Former NCFE Executives Sentenced for Roles in $3 Billion Securities Fraud Scheme
August 8, 2008
Four former National Century Financial Enterprises (NCFE) executives have been sentenced for their roles in a scheme to deceive investors about the financial health of NCFE. NCFE, formerly 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, 72, of Fort Myers, Fla., an NCFE vice chairman, chief operating officer, director and owner of the company, was sentenced on Aug. 6, 2008, to 15 years in prison for conspiracy, securities fraud and money laundering.
Randolph H. Speer, 57, of Peachtree City, Ga., NCFE’s chief financial officer, was sentenced on Aug. 6, 2008, to 12 years in prison for conspiracy, securities fraud, wire fraud and money laundering.
Roger S. Faulkenberry, 47, of Dublin, a senior executive responsible for raising money from investors, was sentenced on Aug. 7, 2008, to ten years in prison for 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 sentenced on Aug. 7, 2008, to five years in prison for conspiracy and money laundering.
Rebecca S. Parrett, 59, of Carefree, Ariz., an NCFE vice chairman, secretary, treasurer, director and owner of the company, became a fugitive following the March 2008 jury verdict. She faces a maximum penalty of 75 years in prison and $2.5 million in fines.
U.S. District Court Judge Algenon Marbley also ordered the defendants to forfeit $1.7 billion of property representing the proceeds of the conspiracy and to pay restitution of $2.3 billion.
“In a scheme which lasted for years, these defendants purposely misled the investing public about National Century, its financial health, and the way in which it did business,” said Acting Assistant Attorney General Matthew Friedrich. “When the facade collapsed and National Century filed for bankruptcy, investors were left holding the bag for billions of dollars in losses. The sentences handed down in this case justly reflect the gravity of the offenses.”
“These sentences mark the end of a nearly six-year march to justice for the architects of the financial house of cards known as National Century,” said Gregory G. Lockhart, U.S. Attorney for the Southern District of Ohio. “These crimes touched hundreds of thousands of Americans if they participated in a pension that invested in National Century, or had money in any of the financial institutions who bought securities from National Century.”
“Unfortunately today’s sentencing does not immediately restore investor confidence or offer complete financial restitution for the victims of one of the largest corporate fraud investigations,” said Assistant Director Kenneth W. Kaiser of the FBI Criminal Investigative Division. “The FBI and our law enforcement and regulatory partners will do whatever it takes so that no company, in small town America or major metropolitan cities alike, misrepresents their financial health and defrauds investors.”
“The IRS, along with our law enforcement partners, will vigorously pursue corporate officers who victimize their investors and violate the public trust,” said Internal Revenue Service (IRS) Chief of the Criminal Investigation Division Eileen Mayer. “Today’s sentence demonstrates the government’s determination to restore and ensure that trust.”
Evidence was presented at trial in February 2008 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 a combined value of $4.4 billion, which evidence showed were actually worth approximately six cents on the dollar at the time of NCFE’s bankruptcy in November 2002.
Court documents show that 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. Evidence at trial 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.
Ayers, Speer, Faulkenberry, Dierker and Parrett were five of eight individuals indicted in the case in July 2007. Lance K. Poulsen was severed from the other defendants following his arrest on obstruction of justice charges on Oct. 18, 2007. He will be sentenced on the obstruction of justice charges on Aug. 8, 2008. Poulsen’s trial on conspiracy, securities fraud, wire fraud, mail fraud and money laundering charges is scheduled to begin Oct. 1, 2008. James K. Happ, a certified public accountant and former executive vice president for servicer operations will face charges of conspiracy and wire fraud at trial scheduled to begin Dec. 1, 2008. Jon A. Beacham, who was responsible for raising money from investors through the sale of notes, pleaded guilty to conspiracy and securities fraud on July 13, 2007, and awaits sentencing.
The case was prosecuted by Assistant U.S. Attorney Douglas Squires of the Southern District of Ohio, Senior Litigation Counsel Kathleen McGovern and Trial Attorney Wes R. Porter of the Criminal Division’s Fraud Section, with assistance from Fraud Section Paralegal Specialists Crystal Curry and Sarah Marberg. The investigation was conducted by FBI agents Matt Daly, Ingrid Schmidt and Tad Morris; IRS Inspectors Greg Ruwe and Mark Bailey; U.S. Postal Inspector Dave Mooney; and U.S. Immigration and Customs Enforcement agent Celeste Koszut.
Source: DoJ
Showing posts with label Donald Ayers. Show all posts
Showing posts with label Donald Ayers. Show all posts
Friday, August 8, 2008
Monday, February 25, 2008
began as a temporary secretary and worked her way up over the years to become executive vice president ....WOW!
Star witness: National Century fraud stretched to 1995
bizjournals.com | 2/20/08| Kevin Kemper
Investors, auditors, clients and courts were fed lies by executives at National Century Financial Enterprises Inc. from 1995 until the company's 2002 collapse, the health-care finance company's former executive vice president for compliance testified all day Thursday.
Sherry Gibson, the government's star witness in its criminal fraud case against five former National Century executives, told federal court jurors the company's principals and senior executives were in on a years-long deception that kept what was once the largest health-care financing business in the nation running.
When National Century began overfunding clients for the accounts receivables it bought, it resulted in cascading debt that forced Gibson and others to cook the company's books, lie to investors and auditors, and in some cases give false testimony in courtrooms when the company became involved in business litigation.
Gibson was an insider at National Century. She began working at National Premeire Financial Services, a precursor to National Century, at age 24 after attending Bowling Green State University to study French and Russian. She began as a temporary secretary and worked her way up over the years to become executive vice president of compliance, a role that required her to interact daily with the company's founders - Lance Poulsen, Rebecca Parrett and Donald Ayers.
As head of the compliance department, it was Gibson's job to oversee the creation of investor reports, work with auditors and make presentations to investors about the company's businessmodel. National Century specialized in purchasing receivables from health-care providers at a discount, giving the providers cash up front so they could pay their bills. The company packaged the receivables as asset-backed bonds and sold them to investors.
National Century filed for bankruptcy in November 2002 after a raid on its Dublin office by FBI agents and its bond ratings were cut to high-yield "junk" status because they had become risky for investors.
The government has accused five of its executives of engaging in conspiracy, money laundering and securities fraud in an effort to benefit their own to the tune of more than $2.84 billion.
Parrett, Ayers, Roger Faulkenberry, Randolph Speer and James Dierker have all pleaded not guilty to the charges.
Poulsen and James Happ, another company executive, are to stand trial later in the year. Gibson was also indicted but pleaded guilty in 2003 to a count of conspiracy to commit securities fraud. Since then, she has spent three years in a federal penitentiary in Lexington, Ky., liquidated her holdings, valued at about $420,000, to repay the government, and agreed to cooperate with the Justice Department's investigation of the company.
Gibson told the jury in the Columbus courtroom that Poulsen would not let her department send out required monthly financial reports on company-issued bonds that were not in compliance. As a result, she said the company was forced to make up data to show that bond funds were meeting their covenants, then fabricate backup files for those reports to throw off auditors in the future.
Gibson said the company also changed dates, names and numbers in accounts, keeping "actual" versus "reported" or doctored account reports that were distributed to senior executives. All of those actions were approved of by Poulsen, she said, and began as far back as 1995. Gibson reiterated earlier testimony from other National Century insiders, saying no one, including her, ever told investors about deficiencies in the bond funds.
Information about the company's bond compliance was on a "need to know basis," Gibson said, with the company going so far as to locate her department in a building separate from the rest of the company.
Throughout her testimony, Gibson recounted how with nearly every single false act or accounting sleight of hand, she consulted with Poulsen, Ayers and Parrett or had conversations with the other defendants - Faulkenberry, Speer and Dierker - about overfunded clients or investor report manipulation. (Excerpt)
Posted by FraudBaron on February 22, 2008 12:15 AM
bizjournals.com | 2/20/08| Kevin Kemper
Investors, auditors, clients and courts were fed lies by executives at National Century Financial Enterprises Inc. from 1995 until the company's 2002 collapse, the health-care finance company's former executive vice president for compliance testified all day Thursday.
Sherry Gibson, the government's star witness in its criminal fraud case against five former National Century executives, told federal court jurors the company's principals and senior executives were in on a years-long deception that kept what was once the largest health-care financing business in the nation running.
When National Century began overfunding clients for the accounts receivables it bought, it resulted in cascading debt that forced Gibson and others to cook the company's books, lie to investors and auditors, and in some cases give false testimony in courtrooms when the company became involved in business litigation.
Gibson was an insider at National Century. She began working at National Premeire Financial Services, a precursor to National Century, at age 24 after attending Bowling Green State University to study French and Russian. She began as a temporary secretary and worked her way up over the years to become executive vice president of compliance, a role that required her to interact daily with the company's founders - Lance Poulsen, Rebecca Parrett and Donald Ayers.
As head of the compliance department, it was Gibson's job to oversee the creation of investor reports, work with auditors and make presentations to investors about the company's businessmodel. National Century specialized in purchasing receivables from health-care providers at a discount, giving the providers cash up front so they could pay their bills. The company packaged the receivables as asset-backed bonds and sold them to investors.
National Century filed for bankruptcy in November 2002 after a raid on its Dublin office by FBI agents and its bond ratings were cut to high-yield "junk" status because they had become risky for investors.
The government has accused five of its executives of engaging in conspiracy, money laundering and securities fraud in an effort to benefit their own to the tune of more than $2.84 billion.
Parrett, Ayers, Roger Faulkenberry, Randolph Speer and James Dierker have all pleaded not guilty to the charges.
Poulsen and James Happ, another company executive, are to stand trial later in the year. Gibson was also indicted but pleaded guilty in 2003 to a count of conspiracy to commit securities fraud. Since then, she has spent three years in a federal penitentiary in Lexington, Ky., liquidated her holdings, valued at about $420,000, to repay the government, and agreed to cooperate with the Justice Department's investigation of the company.
Gibson told the jury in the Columbus courtroom that Poulsen would not let her department send out required monthly financial reports on company-issued bonds that were not in compliance. As a result, she said the company was forced to make up data to show that bond funds were meeting their covenants, then fabricate backup files for those reports to throw off auditors in the future.
Gibson said the company also changed dates, names and numbers in accounts, keeping "actual" versus "reported" or doctored account reports that were distributed to senior executives. All of those actions were approved of by Poulsen, she said, and began as far back as 1995. Gibson reiterated earlier testimony from other National Century insiders, saying no one, including her, ever told investors about deficiencies in the bond funds.
Information about the company's bond compliance was on a "need to know basis," Gibson said, with the company going so far as to locate her department in a building separate from the rest of the company.
Throughout her testimony, Gibson recounted how with nearly every single false act or accounting sleight of hand, she consulted with Poulsen, Ayers and Parrett or had conversations with the other defendants - Faulkenberry, Speer and Dierker - about overfunded clients or investor report manipulation. (Excerpt)
Posted by FraudBaron on February 22, 2008 12:15 AM
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