgan to remit the disputed accounts receivable to Amedisys,
every count in the complaint requires the court to adjudicate whether Amedisys had a rightful claim to that property. Further, the district court properly concluded that Amedisys’ offer voluntarily to stay prosecution of Counts I and VII of the Lousiana action, would not cure the violation of § 362(a). As the district court aptly noted, unless Amedisys voluntarily dismissed the allegations in its complaint seeking refund of the accounts receivable, any judgment in Amedisys’ favor in the Louisiana action would potentially deplete the property of the bankruptcy estate. JA 524.

The district court properly concluded that in the Louisiana action, Amedisys used a
constructive trust theory to “assert[] dominion over money in the Debtors’ accounts.” JA 523. If Amedisys succeeded on a constructive trust theory, the value of the bankruptcy estate would be reduced. This is because property in which the debtor holds legal but not equitable title as of the commencement of the case—for example, property impressed with a constructive trust under state law—is property of the estate only to the extent of the debtor’s legal title. 11 U.S.C. § 541(d); see
Poss v. Morris (In re Morris), 260 F.3d 654, 666 (6th Cir. 2001) (holding that a creditor’s mere claim of a constructive trust does not constitute an equitable interest in property otherwise belonging to the estate; instead, “state law [must have] impressed property with a constructive trust prior to its entry into bankruptcy”); cf. Stevenson v. J.C. Bradford & Co. (In re Cannon), 277 F.3d 838, 849 (6th Cir. 2002) (quoting Begier v. IRS, 496 U.S. 53, 59 (1990)) (holding that the § 541(a) definition of “property of the estate” excludes property held in trust).6 Amedisys contends that its constructive

No. 04-3365 In re Nat’l Century Financial Enterprises Page 9
the funds held in bank accounts owned by the NCFE entities.
trust claim concerns only its prebankruptcy ownership of the disputed accounts receivable, and that this issue is entirely independent of whether the funds currently form part of the bankruptcy estate. This argument is meritless, because the issues are not independent. Whatever determination is made in the Louisiana action concerning the prebankruptcy ownership of the accounts receivable will
necessarily be relevant to postbankruptcy ownership as well. In the Louisiana action, Amedisys alleges that during the period of November 7-12, 2002, JP Morgan wrongfully failed to comply with NCFE’s instructions to refund to Amedisys the disputed amount. Supp. JA 20-21. The fact that the complaint asserts wrongs occurring before the NCFE entities filed for bankruptcy on November 18, 2002, does not alter our conclusion that the complaint demands the return of funds alleged to form part of the bankruptcy estate. See 11 U.S.C. § 541(a)(1) (property of the estate is determined as of the moment the debtor files for bankruptcy).

Further, it appears likely that the disputed accounts receivable to which Amedisys claims ownership do form part of the bankruptcy estate. Amedisys does not dispute that in November 2002, when the NCFE entities filed for bankruptcy, the disputed accounts receivable were located in a JP Morgan collection account held by NPF VI, an NCFE entity. Thus, presumptively, NPF VI holds legal title to these funds. No party has made a plausible claim that JP Morgan, rather than the NCFE entities, owns the funds. See Complaint in Louisiana Action at 8, Supp. JA 13 (“JP Morgan . . . has
no claim, title, or other interest in any nonpurchased receivables or overage funds of the Amedisys Entities now held by it.”); JP Morgan’s Application for Order Authorizing Compensation at 11, JA 727 (“[T]he Amedisys receivables were owned . . . by NPF VI, which had purchased those receivables from Amedisys.”).

Finally, the bankruptcy court, in a final order currently on appeal to the United States District Court for the Southern District of Ohio, has held that the accounts receivable held in the JP Morgan collection account form property of the bankruptcy estate. In granting summary judgment to defendants NCFE and JP Morgan on Amedisys’ claims in the adversary proceeding, the bankruptcy court held that the NCFE entities purchased the $7.3 million in accounts receivable from Amedisys.

The bankruptcy court found that although NCFE had never paid Amedisys for the disputed accounts receivable, this was merely because Amedisys had waived its right under the sale agreement to immediate payment. The bankruptcy court rejected with equal force the argument that either NCFE or JP Morgan held the receivables in an express or constructive trust for Amedisys. The bankruptcy court noted that NCFE bore merely a contractual duty to pay Amedisys for purchased receivables;
NCFE did not hold a fiduciary duty to transfer title in the receivables to Amedisys. Further, the court held, JP Morgan was not even in contractual privity with Amedisys; much less did it bear any fiduciary duty to Amedisys.

We do not purport at this time to resolve in a controlling fashion the issues raised in that appeal. But the bankruptcy court’s determination that the accounts receivable are part of the bankruptcy estate strongly supports the conclusion that the automatic stay was properly enforced.

It is the bankruptcy court’s province to identify the property of the bankruptcy estate. The bankruptcy court, in its summary judgment decision, persuasively marshaled the complex factual record in this case to conclude that the accounts receivable whose ownership forms the crux of the Louisiana action, are property of the estate. Reversing the lower courts’ conclusions that the automatic stay applies, at a time when the bankruptcy court’s determination of the ownership of the accounts receivable remains a live issue in the summary judgment appeal, would impede the
bankruptcy court’s role in managing the bankruptcy case.

No. 04-3365 In re Nat’l Century Financial Enterprises Page 107

The bankruptcy court’s holding did rely on one case, C.H. Robinson Co. v. Paris & Sons, 180 F. Supp. 2d 1002 (N.D. Iowa 2001), which held that a creditor is required to seek a preliminary injunction in order to expand the scope of a § 362(a)(1) stay to cover solvent codefendants. However, like Parry, C.H. Robinson did not involve entitlement to property allegedly part of the bankruptcy estate. The court’s conclusion was that “the automatic stay under section 362(a)(1) of the Bankruptcy Code is not truly automatic when invoked against nondebtor codefendants.” Id. at 1018. The analysis certainly does not preclude the conclusion that a stay against a nondebtor under § 362(a)(3) is truly automatic.

C. The fact that the Louisiana action did not name NCFE as a defendant does not render enforcement of the automatic stay improper. Amedisys argues that “the automatic stay under section 362(a) applies only to the bankrupt debtor,” and therefore that § 362(a) did not support the bankruptcy court’s decision in this case. Appellant’s Br. at 18. To buttress this assertion, Amedisys cites two decisions of this court for the proposition that a bankruptcy court must find unusual circumstances, justifying a preliminary injunction under 11 U.S.C. § 105(a), in order to extend the scope of a § 362(a)(1) automatic stay to encompass claims against not only a debtor defendant, but also nondebtor codefendants. See Patton v. Bearden, 8 F.3d 343, 349 (6th Cir. 1993); Parry v. Mohawk Motors of Mich., Inc., 236 F.3d 299, 314-315 (6th Cir. 2001). These cases note that, by extending the stay beyond its statutory terms, the bankruptcy court is not acting under § 362(a), but is instead issuing an order in equity “necessary or appropriate to carry out the provisions of [the Bankruptcy Code].” 11 U.S.C. § 105(a); Patton, 8 F.3d at 349. The district court, citing Parry, found that unusual circumstances were present in this case because NCFE, rather than JP Morgan, was the real party in interest in the Louisiana action. Therefore, the district court concluded, the bankruptcy court properly exercised its “necessary or appropriate” powers to issue a § 105(a) preliminary injunction.

Amedisys’ argument is not persuasive. The district court appears unnecessarily to have assumed that the bankruptcy court entered a preliminary injunction extending the automatic stay beyond its statutory terms, rather than merely enforcing the automatic stay as provided by statute.

The automatic stay of § 362(a) applies by its terms not only to actions against the debtor, see § 362(a)(1), but also to actions seeking to obtain property of the bankruptcy estate, see § 362(a)(3).

In Patton and Parry, this court found insufficient basis to extend the automatic stay beyond the terms of § 362(a)(1). In Parry, there was no contention that the automatic stay applied by its terms to an action against non-debtors; in Patton, the court rejected such a contention because the action did not seek property of the estate. Here, unlike in Patton and Parry, the bankruptcy court determined that
the automatic stay already covered the action. JA 563-4. As a sister circuit has held, “[A]n action taken against a nondebtor which would inevitably have an adverse impact upon the property of the estate must be barred by the [§ 362(a)(3)] automatic stay provision.” Licensing by Paolo, Inc. v. Sinatra (In re Gucci),126 F.3d 380, 392 (2d Cir. 1997) (citing In re 48th St. Steakhouse, Inc., 835 F.2d 427, 431 (2d Cir. 1987)). This court’s decision in Patton, 8 F.3d 343, further supports this
conclusion. In Patton, this court analyzed separately the applicability of stays under § 362(a)(1) and under § 362(a)(3). As part of the § 362(a)(1) analysis, the court noted that a debtor must demonstrate unusual circumstances in order to extend the automatic stay to nondebtor codefendants.

8 F.3d at 349. Under the § 362(a)(3) inquiry, the court merely analyzed whether a judgment against the solvent codefendants would actually deplete the bankruptcy estate. Id. The bankruptcy court, in its opinion, stated that it was enforcing the automatic stay, not that it was exercising its equitable powers under § 105(a).7 Further, it held that the Louisiana action sought a determination that the disputed accounts receivable did not form part of the bankruptcy estate. JA 563. Accepting Amedisys’ argument that the bankruptcy court failed to find unusual circumstances justifying a preliminary injunction would require an unwarranted limiting of
§ 362(a)(3), a subsection that requires application of the automatic stay without reference to whether No. 04-3365 In re Nat’l Century Financial Enterprises Page 11
the debtor is the defendant in the stayed action. Because the Louisiana action seeks to obtain property of the bankruptcy estate, we affirm the order enforcing the stay.

D. Amedisys’ remaining grounds for asserting that the bankruptcy court improperly stayed the Louisiana action are all rooted in the assumption that the stay constituted a preliminary injunction under § 105(a), expanding the automatic stay. Amedisys argues (1) that NCFE failed to initiate an adversary proceeding in order to request a preliminary injunction, and that the enforcement of the automatic stay was invalid because of this procedural error; (2) that the bankruptcy court failed to consider the four factors determining whether a preliminary injunction is appropriate; and (3) that the bankruptcy court improperly imposed a preponderance-of-the-evidence burden of proof on NCFE, rather than a clear-and-convincing-evidence burden of proof. Appellant’s Br. at 21-28.

Amedisys forfeited these arguments by failing to raise them in its appeal brief before the district court. See Thurman v. Yellow Freight Sys., 97 F.3d 833, 835 (6th Cir. 1996) (holding that arguments not raised before the district court are waived).

Even if these arguments had been properly preserved, they would nonetheless fail, because the bankruptcy court’s action was supported by the automatic stay of § 362(a)

(3). Normally, a debtor initiates an adversary proceeding in order to request a § 105(a) preliminary injunction. See Amer. Imaging Servs. v. Eagle-Pitcher Indus., Inc.
(In re Eagle-Picher Indus., Inc)., 963 F.2d 855, 857-59 (6th Cir. 1992). On the other hand, a debtor is not required to initiate an adversary proceeding in order to move the bankruptcy court to enforce the automatic stay. In re LTV Steel Co., Inc., 264 B.R. 455, 462-63 (Bankr. N.D. Ohio 2001).

Similarly, as Amedisys concedes, only when the bankruptcy court enjoins an action under § 105(a) must it consider the four preliminary injunction factors, and apply a standard of clear and convincing evidence. Because these arguments rely upon Amedisys’ assertion that § 362(a) did not support the bankruptcy court’s holding, and because we hold, to the contrary, that enforcement of the automatic stay under § 362(a)(3) was proper, the arguments fail.

III.
For the foregoing reasons, we AFFIRM the judgment of the district court enforcing the
automatic stay in bankruptcy, 11 U.S.C. § 362(a), against the Louisiana action.

Sprinkled among the doctors, lawyers and society people...

"lots of pushing and shoving." The couple had to leverage big deals with little equity value. "It was an enormous amount of work."


The gift was made after a lunch meeting that included Moore and her husband and top Bank of America executives William "Hootie" Johnson and Hugh McCall, Moore said.

She attended the lunch at the Florence Country Club because she was excited to meet Johnson, she said. She did not foresee the request that would come after a long, friendly conversation.

Editor's note: This is the first of two stories on one of the most influential women in South Carolina.

The pragmatic Grande Dame of South Carolina receives her guests by the Steinway & Sons grand piano, nestled in a front parlor niche of her luxurious South of Broad home.

She introduces her husband, Richard Rainwater, as "Dr. Doom." He is holding a can of soda, chatting and a little self-deprecating, full of praise for the lady of the house, worried that the economic downturn could mean utter disaster. A platter of hors d'oeuvres slides through.

Sprinkled among the doctors, lawyers and society people are those affiliated with the agriculture business who are in Charleston to attend the third-annual AgSummit, hosted by the Palmetto Institute.

The institute is the all-business, no-nonsense expression of Darla Moore's central passion: to raise the per-capita income of the state. And agriculture, South Carolina's No. 1 economic driver, offers one way to achieve her goal.

The guests enjoy drinks on the porch. The November night is crisp and clear, like Moore. She talks about the big plans for her hometown of Lake City. She shows off her extraordinary rare book collection in the warm, art-furnished library.

The house is decorated with objects and furniture Moore selected herself, and it intentionally resembles the décor one would have found in a 19th century Charleston residence. The reception is reminiscent of that era's society parties, except that modern farmers have replaced plantation owners. The conversation is probably similar, talking about new crops, cooperatives, marketing initiatives and a desire for more government support.

The next morning at the Francis Marion Hotel, summit attendees get serious.

Moore welcomes attendees and summarizes her goals: "We've got to think innovatively," she says. We've got to reinvigorate rural areas, boost research then commercialize its discoveries.

State Agriculture Commissioner Hugh Weathers says Moore's enthusiasm "gets other people off the bench."

"She's saying the status quo is not satisfactory in a whole host of things. I agree it can be better," Weathers says.

Fenton Overdyke, vice president of MarketSearch, which was hired by the Palmetto Institute to study the agriculture sector in the state, notes that agriculture is a $30 billion industry that employs 188,000 people. More than 90 percent of farmland is owned by individuals or families, not large-production companies, Overdyke says. More than half of all farms are fewer than 100 acres.

In advocating for improved agribusiness, Moore is thinking of Lake City, her beloved hometown, site of the family farm and repository of childhood memories.

"This is special to me," she tells the audience. "I consider myself one of you."

Funding big ideas

It can be difficult to pin down Moore. She constantly is working, traveling and speaking at Rotary Clubs, conferences and universities. She is a loyal capitalist and tireless advocate of economic improvement. She is pushing for tax reform, for farming clusters, for competitive international trade, for more and better research, for recruitment of top-drawer thinkers to the state. She is determined to succeed. She is not one to throw her hands in the air and move on before the current issue is addressed satisfactorily and assigned a management team. And even then, she keeps a hand in it.

Jim Fields, director of the Columbia-based Palmetto Institute, is Moore's go-to man, the one who manages the schedule, helps set the agenda, explains the mission, protects her interests and shields her from unwanted exposure. She has a habit of calling him only by his last name.

"Fields, what's next on the schedule?" "Fields! Tell them I'm not interested."

Fields is a reliable and trusted ally. Once affiliated with the McNair Law Firm, he specialized in state and local government affairs. He was counsel to the state Senate Judiciary Committee, then served as Clerk of the South Carolina Senate before being elected to head the Government Issues Committee of the National Conference of State Legislatures.

These days, he devotes himself to Moore and the mission of the Palmetto Institute.

In 1998, Moore gave $25 million to the University of South Carolina's College of Business Administration, which was renamed in her honor. The school, reputed to have one of the world's best programs in international business, is for Moore the launching pad to grow and propel innovative business enterprise throughout the state.

The gift was made after a lunch meeting that included Moore and her husband and top Bank of America executives William "Hootie" Johnson and Hugh McCall, Moore said.

She attended the lunch at the Florence Country Club because she was excited to meet Johnson, she said. She did not foresee the request that would come after a long, friendly conversation.
"We're here," Johnson finally said, "because we'd like to propose naming a business school at the university for Darla." It would be a first. Business schools had never been named for a woman before.

"Richard and I were dumbstruck. We just stared at him," Moore said. "Then he said it would cost $25 million."

Moore turned to Rainwater and said, "What do you think?"

Sitting there sipping coffee, Rainwater took a brief moment to think.

"Well, I think you should do it," he said.

It was a done deal. But the flattery only went so far. Soon Moore discovered that her no-strings-attached approach needed revising: All was not as rosy as it seemed.

"Fields, have I just flushed $25 million down the toilet?" she asked.

She hired a consulting firm to evaluate the school's performance. She wanted it to be a factory producing bright business minds that glowed with creativity and financial know-how. She would settle for nothing less.

"I was going to invest in South Carolina, that was a given," she said. And one of the most important assets in the state was its premier institution of learning, meant to be an engine that keeps the economy growing, she thought. This was more than a gift and a name on the side of a building, more than a good deed.

This was critical.

So Moore did what she always does when faced with a challenge. She got involved. She pushed for a revised curriculum. She consulted with school officials. She allocated some endowment money to a fellowship program that covered expenses for up to 30 students each year. She instigated a search for a new dean, then found one in Hildy Teegan. And she advocated for the recruitment of new faculty.

In 2003, Moore and Rainwater gave $10 million to the School of Education at Clemson University in honor of her father, Eugene Moore Jr., a Clemson alumnus and former public school teacher, coach and principal who died in October 2008.

Then in 2004, she pledged an additional $45 million to renovate the Hipp-Close building at USC and bolster the endowment, challenging the administration to match the gift.

Finding a dean

By 2007, the dream house Teegan and her husband were building on the edge of the Shenandoah National Park was ready to be occupied. Teegan was happily teaching international business at Moore's alma mater, George Washington University, and had no thoughts of becoming a dean, she said.

The force of Moore's charisma and vision, combined with a perceived opportunity, convinced Teegan to abandon her Washington life and take a new course.

"Her reputation is very strong," Teegan said of Moore. "She is associated with the mavericks of Wall Street. … She is the uber role model for many women in business. … She was known for a series of great choices made in somewhat adverse circumstances."

And there was her tenacity, her history of leveraging events to her advantage, her grand vision. "She is a bright light in the state," Teegan said.

Now, Teegan is making adjustments, some large some subtle, so that academia and enterprise work together, so that agribusiness in the state can be exported more and intellectual properties developed, so that ideas fueled in the classroom can be transformed into market solutions.

By nuturing great minds in business enterprise, Teegan hopes some of them will stay in South Carolina and help realize Moore's vision. It's about leverage, about transforming something small and powerful into something big. Or as Teegan put it, "to take limited investment and get a multiplier."

There is a vehicle for achieving these mostly abstract goals. It's called Innovista, a public-private research and development project sponsored by USC, local and state government and business leaders. Innovista is a $250 million idea factory that officials, including Moore and Teegan, hope will serve as an economic catalyst for the state, adding knowledge-based businesses and high-paying jobs.

"Great ideas spring forth," Teegan said of the academic environment, "but the missing link is the transition to commercial applications. … Some of the most difficult problems can't be solved by government alone, or civil society alone. You've got to have the private sector engaged."

Harris Pastides, who became president of USC this year and who is one of the forces behind the Innovista project, said he works closely with Moore, who sits on the university's board, and appreciates her influence.

"What else do you have if you don't have job creation coming out of research institutions?" he asked. Tourism appears to be in decline, at least for now. Agriculture is important, but its growth potential is questionable. The manufacturing sector is a disaster. "Knowledge. That one is a level playing field."

But getting the state and its institutions to fully endorse and fund the public-private research initiative and the ideas it is meant to explore has been slow going, Pastides said. Moore's participation has been invaluable.

"When Darla speaks, people listen," Pastides said. "When a university president speaks, some people listen, some people run away."

Rolling tobacco

Born at the height of summer in 1954, Moore grew up on a tobacco plantation in Lake City when the town was still a hub of rural South Carolina, a crossroads through which trains passed carrying bean and tobacco crops to markets far and wide. The property, which had been in the family for generations, remains the site of Moore's primary residence.

Besides tobacco, the farm grew cotton and soy beans. Moore remembers the sharecroppers who worked the crops and cured and classified the huge tobacco leaves in the pack house. Sometimes she would pitch in a little, earning 10 cents a day.

Productivity. Getting things done. Markets. Trade. It shaped the worldview of a young, pretty, determined girl.

In the 1970s, an affluent Lake City began its slow, painful decline. Tobacco was vilified. Farmers struggled. Moore knew she could not go far by staying home. She wanted to make a mark somehow, to make a name for herself. In 1979, Moore left for Washington to work for the Republican National Committee on behalf of Ronald Reagan in his run for president.

She discovered, however, that power born through politics was transient and fickle. In 1981, she graduated with an MBA from George Washington University, and the next year she moved to New York and joined a training program at Chemical Bank. She set her sights on the leveraged buyout business, which was all the rage on Wall Street then. Mergers and acquisitions. Big money. Influence. Wealth.

"There wasn't a snowball's chance in hell that a female from the rural Deep South would be invited or embraced by that LBO environment," she told an audience at the Wharton School of the University of Pennsylvania in 2000. "Historically no major players in the LBO business were women."

So someone suggested the bankruptcy business. If the leveraged buyout market was the top of the skyscraper, bankruptcy was the basement. Or, to use Moore's metaphor: "I ended up on the dark side of the moon."

She was buried in failed companies, working in relative isolation to manage reorganizations and liquidations. She learned a lot and became an expert at dealing with companies in crisis mode. She earned a guaranteed fee, which was paid first, before any creditors received a dime, before the company could spend money on its restructuring. The dark side of the moon proved lucrative.

Then, suddenly, came economic crisis.

The peak of the merger period had been reached and markets were contracting. The savings and loan fiasco made headlines. Businesses were tumbling from the top of the skyscraper into the basement, and Moore, efficient and ruthless, processed them one by one.

"It was manna from heaven," she said. "I was unassailable at the time, they couldn't touch me."

And she played up her Southern belle charm, which transformed from a liability into an asset. She was polite and sweet, even as she demanded of humbled executives that they do as she told them. The business provided "an incredibly high return on incredibly low risk," she said. And the chaos didn't faze her. "I could see the end game through the smoke."

This was her professional life for 13 years. She became the highest paid woman in banking. In 1991, she married Texas investment tycoon Richard Rainwater. In 1993, she left her job at the bank in New York to become president of Rainwater Inc. She was 39 and on the verge of a new career, still in the "get-rich" phase of her life.

Rainwater was a successful funds manager-turned-private investor from Fort Worth, Texas, who had gained a reputation for taking big risks that paid off handsomely. He bought 15 million square feet of real estate in Houston and Dallas after an episode of panic selling in the mid-1990s. Then he caught wind of the "peak oil" theory, which says that there is a possible peak in worldwide oil production, and decided to invest heavily while prices were low.

With Moore at the helm of the company, Rainwater focused on raising money. She steered the ship. It was a period of "high-wire acts," Moore said, with "lots of pushing and shoving." The couple had to leverage big deals with little equity value. "It was an enormous amount of work."
But the wealth amassed, and after some years Moore was entering the "stay-rich" phase when priorities shifted.

She would settle back into the family home in Lake City. It would become her base, even as she maintained other homes in New York, California and Charleston. Lake City, this washed-out farming town in Florence County, was the community in which she would pay her taxes.

And restoring it to its former grandeur would become her passion.

Next: Moore's vision for Lake City, her efforts as chairwoman of the Palmetto Institute and her rare book collection.

Reach Adam Parker at 937-5902 or aparker@postandcourier.com.

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.

Brokaw, Friedman and company also didn’t recognize the obvious danger to the United States that Bush represented in 2000

Predictable Disaster of George W. Bush

By Robert Parry
November 16, 2008


In his trademark goofy way, George W. Bush explained why he supported a bailout of the U.S. financial markets, saying he was “a free-market person, until you're told that if you don't take decisive measures then it's conceivable that our country could go into a depression greater than the Great Depression.”

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So, with a smirk on his face, President Bush explained the predicament that the United States and the world face after eight years of his incompetence and mismanagement – teetering on the edge of a catastrophe “greater than the Great Depression.”

Yet what is remarkable about American news coverage of this extraordinary moment – and Bush’s strangely light-hearted comment at the end of the Nov. 15 global economic summit – is how little blame is being laid specifically at Bush’s door.

In a pattern typical of the preceding eight years, major U.S. journalists are focusing on almost everything else – from Sarah Palin’s political future to what President-elect Barack Obama should do after he’s inaugurated in two months – not the lessons that should be learned from Bush’s disastrous presidency.

An example was Tom Brokaw’s “Meet the Press” on Sunday, which addressed the financial and energy crises with nary a negative word spoken about Bush.

It was as if everyone else was responsible for the nation’s troubles, from unions and auto executives to Congress and Obama (for not providing immediate answers). Just not the person who is still in charge and who was chiefly responsible for taking the United States from an era of peace, prosperity and budget surpluses to the precipice of endless war, economic devastation and national bankruptcy.

Part of that may be that Brokaw and some of his fellow pundits, such as New York Times columnist Thomas Friedman, were major enablers of Bush’s most harmful decisions. Brokaw and Friedman were among the leading journalists in 2002-03 who didn’t ask tough questions about the Iraq invasion and indeed cheered the war on.

Brokaw, Friedman and company also didn’t recognize the obvious danger to the United States that Bush represented in 2000 when he and his Republican allies ran a down-and-dirty campaign against Al Gore and then blocked the counting of Florida’s votes so Bush could slip into the White House.

The big-name pundits almost all bought into the myth that Bush’s strange ascension to the White House -- as the first popular-vote loser in more than a century -- was a good idea, pushing out Bill Clinton’s crowd and putting “the adults back in charge.”

Beyond the affront that Bush’s “election” represented to American democracy, there also was the troubling fact that Bush had a long history of messing up whatever he touched and then “failing upward,” pulled out of trouble by his father’s rich friends.

However, when this well-born wastrel was elevated to the highest office on earth, there was really no way that daddy or daddy’s friends could either control him or save him from himself. It may be that not even all the central banks in all the world can undo the damage that George W. Bush has done.

That big-name American journalists failed to recognize this danger back in Campaign 2000 represented another example of their professional limitations and moral deficiencies. At the time, it was easier to go with the flow.

But the inadequacies of George W. Bush were well-known during Campaign 2000, although readers often had to search out the facts on the Internet or in a few small-circulation liberal magazines. Bush’s ominous history of business failures -- his reverse Midas touch -- drew far less attention than the bogus stories about “Lyin’ Al” Gore and his “exaggerations.”

Warning the Electorate

At Consortiumnews.com, we were among those small outlets that tried to warn the American electorate about these risks. We also recounted this reality in our book, Neck Deep, an excerpt of which follows:

At times grudgingly, George W. Bush traced virtually every early step his father took. Like his father, George W. went to both Phillips Andover Academy and Yale and joined the secretive Yale fraternity Skull and Bones.

Like his father – when starting out on his own career – George W. exploited both wealthy family connections and the nexus between oil and politics. Like his father, too, George W. joined the armed forces during war time.

But George W.’s early record had the look of a child shuffling around in his father’s oversized shoes. In school, George W. was a C student, while his father graduated Phi Beta Kappa. In sports, George the father was captain of the Yale baseball team while George the son was captain of the cheerleading squad.

George Sr. served under fire as a naval aviator in the Pacific theater of World War II, while George Jr. slipped past other better qualified candidates into the Texas Air National Guard where he would avoid service in Vietnam and leave behind long-term questions about his duty records and premature departure.

Bush’s checkered history with the National Guard coincided with a period of his life when he drank heavily and apparently abused cocaine, although he never exactly admitted to that last fact. During his presidential run in 2000, Bush acknowledged the drinking problem – in the context of saying he had licked the bottle with the help of his Christian faith – but he slid away from the cocaine question.

When pressed, he didn’t confirm or deny that he abused cocaine but asserted that he could have met his father’s White House personnel requirement that set time limits on how far back an applicant would have to admit illegal drug use.

Despite this implicit confirmation of drug abuse, most of the major news outlets, such as The New York Times, took Bush’s side and reported that there was no evidence Bush had ever used illegal drugs.

But what he may have lacked in early accomplishments, he made up for in ambition and charm, two traits that served him well in both business and politics. In 1978, his ambition led George W. Bush to embrace his father’s two career paths, oil and politics.

With almost no political experience, George W. launched an uphill campaign for the U.S. Congress in 1978. He lost badly to the Democratic incumbent. That same year, he incorporated his own oil-drilling venture, Arbusto (Spanish for bush) Energy.

George W. Bush’s oil business venture seemed promising at first. Just as his father had done nearly 30 years prior, George W. sought financial assistance from an uncle, this time, Jonathan Bush, a Wall Street financier. Jonathan Bush pulled together two dozen investors to raise $3 million to help launch Arbusto.

James Bath, one of George W.’s friends from the National Guard, also invested $50,000 for a five percent stake. At the time, Bath was the sole U.S. business representative for Salem bin Laden, scion of the wealthy Saudi bin Laden family and half-brother of Osama bin Laden, who in the 1980s would be heading to Afghanistan to help Islamic fundamentalists resist the Soviet invasion.

Though responsible for investments for Salem bin Laden, Bath insisted that the $50,000 for Arbusto came from his own personal funds. (Salem bin Laden could not be questioned about the investment. He died in a 1988 plane crash in Texas.)

A History of Bailouts

In his subsequent business career, George W. was the beneficiary of three major bailouts.

The first occurred in 1982 when, despite the millions already pumped into Arbusto, the company faced a cash crunch. George W.’s balance sheet showed $48,000 in the bank and $400,000 owed to banks and other creditors.

George W. realized that he had to raise additional cash and decided to take Arbusto public. With the company so deeply in debt, however, George W. would need a new infusion of money to clear the books.

In stepped Philip Uzielli, a New York investor and friend of Bush Family lawyer James Baker III from their days at Princeton University. Uzielli worked out a deal with George W. to purchase a 10 percent stake in Arbusto for $1 million, though the entire company was valued at less than $400,000.

In a 1991 interview, Uzielli recalled the investment as a major money loser. “Things were terrible,” he said.

As bad as Uzielli’s investment turned out to be, George W. now had enough money to seek public investors. But first he decided to make one other change. In April 1982, perhaps realizing the negative connotation of “bust” in Arbusto, George W. changed the name of his company to Bush Exploration. The name change also made better use of Bush’s primary asset, his family name.

In June 1982, George W. issued a prospectus, seeking $6 million in the initial public offering. But he managed to raise only $1.14 million. The shortfall was due in large part to the waning interest in the oil industry among investors. The price for a barrel of oil was falling and special tax breaks for losses incurred in oil investments had been slashed.

Within two years, it was clear that Bush Exploration was in trouble again. Michael Conaway, George W.’s chief financial officer, told the Washington Post, “We didn’t find much oil and gas. We weren’t raising any money.” Something had to be done.

In walked bailout number two in the persons of Cincinnati investors, William DeWitt Jr. and Mercer Reynolds III. Heading up an oil exploration company called Spectrum 7, DeWitt and Mercer contacted George W. about a merger with Bush Exploration. For Bush and his struggling company, the decision wasn’t hard to make.

In February 1984, George W. agreed to a merger with Spectrum 7 in which Dewitt and Reynolds would each control 20.1 percent and George W. would own 16.3 percent. George W. was named chairman and chief executive officer of Spectrum 7, which brought him an annual salary of $75,000.

Even though the merged companies still failed to make any money, the pieces were finally starting to fall into place for George W. Bush.

Spectrum 7 president Paul Rea remembers Bush’s name as a definite “drawing card” for investors. With oil prices collapsing in the mid-1980s, however, it became clear that George W.’s name alone would not save the company.

In a six-month period in 1986, Spectrum 7 lost $400,000 and owed more than $3 million with no hope of paying those debts off. Once more, the situation was growing desperate.

In September 1986, George W. was tossed his third lifeline, this time by Harken Energy Corporation, a medium-sized, diversified company that was purchased in 1983 by a New York lawyer, Alan Quasha.

Quasha seemed interested in acquiring not just an oil company, but a relationship with the son of the then-Vice President, George H.W. Bush. Harken agreed to acquire Spectrum 7 in a deal that handed over one share of publicly traded stock for five shares of Spectrum, which at the time were practically worthless.

After the acquisition in 1986, George W. got a seat on the Harken board of directors, landed a $120,000-a-year job as a consultant and received $600,000 worth of Harken stock options. By any account, this wasn’t a bad deal for an oilman who had never made any money in the oil business and, indeed, had lost lots of money for his investors.

A Political Bonus

But Harken found that its investment at least in George W. appreciated. Though the company had acquired the son of the Vice President, it ended up in 1989 with the son of the President. Harken moved to exploit that upgrade by expanding its operations into the Middle East, where business and family connections are of legendary importance.

In 1989, the government of Bahrain was in the middle of negotiations with Amoco for an agreement to drill for offshore oil. Negotiations were progressing until the Bahrainis suddenly changed direction.

Michael Ameen, who was serving as a State Department consultant assigned to brief Charles Hostler, the newly confirmed U.S. ambassador to Bahrain, put the Bahraini government in touch with Harken Energy.

In January 1990, in a decision that shocked oil-industry analysts, Bahrain granted exclusive oil drilling rights to Harken, a company that had never before drilled outside Texas, Louisiana and Oklahoma – and that had never before drilled offshore.

Nearly two years later, when The Wall Street Journal examined the curious Bahrain transaction, Bush declined to be interviewed but did agree to answer some questions in writing. Some of his responses were snippy, such as his answer to a question about whether his involvement in Dallas-based Harken lent it extra credibility in the Arab world.

“Ask the Bahranis,” Bush shot back.

Nevertheless, the January 1990 deal added to Harken’s stock value, with its shares rising more than 22 percent from $4.50 to $5.50. The run-up in Harken’s stock marked one of George W. Bush’s first successes in the oil business.

That limited success opened the door to Bush’s next step up the ladder, as a popular young owner of the Texas Rangers baseball team.

The beginning of that deal traced back to an idea of George W.’s Spectrum 7 partner, Bill DeWitt, whose father had owned the St. Louis Browns baseball team and later the Cincinnati Reds. DeWitt wanted to pull together a group of investors to buy the Texas Rangers.

To do so, DeWitt understood that he needed a native Texan in his group of investors. George W. fit the bill. The group of investors was missing only one thing – money. To address that need, George W. tapped a Yale fraternity brother, Roland Betts, who brought with him a partner from a film-investment firm, Tom Bernstein, both from New York.

The New York connection became a problem when Major League Baseball Commissioner Peter Ueberroth insisted on more financial backing from Texas-based investors. But Ueberroth was eager to put together a deal for the son of the President, so the commissioner brought in a second investment group headed by Richard Rainwater, who had built a $4 billion empire while working with the Bass family of Fort Worth.

Rainwater agreed to join Betts, Bernstein and George W. in the $86 million deal, but Rainwater imposed a strict limit on George W.’s active participation in the team.

Bush got to be called a “managing partner.” But – under Rainwater’s conditions – George W. would only be the handsome front man for the team; he would have no actual say in how it was run.

Selling Stock

To finance his part of the purchase price, Bush decided to sell two-thirds of his holdings in Harken. He pressed ahead with this decision though he knew that Harken was struggling financially and was planning to sell shares in two subsidiaries to avert bankruptcy.

Outside lawyers from the Haynes and Boone law firm advised Harken officers and directors on June 15, 1990, that if they possessed any negative information about the company’s outlook, a stock sale might be viewed as illegal trading. Bush, who had attended a meeting four days earlier on the plan to sell off the two subsidiaries, went ahead anyway.

On June 22, 1990, Bush sold 212,140 shares to a still-unidentified buyer who spared Bush the trouble of selling on the open market, which likely would have tanked Harken’s lightly traded stock and meant less money for Bush.

The sale also preceded Harken’s disclosure in August 1990 of more than $23 million in losses for the second quarter, which caused the stock to fall 20 percent before recovering for a time. To make matters worse, Bush missed deadlines by up to eight months for disclosing four stock sales to the Securities and Exchange Commission.

After the missed deadlines were noted in published reports in 1991, the SEC opened an insider-trading investigation. At the time, Bush’s father was President and the person responsible for appointing the SEC chairman.

George W. Bush denied any wrongdoing in the Harken stock sales. He insisted that he had sold into the “good news” of Harken landing offshore drilling rights in Bahrain. Bush’s lawyers also argued that he had cleared the stock sale with the Haynes and Boone lawyers, a claim that proved to be important in the SEC’s decision to close the investigation on August 21, 1991, without ever interviewing Bush.

But what the SEC didn’t know at the time was that the Haynes and Boone lawyers had sent Bush and other Harken officials that letter warning against selling shares if they knew about the company’s financial troubles. One day after the investigation was closed, Bush’s lawyer Robert W. Jordan delivered a copy of the warning letter to the SEC.

Asked years later about the letter, SEC investigators said they had no memory of reading it.

“The SEC investigation apparently never examined a key issue raised in the memo: whether Bush’s insider knowledge of a plan to rescue the company from financial collapse by spinning off two troubled units was a factor in his decision to sell,” the Boston Globe reported in October 2002, almost two years after Bush gained the presidency.

Bush also was less than forthcoming about why he missed the deadlines for reporting the June 1990 stock sale and three others. For years, he claimed publicly that he had sent the reports in on time and the SEC had lost them, a sort of the bureaucrats-ate-my-stock-sale-reports argument.

The issue resurfaced in 2002 after Enron and other major companies collapsed in accounting scandals. Bush was positioning himself as a friend of embattled shareholders and demanding that corporate officers reveal their stock sales almost immediately.

Asked why he had not lived up to his own admonition, Bush shifted the blame to Harken’s lawyers for the late filings. He then changed his story again to say that he simply didn’t know what had happened. He never apologized for claiming falsely for years that it had been the SEC’s fault.

Nevertheless, on June 22, 1990, Bush made $848,560 on his Harken stock sale. He used $606,000 of his profits to buy a 1.8 percent stake in the Texas Rangers baseball team. Then, after helping engineer public financing for a new baseball stadium in Arlington, Texas, he sold his interest in the Rangers for $14.9 million, more than 20 times his original investment.

The success of his Texas Rangers investment was even more dramatic when compared with what happened to the Harken stock that Bush sold for $4 a share to that unidentified buyer. A dozen years later, each of those shares would have been worth two cents.

George W.’s time with Harken and his part ownership of the Rangers made him a millionaire and a well-known personality in Texas. That measure of success had derived almost entirely from the family’s triangle of oil-political-financial connections, from Texas to Washington to Wall Street.

Though most of Bush’s sordid business history was known during Campaign 2000, it attracted little attention in the mainstream press, especially compared to the news media’s obsession with dissecting every comment by Al Gore for signs of exaggeration.

Even today, as George W. Bush’s crony capitalism, aversion to regulation, and his trillion-dollar war in Iraq have driven the U.S. – and the world’s – economy off the road and into financial quicksand, big-time journalists continue with their Bush deference. They won’t put too much blame on the person who arguably should top the list of those responsible.

While the Brokaws and Friedmans might justify their behavior as a resistance to “piling on” a lame-duck President, they also are contributing to a distorted history – one that fails to identify Bush and his political/media enablers as largely to blame for this global catastrophe.

By averting their eyes from Bush and focusing so much on Obama now, the mainstream U.S. news media also clears space for right-wing media voices like Rush Limbaugh to begin writing another false narrative, blaming the financial collapse on the incoming President not on the one who has held the office the past eight years.

That narrative, in turn, could restrict what an Obama administration can do once in office. That, in turn, could open the way for a possible Republican comeback in 2010, much as the GOP rebounded from Bill Clinton’s victory in 1992 to win both houses of Congress in 1994.

Though the U.S. press corps is loath to examine history, especially when it reflects badly on the Bush Family, the present – and the future – might hinge on the American people finally understanding how George W. Bush and his reverse-Midas touch managed to turn a relatively golden U.S. economy to dross in just eight years.

It was all predictable.