Columbia Homecare Group was also involved with the largest Bankruptcy in Western Tennessee . Medshares, Inc. which was also connected to the largest ‘private’ fraud case in Columbus Ohio, National Cantury Finanacial Enterprises, Inc. (NCFE).
Funny, the only executive to be acquitted was the ex-CFO of Columbia Homecare Group out of Dallas Ft Worth, Mr. Richard Rainwater’s losing assets of HCA/TN.
James K Happ, the ex-CFO, dumped all the homecares into Medshares, financed by, you guessed it, NCFE!!
Guess it pays to be the ex-partner of the worst President in our modern history.
Rainwater & Bush----go TEXAS RANGERS!!!!
I woncder if BUSH & RAINWATER will have dinner at the White House or maybe at the "WESTERN" White HOUSE. Oh and don't forget, Rainwater's wife, the Queen of Bankruptcy,Darla Moore. Remember, she was the inventor of 'DIP FINANCE' while at CHASE BANK for CORPORATE BANKRUPTCY.
Showing posts with label FBI. Show all posts
Showing posts with label FBI. Show all posts
Saturday, January 3, 2009
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.
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.
Friday, April 4, 2008
JPMorgan Chase will pay about $2 million .....really??? Such a DEAL!
Chase's new tab: $2 million
National Century case settlement its 2nd
Saturday, March 29, 2008 3:14 AM
FROM STAFF REPORTS
JPMorgan Chase will pay about $2 million to settle a case involving its relationship with National Century Financial Enterprises, the Securities and Exchange Commission announced this week.
The SEC accused Bank One and JPMorgan Chase, which now owns Bank One, of "negligent conduct" involving improper transfers among the accounts of National Century subsidiaries for which they served as trustees.
National Century and those subsidiaries collapsed, causing investor losses that the SEC pegged in its statement at $3.6 billion.
The SEC said the banks, at the instruction of National Century, moved money around, making it appear on days when balances were reported that there was enough money in accounts to meet requirements.
The SEC said the transfers were "large, recurring and contrary to the requirements. … Bank One and JPMorgan Chase were negligent and should have known" that National Century was trying to hide shortfalls.
A JPMorgan Chase spokeswoman confirmed the settlement but declined to comment.
This is not the first time JPMorgan Chase has agreed to a multimillion-dollar settlement involving its work with National Century.
Two years ago, it reached a $425 million settlement with National Century creditors, Bloomberg News reported at the time.
National Century was a Dublin-based company that served as a financier for health-care providers. National Century agreed to buy the providers' uncollected debts owed by patients, or accounts receivable, and give the providers money to cover expenses.
To raise that money, National Century set up subsidiaries, or "programs" as the SEC called them in this week's settlement, and sold bonds to investors.
National Century went bankrupt in 2002.
Five former National Century executives were convicted this month of fraud and other charges related to their business dealings that led to the company's collapse. The five are expected to be sentenced this summer.
Four other executives have pleaded guilty.
The company's leader and co-founder, Lance K. Poulsen, and his friend Karl A. Demmler were found guilty this week in a witness-tampering case related to the National Century case.
The two were convicted of trying to sway the testimony of a former company executive who is expected to testify against Poulsen in his upcoming trial. He faces a variety of charges related to National Century's collapse in 2002.
National Century case settlement its 2nd
Saturday, March 29, 2008 3:14 AM
FROM STAFF REPORTS
JPMorgan Chase will pay about $2 million to settle a case involving its relationship with National Century Financial Enterprises, the Securities and Exchange Commission announced this week.
The SEC accused Bank One and JPMorgan Chase, which now owns Bank One, of "negligent conduct" involving improper transfers among the accounts of National Century subsidiaries for which they served as trustees.
National Century and those subsidiaries collapsed, causing investor losses that the SEC pegged in its statement at $3.6 billion.
The SEC said the banks, at the instruction of National Century, moved money around, making it appear on days when balances were reported that there was enough money in accounts to meet requirements.
The SEC said the transfers were "large, recurring and contrary to the requirements. … Bank One and JPMorgan Chase were negligent and should have known" that National Century was trying to hide shortfalls.
A JPMorgan Chase spokeswoman confirmed the settlement but declined to comment.
This is not the first time JPMorgan Chase has agreed to a multimillion-dollar settlement involving its work with National Century.
Two years ago, it reached a $425 million settlement with National Century creditors, Bloomberg News reported at the time.
National Century was a Dublin-based company that served as a financier for health-care providers. National Century agreed to buy the providers' uncollected debts owed by patients, or accounts receivable, and give the providers money to cover expenses.
To raise that money, National Century set up subsidiaries, or "programs" as the SEC called them in this week's settlement, and sold bonds to investors.
National Century went bankrupt in 2002.
Five former National Century executives were convicted this month of fraud and other charges related to their business dealings that led to the company's collapse. The five are expected to be sentenced this summer.
Four other executives have pleaded guilty.
The company's leader and co-founder, Lance K. Poulsen, and his friend Karl A. Demmler were found guilty this week in a witness-tampering case related to the National Century case.
The two were convicted of trying to sway the testimony of a former company executive who is expected to testify against Poulsen in his upcoming trial. He faces a variety of charges related to National Century's collapse in 2002.
Rearrested executives deny plot to flee U.S....where is the missing executive from all of this?
Rearrested executives deny plot to flee U.S.
1 National Century leader goes AWOL; judge corrals rest
Thursday, April 3, 2008 3:25 AM
By Jodi Andes
THE COLUMBUS DISPATCH
Update
Judge refuses to free defendants
If former executives of National Century Financial Enterprises were convicted, the plan was for them to flee to Aruba, a source told the FBI.Hearing that less than a week after one of the five recently convicted executives disappeared, U.S. District Judge Algenon L. Marbley ordered that the rest be arrested.
All five had been free since their March 13 convictions while they await sentencing in what prosecutors called the largest fraud case in U.S. history involving a privately held company.
Four executives were arrested at their homes yesterday morning: James E. Dierker Jr. in Powell; Roger S. Faulkenberry in Dublin; Donald H. Ayers in Florida; and Randolph H. Speer in Georgia, Deputy U.S. Marshal Brian Babtist said.
An arrest warrant was issued for Rebecca S. Parrett last week after she did not report to court near her home in Carefree, Ariz., prosecutors said.
Marbley had allowed Parrett and Ayers to remain free on house arrest; Dierker, Faulkenberry and Speer were free on less-restrictive personal-recognizance bonds and allowed to work.
On Tuesday, the FBI received information from a "confidential source" that the group had a previous plan to flee to the Caribbean island off the Venezuelan coast, Assistant U.S. Attorney Doug Squires said in a motion filed yesterday in federal court.
The defendants had to turn in their passports before the trial. But Parrett went so far as to "secure personal identity information of another person prior to the jury trial," the motion states.
The source is not named, but it is someone the FBI has found to be credible in the past, Squires wrote in asking that their bonds be revoked.
Defense attorneys were outraged at the allegation.
"This guy has done everything by the book," said Faulkenberry's attorney, Javier Armengau.
He said Faulkenberry calls his office every day and even checked with the court to make sure he could leave his house to drive his daughter to school.
James Ervin Jr., an attorney for Speer, said his client "vehemently maintains his innocence." Ervin said they were shocked by the allegations.
"I don't know anything about it. But I don't believe it," added Leonard Yelsky, attorney for Dierker, a vice president at Victoria's Secret.
The five executives were convicted on a combination of wire-fraud, securities-fraud, money-laundering and conspiracy charges connected to National Century's collapse.
The Dublin-based company provided funding for health-care providers after purchasing their accounts receivables. The company went bankrupt in November 2002, in large part because of unsecured loans it made to the health-care providers, prosecutors showed.
Investors in National Century lost more than $1.9 billion, more than 275 health-care providers filed for bankruptcy in its wake and about 350 local National Century employees lost their jobs.
jandes@dispatch.com
1 National Century leader goes AWOL; judge corrals rest
Thursday, April 3, 2008 3:25 AM
By Jodi Andes
THE COLUMBUS DISPATCH
Update
Judge refuses to free defendants
If former executives of National Century Financial Enterprises were convicted, the plan was for them to flee to Aruba, a source told the FBI.Hearing that less than a week after one of the five recently convicted executives disappeared, U.S. District Judge Algenon L. Marbley ordered that the rest be arrested.
All five had been free since their March 13 convictions while they await sentencing in what prosecutors called the largest fraud case in U.S. history involving a privately held company.
Four executives were arrested at their homes yesterday morning: James E. Dierker Jr. in Powell; Roger S. Faulkenberry in Dublin; Donald H. Ayers in Florida; and Randolph H. Speer in Georgia, Deputy U.S. Marshal Brian Babtist said.
An arrest warrant was issued for Rebecca S. Parrett last week after she did not report to court near her home in Carefree, Ariz., prosecutors said.
Marbley had allowed Parrett and Ayers to remain free on house arrest; Dierker, Faulkenberry and Speer were free on less-restrictive personal-recognizance bonds and allowed to work.
On Tuesday, the FBI received information from a "confidential source" that the group had a previous plan to flee to the Caribbean island off the Venezuelan coast, Assistant U.S. Attorney Doug Squires said in a motion filed yesterday in federal court.
The defendants had to turn in their passports before the trial. But Parrett went so far as to "secure personal identity information of another person prior to the jury trial," the motion states.
The source is not named, but it is someone the FBI has found to be credible in the past, Squires wrote in asking that their bonds be revoked.
Defense attorneys were outraged at the allegation.
"This guy has done everything by the book," said Faulkenberry's attorney, Javier Armengau.
He said Faulkenberry calls his office every day and even checked with the court to make sure he could leave his house to drive his daughter to school.
James Ervin Jr., an attorney for Speer, said his client "vehemently maintains his innocence." Ervin said they were shocked by the allegations.
"I don't know anything about it. But I don't believe it," added Leonard Yelsky, attorney for Dierker, a vice president at Victoria's Secret.
The five executives were convicted on a combination of wire-fraud, securities-fraud, money-laundering and conspiracy charges connected to National Century's collapse.
The Dublin-based company provided funding for health-care providers after purchasing their accounts receivables. The company went bankrupt in November 2002, in large part because of unsecured loans it made to the health-care providers, prosecutors showed.
Investors in National Century lost more than $1.9 billion, more than 275 health-care providers filed for bankruptcy in its wake and about 350 local National Century employees lost their jobs.
jandes@dispatch.com
U.S. Marshals arrest Ayers, Dierker, Faulkenberry and Speer
Arrests in alleged escape plot latest twist in Ohio fraud case
By The Associated Press
Published on Thursday Apr 03, 2008
Some events in the history of the $1.9 billion fraud case against National Century Financial Enterprises, based in the Columbus suburb of Dublin:
1991: Businessman Lance Poulsen founds National Century, a health care financing company that provides financing to medical providers such as nursing homes and small hospitals by buying their short-term debt with money raised from investors.
1995-2002: According to federal prosecutors, the company provides unsecured loans to health care providers and misleads investors about the loans.
November 2002: The company declares bankruptcy after the FBI raids its offices as part of a government investigation.
August 2003: Sherry Gibson, a friend of Poulsen who rose through the company ranks from secretary to executive vice president of compliance, pleads guilty to conspiracy to commit wire and securities fraud.
July 2007: A federal grand jury indicts seven former executives of the company, including Poulsen, with multiple counts of conspiracy, wire and securities fraud and money laundering.
December 2007: A grand jury indicts Poulsen and acquaintance Karl Demmler on charges of trying to bribe Gibson to change her testimony at Poulsen's upcoming fraud trial.
January: U.S. District Court Judge Algenon Marbley grants Poulsen's request to have his own fraud trial in August.
February: Five remaining defendants go on trial before Marbley: Donald Ayers, James Dierker, Roger Faulkenberry, Rebecca Parrett and Randolph Speer.
Prosecutors allege the five engaged in a massive cover-up by lying to investors, fabricating data and loading false information onto a company computer system. Defendants said the government used incorrect definitions in looking at the company's books and took the company's activities out of context by showing jurors only a tiny slice of National Century's operations.
March 13: A jury finds all five defendants guilty. Marbley allows the five to remain free pending sentencing.
March 26: A jury convicts Poulsen and Demmler of conspiracy, witness tampering and obstruction of justice for trying to bribe Gibson.
March 27: Marbley issues an arrest warrant for Parrett after the government says she disappeared.
April 2: U.S. Marshals arrest Ayers, Dierker, Faulkenberry and Speer after the government says it uncovered a plot under which the four would flee to Aruba if convicted.
April 3: Marbley refuses to allow Dierker and Faulkenberry to go free pending a full hearing on the government's plot allegations.
Source: AP Research.
By The Associated Press
Published on Thursday Apr 03, 2008
Some events in the history of the $1.9 billion fraud case against National Century Financial Enterprises, based in the Columbus suburb of Dublin:
1991: Businessman Lance Poulsen founds National Century, a health care financing company that provides financing to medical providers such as nursing homes and small hospitals by buying their short-term debt with money raised from investors.
1995-2002: According to federal prosecutors, the company provides unsecured loans to health care providers and misleads investors about the loans.
November 2002: The company declares bankruptcy after the FBI raids its offices as part of a government investigation.
August 2003: Sherry Gibson, a friend of Poulsen who rose through the company ranks from secretary to executive vice president of compliance, pleads guilty to conspiracy to commit wire and securities fraud.
July 2007: A federal grand jury indicts seven former executives of the company, including Poulsen, with multiple counts of conspiracy, wire and securities fraud and money laundering.
December 2007: A grand jury indicts Poulsen and acquaintance Karl Demmler on charges of trying to bribe Gibson to change her testimony at Poulsen's upcoming fraud trial.
January: U.S. District Court Judge Algenon Marbley grants Poulsen's request to have his own fraud trial in August.
February: Five remaining defendants go on trial before Marbley: Donald Ayers, James Dierker, Roger Faulkenberry, Rebecca Parrett and Randolph Speer.
Prosecutors allege the five engaged in a massive cover-up by lying to investors, fabricating data and loading false information onto a company computer system. Defendants said the government used incorrect definitions in looking at the company's books and took the company's activities out of context by showing jurors only a tiny slice of National Century's operations.
March 13: A jury finds all five defendants guilty. Marbley allows the five to remain free pending sentencing.
March 26: A jury convicts Poulsen and Demmler of conspiracy, witness tampering and obstruction of justice for trying to bribe Gibson.
March 27: Marbley issues an arrest warrant for Parrett after the government says she disappeared.
April 2: U.S. Marshals arrest Ayers, Dierker, Faulkenberry and Speer after the government says it uncovered a plot under which the four would flee to Aruba if convicted.
April 3: Marbley refuses to allow Dierker and Faulkenberry to go free pending a full hearing on the government's plot allegations.
Source: AP Research.
Tuesday, March 11, 2008
Sherry Gibson, who the FBI has characterized as the architect of the fraud. Well , maybe the FBI should DIG DEEPER!
Monday, March 10, 2008 - 6:20 PM EDT
Attorneys trade claims
Closing arguments in the trial of five executives accused of masterminding one of the nation's largest corporate frauds began Monday with a government prosecutor summarizing six weeks worth of exhibits, evidence and testimony.
Assistant U.S. Attorney Wes Porter began his final argument by laying responsibility for the nearly $3 billion collapse of Dublin-based National Century Financial Enterprises Inc. squarely on the shoulders of the five executives standing trial.
"Every company takes its course because of the actions of people." Porter said. "National Century was not an exception. They (the defendants) turned a good business model ... into a pack of lies."
With pictures of the defendants and those who testified against them flashing on a courtroom wall behind him, Porter reminded the 15 jurors about the reams of evidence the government presented against the defendants since the trial began Feb. 4.
Rebecca Parrett, Donald Ayers, Roger Faulkenberry, Randolph Speer and James Dierker are facing charges of money laundering, conspiracy and fraud in connection with National Century's 2002 collapse and bankruptcy.
All of them have denied the charges.
National Century was a financier for health-care providers, buying medical firms' receivables at a discount and packaging them as asset-backed bonds for sale to investors.
Porter began his closing remarks by recalling 1995, when he said National Century started down a troubled road. Ayers, Parrett and National Century's former CEO Lance Poulsen formed the company, but almost immediately got off on the wrong foot. National Century took on clients that were in dire financial straits, Porter said. The company then gave those clients more money than their accounts receivables were worth, taking future receivables as collateral.
But those future receivables were nearly worthless IOUs, Porter said, because the companies couldn't pay their current bills, much less future bills.
Once National Century started down that path, he said, it couldn't turn back. It had to keep those troubled clients in business, Porter said, because those IOUs would otherwise amount to nothing.
"Everything spiraled out of control," Porter said.
First it was Poulsen, Parrett and Ayers who made the decisions to overfund clients, then they allowed the other defendants to make advances to clients, too, Porter claimed.
When National Century advanced clients hundreds of millions of dollars and ran out of money, Porter pointed to testimony that showed executives just raised more money from investors. Former investors in National Century bond funds testified that they were kept in the dark about the whole thing, Porter reminded the jury.
Former employees, Porter said, testified to doctoring reports to investors and auditors in an effort to hide the fraud. Those same employees also testified that each of the defendants participated in the fraud to some extent, he added.
"It was a way of life at this company," Porter said.
From the other side
When defense attorneys got their chance to give closing arguments, jury members heard much the same from each lawyer - none of the witnesses ever said the executives asked them to commit fraud, and the government didn't give jurors the full story.
Javier Armengau, the attorney for Faulkenberry, said he found it ironic the government was alleging the executives had omitted facts from investors when it was doing the same thing to the jury. None of the government's witnesses, he said, mentioned orders to commit fraud coming from Faulkenberry.
"If you look at whole company, you will never find an intent to defraud," he said.
Frederick Benton, the lawyer for Speer, focused on what he said was the government's lack of proof concerning his client.
"This is the case of the United States government versus Randolph Speer, not the case of the U.S. government versus National Century Financial Enterprises," Benton said, warning the jury that the government tried to cast a "cloak of conspiracy" over all the proceedings.
Benton said the government never proved Speer's intent, and he added that Speer's position at the company or his participation in a meeting proved nothing.
"Mr. Speer does not have to explain anything," Benton said. The burden to prove guilt, he said, is on the government.
Any financial losses at the company were not caused by the executives, Benton argued, but by outside directors who forced National Century into a sudden bankruptcy. And losing money, he said, is not a crime.
Gregory Peterson, the attorney for Parrett, spent much of his time focusing on the government's star witness, Sherry Gibson, who the FBI has characterized as the architect of the fraud.
Gibson, National Century's executive vice president of compliance, testified she routinely falsified company reports to investors and auditors over more than eight years in an effort to hide the financial troubles. Peterson noted that even though Gibson admitted to lying in courtrooms during litigation involving National Century, the government wanted the jurors to believe her now.
Closing arguments from attorneys for Ayers and Dierker are scheduled for Tuesday morning, with the government's rebuttal afterward. Jurors will then receive instructions and begin deliberations.
Attorneys trade claims
Closing arguments in the trial of five executives accused of masterminding one of the nation's largest corporate frauds began Monday with a government prosecutor summarizing six weeks worth of exhibits, evidence and testimony.
Assistant U.S. Attorney Wes Porter began his final argument by laying responsibility for the nearly $3 billion collapse of Dublin-based National Century Financial Enterprises Inc. squarely on the shoulders of the five executives standing trial.
"Every company takes its course because of the actions of people." Porter said. "National Century was not an exception. They (the defendants) turned a good business model ... into a pack of lies."
With pictures of the defendants and those who testified against them flashing on a courtroom wall behind him, Porter reminded the 15 jurors about the reams of evidence the government presented against the defendants since the trial began Feb. 4.
Rebecca Parrett, Donald Ayers, Roger Faulkenberry, Randolph Speer and James Dierker are facing charges of money laundering, conspiracy and fraud in connection with National Century's 2002 collapse and bankruptcy.
All of them have denied the charges.
National Century was a financier for health-care providers, buying medical firms' receivables at a discount and packaging them as asset-backed bonds for sale to investors.
Porter began his closing remarks by recalling 1995, when he said National Century started down a troubled road. Ayers, Parrett and National Century's former CEO Lance Poulsen formed the company, but almost immediately got off on the wrong foot. National Century took on clients that were in dire financial straits, Porter said. The company then gave those clients more money than their accounts receivables were worth, taking future receivables as collateral.
But those future receivables were nearly worthless IOUs, Porter said, because the companies couldn't pay their current bills, much less future bills.
Once National Century started down that path, he said, it couldn't turn back. It had to keep those troubled clients in business, Porter said, because those IOUs would otherwise amount to nothing.
"Everything spiraled out of control," Porter said.
First it was Poulsen, Parrett and Ayers who made the decisions to overfund clients, then they allowed the other defendants to make advances to clients, too, Porter claimed.
When National Century advanced clients hundreds of millions of dollars and ran out of money, Porter pointed to testimony that showed executives just raised more money from investors. Former investors in National Century bond funds testified that they were kept in the dark about the whole thing, Porter reminded the jury.
Former employees, Porter said, testified to doctoring reports to investors and auditors in an effort to hide the fraud. Those same employees also testified that each of the defendants participated in the fraud to some extent, he added.
"It was a way of life at this company," Porter said.
From the other side
When defense attorneys got their chance to give closing arguments, jury members heard much the same from each lawyer - none of the witnesses ever said the executives asked them to commit fraud, and the government didn't give jurors the full story.
Javier Armengau, the attorney for Faulkenberry, said he found it ironic the government was alleging the executives had omitted facts from investors when it was doing the same thing to the jury. None of the government's witnesses, he said, mentioned orders to commit fraud coming from Faulkenberry.
"If you look at whole company, you will never find an intent to defraud," he said.
Frederick Benton, the lawyer for Speer, focused on what he said was the government's lack of proof concerning his client.
"This is the case of the United States government versus Randolph Speer, not the case of the U.S. government versus National Century Financial Enterprises," Benton said, warning the jury that the government tried to cast a "cloak of conspiracy" over all the proceedings.
Benton said the government never proved Speer's intent, and he added that Speer's position at the company or his participation in a meeting proved nothing.
"Mr. Speer does not have to explain anything," Benton said. The burden to prove guilt, he said, is on the government.
Any financial losses at the company were not caused by the executives, Benton argued, but by outside directors who forced National Century into a sudden bankruptcy. And losing money, he said, is not a crime.
Gregory Peterson, the attorney for Parrett, spent much of his time focusing on the government's star witness, Sherry Gibson, who the FBI has characterized as the architect of the fraud.
Gibson, National Century's executive vice president of compliance, testified she routinely falsified company reports to investors and auditors over more than eight years in an effort to hide the financial troubles. Peterson noted that even though Gibson admitted to lying in courtrooms during litigation involving National Century, the government wanted the jurors to believe her now.
Closing arguments from attorneys for Ayers and Dierker are scheduled for Tuesday morning, with the government's rebuttal afterward. Jurors will then receive instructions and begin deliberations.
Monday, March 10, 2008
Forbes ....October 2001 NCFE was viewed as a "train wreck waiting to happen."
National century bust
By Rutberg, Sidney
Publication: The Secured Lender
Date: Saturday, March 1 2003
Subject: Financial services, Bankruptcy, Asset backed securities
Location: United States
National Century Financial Enterprises was billed as the largest and fastest growing receivables finance firm in the healthcare industry. Its receivables-backed paper was rated AAA by Moody's. It signed up for top-of-the-line software technology to control its ever-expanding business so that 300 employees could handle $3 billion in assets.
Since its founding about a dozen years ago, it said it purchased $15 billion in healthcare receivables and, with the help of Credit Suisse First Boston, it securitized $6 billion of them. The company claimed to have earned a net profit in 2001 of $40 million on revenues of $300 million. Trustees of the NCFE securitizations were also top-drawer bankers, J. P. Morgan Chase and Bank One. In short, NCFE was the hottest healthcare financial services organization in the country.
But in late October 2002 Moody's pulled the triple-A rating on the NCFE-sponsored receivables-backed notes and on November 18, 2002, National Century Financial Enterprises filed a bankruptcy petition under Chapter 11 in Columbus, Ohio, with some $3.35 billion in these notes outstanding. About a week earlier, Lance K. Poulsen, one of the founders and chief executive, left the company. The NCFE bankruptcy left many of its clients without financing and several took the Chapter 11 route. Since the bankruptcy, NCFE is being run by the New York-based turnaround specialists, Alvarez & Marsal.
Back in March 2002, a San Jose software company announced with great enthusiasm that it had landed NCFE as a client and that NCFE would be running its entire business operation on the California company's systems. The software company crowed about NCFE and said that with the new technology, NCFE could afford to go after smaller healthcare businesses "whose receivables were below the threshold of NCFE's business model."
It turns out that NCFE, based in Dublin, Ohio, was not all it seemed to be. Among the problems: NCFE or its principals had an equity ownership in the company's major clients; healthcare receivables at best tend to have very squishy valuations; to provide funding for its favored clients, NCFE dipped into the reserves set up as additional collateral for the asset-backed securities issued, and the operations it was financing were largely unsuccessful. There are also charges that NCFE didn't own all the receivables it placed as collateral for the securitizations. Put this all together and it spelled Chapter 11.
In pulling its highest rating from the NCFE paper, Moody's said the action "reflects Moody's concern about NCFE's financial stability, its ongoing ability to service the receivables and its role in directing transaction cash flows" for the notes. Moody's added that "the unique forms of dilution and credit risks associated with healthcare receivables necessitates a transaction structure and servicing that insulates the investor from such risks."
Cutting through Moody's jargon, Ivan Abrams, president of Abrams & Company, Inc., a New York-based finance company that operates in the healthcare field, notes that under the best of circumstances, healthcare is a treacherous area for asset-based financing.
Mr. Abrams noted that, while the healthcare industry is huge and with the aging population probably the fastest growing sector of the economy, it requires a highly disciplined approach. "I really have no first-hand knowledge of what happened at National Century, but I did notice one transaction with a large cash-flow component. This just doesn't make sense in healthcare financing."
Mr. Abrams adds that in the past doctors and healthcare facilities "made money hand over fist so there was no need for disciplined financial management. This psychology has carried over into the present and often there is little sophisticated financial management of these facilities. Thus, in financing this area, lenders must be especially vigilant."
On top of that, dealing with the government (Medicare and Medicaid) can be a slippery slope. "Your records might show that the government owes you $2.6 million and suddenly the government decides that because of some obscure reason it only owes $1.6 million. You've just lost a million dollars. The government has the right to do that."
Also, Mr. Abrams continued, reimbursement levels are constantly changing and this often encourages healthcare providers to boost their billing in the hope that the government or private insurers might pay more. This further complicates the proper evaluation of the receivables.
According to an attorney with a client stuck in the NCFE fiasco, the company must have really taken the advice of the software company to seek "below-threshold" clients. The attorney, who requested anonymity, said that NCFE catered to poor performing healthcare companies "and its formula provided for advances that were a h
Lending to deadbeat companies and providing higher advances to clients than the competition can trigger rapid growth, but it is also the secret to going broke, he said, calling NCFE's operation "a kind of Ponzi scheme." ell of a lot above industry standards."
Among the more prominent victims of NCFE were Credit Suisse First Boston, the underwriter of the NCFErelated securities, and Ambac Financial Group, a large New York-based credit guarantor and financial services company. Credit Suisse, in a strongly worded press release
issued November 25 of last year, just days after the bankruptcy, announced that it, along with other holders of notes related to NCFE, "suffered losses as a result of what appears to be massive fraud at NCFE. It is increasingly apparent that NCFE and its officers deliberately misled CSFB and other investors. CSFB intends to assess the situation as information develops related to NCFE, its officers and directors, and others, and will vigorously pursue those responsible for the losses."
Meanwhile, CSFB said that based on the information available at that time, it was writing down its investment in NCFE paper by 83 percent, from $214 million to $44 million, and will adjust the amount as more complete information becomes available.
Ambac's principal operating subsidiary, Ambac Assurance Corp., a guarantor of public finance and structured finance debt, is rated triple A by Moody's Investor Service, Standard & Poor's and other ratings firms. The parent announced on the day that NCFE filed for bankruptcy that it was taking an after-tax write-down of $79.4 million on notes secured by receivables of NCFE customers. Ambac said it owned $54 million of NCFE-related notes issued by NPF X1I and $120.5 million of another NCFE-sponsored entity. The announcement pointed out that the notes were rated Triple-A until October 25, 2002.
Ambac added that the write-down was based on the best information it had at the time and that it was joining with a group of bondholders to seek recovery of the losses, but noted that no estimate of recovery was included in the write-down. To assure investors that Ambac could afford the write-off, the company pointed out that the fair value of its total portfolio is about $11.7 billion and that after the write-down, it still had net unrealized gains of around $400 million. Additionally, Ambac made it clear that it had no guarantee insurance or other exposure to programs sponsored by NCFE.
Forbes magazine, in scolding the ratings companies and investors for not recognizing the NCFE problems earlier, pointed out last October that the healthcare finance company had been up to its ears in litigation and its ownership interests in a number of its significant clients posed a major conflict of interest. Forbes also noted that, in the healthcare receivables community, NCFE was viewed as a "train wreck waiting to happen."
Among the clients that NCFE or its principals held interests in were Med Diversified, a home healthcare provider in Andover, Massachusetts, Rx Medical Services, a hospital management company based in Fort Lauderdale, and PhyAmerica Physician Group, of Durham, North Carolina.
A Chapter 11 petition filed by PhyAmerica in Baltimore on November 11, lays the blame directly at the feet of NCFE. Noting that it has financed its operations through NCFE since June 1997, PhyAmerica states that since midOctober "scheduled funding was late or unpredictable."
PhyAmerica points out that, on October 25 when Moody's cut the rating on the NCFE paper, the ratings agency stated that NCFE had a "liquidity problem" in funding its clients. NCFE admitted using reserve funds to continue making advances to its clients resulting in an "equity account reserve deficit." A press release by the Fitch rating agency was more specific, PhyAmerica stated. Fitch put the deficit at nearly $325 million, and brought the reserve fund down to .06 percent from the required 17 percent.
On October 31, Mr. Poulsen, at the time CEO of NCFE, sent a letter to PhyAmerica and hundreds of other clients informing them that NCFE would no longer be able to
release funds from the program
PhyAmerica's press release on its Chapter 11 filing also reports that other NCFE borrowers have turned to the bankruptcy courts since NCFE funding dried up. These include Meridian Corp. in Memphis and Tender Loving Care, a home health provider in Boston.
Med Diversified, in which Mr. Poulsen is reported to be the largest stockholder, has also filed for bankruptcy under Chapter 11 and has stated that it plans to file a $1 billion suit against NCFE and the trustees of the NCFE notes, Bank One and J.P. Morgan Chase & Co.
A story in the Washington Post on November 17 made it clear that some of NCFE's shenanigans may provide a fraud case for the federal government. Armed with a search warrant, FBI agents descended on the company's headquarters on a Saturday morning, removing computer equipment, books and records. According to the Washington Post story, NCFE claimed it earned a net profit of $40 million on revenue of $300 million in 2001.
Also, the Securities and Exchange Commission is looking into the goings-on at National Century. The National Century Financial Enterprises story is a long way from over.
By Rutberg, Sidney
Publication: The Secured Lender
Date: Saturday, March 1 2003
Subject: Financial services, Bankruptcy, Asset backed securities
Location: United States
National Century Financial Enterprises was billed as the largest and fastest growing receivables finance firm in the healthcare industry. Its receivables-backed paper was rated AAA by Moody's. It signed up for top-of-the-line software technology to control its ever-expanding business so that 300 employees could handle $3 billion in assets.
Since its founding about a dozen years ago, it said it purchased $15 billion in healthcare receivables and, with the help of Credit Suisse First Boston, it securitized $6 billion of them. The company claimed to have earned a net profit in 2001 of $40 million on revenues of $300 million. Trustees of the NCFE securitizations were also top-drawer bankers, J. P. Morgan Chase and Bank One. In short, NCFE was the hottest healthcare financial services organization in the country.
But in late October 2002 Moody's pulled the triple-A rating on the NCFE-sponsored receivables-backed notes and on November 18, 2002, National Century Financial Enterprises filed a bankruptcy petition under Chapter 11 in Columbus, Ohio, with some $3.35 billion in these notes outstanding. About a week earlier, Lance K. Poulsen, one of the founders and chief executive, left the company. The NCFE bankruptcy left many of its clients without financing and several took the Chapter 11 route. Since the bankruptcy, NCFE is being run by the New York-based turnaround specialists, Alvarez & Marsal.
Back in March 2002, a San Jose software company announced with great enthusiasm that it had landed NCFE as a client and that NCFE would be running its entire business operation on the California company's systems. The software company crowed about NCFE and said that with the new technology, NCFE could afford to go after smaller healthcare businesses "whose receivables were below the threshold of NCFE's business model."
It turns out that NCFE, based in Dublin, Ohio, was not all it seemed to be. Among the problems: NCFE or its principals had an equity ownership in the company's major clients; healthcare receivables at best tend to have very squishy valuations; to provide funding for its favored clients, NCFE dipped into the reserves set up as additional collateral for the asset-backed securities issued, and the operations it was financing were largely unsuccessful. There are also charges that NCFE didn't own all the receivables it placed as collateral for the securitizations. Put this all together and it spelled Chapter 11.
In pulling its highest rating from the NCFE paper, Moody's said the action "reflects Moody's concern about NCFE's financial stability, its ongoing ability to service the receivables and its role in directing transaction cash flows" for the notes. Moody's added that "the unique forms of dilution and credit risks associated with healthcare receivables necessitates a transaction structure and servicing that insulates the investor from such risks."
Cutting through Moody's jargon, Ivan Abrams, president of Abrams & Company, Inc., a New York-based finance company that operates in the healthcare field, notes that under the best of circumstances, healthcare is a treacherous area for asset-based financing.
Mr. Abrams noted that, while the healthcare industry is huge and with the aging population probably the fastest growing sector of the economy, it requires a highly disciplined approach. "I really have no first-hand knowledge of what happened at National Century, but I did notice one transaction with a large cash-flow component. This just doesn't make sense in healthcare financing."
Mr. Abrams adds that in the past doctors and healthcare facilities "made money hand over fist so there was no need for disciplined financial management. This psychology has carried over into the present and often there is little sophisticated financial management of these facilities. Thus, in financing this area, lenders must be especially vigilant."
On top of that, dealing with the government (Medicare and Medicaid) can be a slippery slope. "Your records might show that the government owes you $2.6 million and suddenly the government decides that because of some obscure reason it only owes $1.6 million. You've just lost a million dollars. The government has the right to do that."
Also, Mr. Abrams continued, reimbursement levels are constantly changing and this often encourages healthcare providers to boost their billing in the hope that the government or private insurers might pay more. This further complicates the proper evaluation of the receivables.
According to an attorney with a client stuck in the NCFE fiasco, the company must have really taken the advice of the software company to seek "below-threshold" clients. The attorney, who requested anonymity, said that NCFE catered to poor performing healthcare companies "and its formula provided for advances that were a h
Lending to deadbeat companies and providing higher advances to clients than the competition can trigger rapid growth, but it is also the secret to going broke, he said, calling NCFE's operation "a kind of Ponzi scheme." ell of a lot above industry standards."
Among the more prominent victims of NCFE were Credit Suisse First Boston, the underwriter of the NCFErelated securities, and Ambac Financial Group, a large New York-based credit guarantor and financial services company. Credit Suisse, in a strongly worded press release
issued November 25 of last year, just days after the bankruptcy, announced that it, along with other holders of notes related to NCFE, "suffered losses as a result of what appears to be massive fraud at NCFE. It is increasingly apparent that NCFE and its officers deliberately misled CSFB and other investors. CSFB intends to assess the situation as information develops related to NCFE, its officers and directors, and others, and will vigorously pursue those responsible for the losses."
Meanwhile, CSFB said that based on the information available at that time, it was writing down its investment in NCFE paper by 83 percent, from $214 million to $44 million, and will adjust the amount as more complete information becomes available.
Ambac's principal operating subsidiary, Ambac Assurance Corp., a guarantor of public finance and structured finance debt, is rated triple A by Moody's Investor Service, Standard & Poor's and other ratings firms. The parent announced on the day that NCFE filed for bankruptcy that it was taking an after-tax write-down of $79.4 million on notes secured by receivables of NCFE customers. Ambac said it owned $54 million of NCFE-related notes issued by NPF X1I and $120.5 million of another NCFE-sponsored entity. The announcement pointed out that the notes were rated Triple-A until October 25, 2002.
Ambac added that the write-down was based on the best information it had at the time and that it was joining with a group of bondholders to seek recovery of the losses, but noted that no estimate of recovery was included in the write-down. To assure investors that Ambac could afford the write-off, the company pointed out that the fair value of its total portfolio is about $11.7 billion and that after the write-down, it still had net unrealized gains of around $400 million. Additionally, Ambac made it clear that it had no guarantee insurance or other exposure to programs sponsored by NCFE.
Forbes magazine, in scolding the ratings companies and investors for not recognizing the NCFE problems earlier, pointed out last October that the healthcare finance company had been up to its ears in litigation and its ownership interests in a number of its significant clients posed a major conflict of interest. Forbes also noted that, in the healthcare receivables community, NCFE was viewed as a "train wreck waiting to happen."
Among the clients that NCFE or its principals held interests in were Med Diversified, a home healthcare provider in Andover, Massachusetts, Rx Medical Services, a hospital management company based in Fort Lauderdale, and PhyAmerica Physician Group, of Durham, North Carolina.
A Chapter 11 petition filed by PhyAmerica in Baltimore on November 11, lays the blame directly at the feet of NCFE. Noting that it has financed its operations through NCFE since June 1997, PhyAmerica states that since midOctober "scheduled funding was late or unpredictable."
PhyAmerica points out that, on October 25 when Moody's cut the rating on the NCFE paper, the ratings agency stated that NCFE had a "liquidity problem" in funding its clients. NCFE admitted using reserve funds to continue making advances to its clients resulting in an "equity account reserve deficit." A press release by the Fitch rating agency was more specific, PhyAmerica stated. Fitch put the deficit at nearly $325 million, and brought the reserve fund down to .06 percent from the required 17 percent.
On October 31, Mr. Poulsen, at the time CEO of NCFE, sent a letter to PhyAmerica and hundreds of other clients informing them that NCFE would no longer be able to
release funds from the program
PhyAmerica's press release on its Chapter 11 filing also reports that other NCFE borrowers have turned to the bankruptcy courts since NCFE funding dried up. These include Meridian Corp. in Memphis and Tender Loving Care, a home health provider in Boston.
Med Diversified, in which Mr. Poulsen is reported to be the largest stockholder, has also filed for bankruptcy under Chapter 11 and has stated that it plans to file a $1 billion suit against NCFE and the trustees of the NCFE notes, Bank One and J.P. Morgan Chase & Co.
A story in the Washington Post on November 17 made it clear that some of NCFE's shenanigans may provide a fraud case for the federal government. Armed with a search warrant, FBI agents descended on the company's headquarters on a Saturday morning, removing computer equipment, books and records. According to the Washington Post story, NCFE claimed it earned a net profit of $40 million on revenue of $300 million in 2001.
Also, the Securities and Exchange Commission is looking into the goings-on at National Century. The National Century Financial Enterprises story is a long way from over.
Friday, March 7, 2008
...defense attorneys knew he had talked to the FBI.
Key witness an informant in FBI probe, trial reveals
Jodi Andes
Mar 06, 2008 (The Columbus Dispatch - McClatchy-Tribune Information Services via COMTEX) --
The leading expert for National Century executives accused of the nation's largest private fraud was a snitch for the FBI in the same case, testimony yesterday showed.
Computer programmer Jon Bryant, who was paid to testify by the defense, had talked with the FBI about fraudulent business at National Century Financial Enterprises.
Bryant also had met with the FBI and handed over National Century documents he had secretly stored at his house.
But Bryant hadn't told defense attorneys all that before federal Judge Algenon L. Marbley declared him an "expert witness" for the defense. Bryant testified yesterday and Tuesday.
Assistant U.S. Attorney Doug Squires questioned Bryant:
"Did you ever tell the FBI there was fraud at NCFE?"
"Back in 2002, did you ever tell the FBI that NCFE was providing funding to providers without accounts receivable?"
"Did you ever keep any documents from NCFE about wrongdoing?"
Several times, Bryant said he couldn't recall his conversation with FBI agents, but he later said it was "possible" that he had made such statements.
Defense attorneys had called Bryant to the stand on Tuesday to testify about work he did analyzing National Century's computer system. Bryant told jurors he was paid $80 an hour by the five defendants to do the analysis and testify.
Crashes in nine of the company's hard drives, discovered years after National Century filed for bankruptcy, made it impossible for anyone to make conclusions about the company's data, Bryant told the jury.
The statements were meant to counter the government's expert witness, Bernard Woolfley, who testified last week that National Century's records show officials gave hundreds of millions in unsecured loans.
The Dublin-based company offered financing to health-care providers by agreeing to buy the providers' debts, or accounts receivable, and give them cash to cover expenses.
The government hired Woolfley, paying him $2.1 million thus far, to determine such things as how much unsecured funding was given away and where it went. The money went to companies that National Century founders Rebecca S. Parrett, Donald H. Ayers and Lance K. Poulsen partially owned, Woolfley told jurors.
Woolfley gave several examples of the business dealings National Century had with health-care providers across the country:
National Century owned all of the facilities for a company called HCCA. National Century officials wired the health-care provider $334.7 million between 1999 and 2002, without HCCA providing accounts receivable to show how the money could be repaid.
In addition, National Century owned close to half of Rx Medical Services' common stock and all of its preferred stock. Rx Medical received $18.9 million in unsecured loans between 1999 and 2002.
National Century executives also had voting control of Medshares stock. National Century wired that company $93 million without receivables during that same time frame.
Former National Century executives Parrett, Ayers, James E. Dierker, Roger S. Faulkenberry and Randolph H. Speer are charged with fraud, securities fraud, wire fraud and money laundering.
As Bryant left the courthouse yesterday, he told The Dispatch that defense attorneys knew he had talked to the FBI.
But asked whether he previously told them that he gave federal authorities company documents, he said, "No. It kinda slipped my mind."
Defense attorneys said they don't comment on witnesses and didn't continue to question Bryant much on the stand once the prosecutor was done.
"You realize that the FBI considers you a confidential informant," defense attorney Greg Peterson asked Bryant in front of jurors. "But do you stand by your analysis of the AS 400 (computer system)?"
Bryant said he did.
jandes@dispatch.com
Jodi Andes
Mar 06, 2008 (The Columbus Dispatch - McClatchy-Tribune Information Services via COMTEX) --
The leading expert for National Century executives accused of the nation's largest private fraud was a snitch for the FBI in the same case, testimony yesterday showed.
Computer programmer Jon Bryant, who was paid to testify by the defense, had talked with the FBI about fraudulent business at National Century Financial Enterprises.
Bryant also had met with the FBI and handed over National Century documents he had secretly stored at his house.
But Bryant hadn't told defense attorneys all that before federal Judge Algenon L. Marbley declared him an "expert witness" for the defense. Bryant testified yesterday and Tuesday.
Assistant U.S. Attorney Doug Squires questioned Bryant:
"Did you ever tell the FBI there was fraud at NCFE?"
"Back in 2002, did you ever tell the FBI that NCFE was providing funding to providers without accounts receivable?"
"Did you ever keep any documents from NCFE about wrongdoing?"
Several times, Bryant said he couldn't recall his conversation with FBI agents, but he later said it was "possible" that he had made such statements.
Defense attorneys had called Bryant to the stand on Tuesday to testify about work he did analyzing National Century's computer system. Bryant told jurors he was paid $80 an hour by the five defendants to do the analysis and testify.
Crashes in nine of the company's hard drives, discovered years after National Century filed for bankruptcy, made it impossible for anyone to make conclusions about the company's data, Bryant told the jury.
The statements were meant to counter the government's expert witness, Bernard Woolfley, who testified last week that National Century's records show officials gave hundreds of millions in unsecured loans.
The Dublin-based company offered financing to health-care providers by agreeing to buy the providers' debts, or accounts receivable, and give them cash to cover expenses.
The government hired Woolfley, paying him $2.1 million thus far, to determine such things as how much unsecured funding was given away and where it went. The money went to companies that National Century founders Rebecca S. Parrett, Donald H. Ayers and Lance K. Poulsen partially owned, Woolfley told jurors.
Woolfley gave several examples of the business dealings National Century had with health-care providers across the country:
National Century owned all of the facilities for a company called HCCA. National Century officials wired the health-care provider $334.7 million between 1999 and 2002, without HCCA providing accounts receivable to show how the money could be repaid.
In addition, National Century owned close to half of Rx Medical Services' common stock and all of its preferred stock. Rx Medical received $18.9 million in unsecured loans between 1999 and 2002.
National Century executives also had voting control of Medshares stock. National Century wired that company $93 million without receivables during that same time frame.
Former National Century executives Parrett, Ayers, James E. Dierker, Roger S. Faulkenberry and Randolph H. Speer are charged with fraud, securities fraud, wire fraud and money laundering.
As Bryant left the courthouse yesterday, he told The Dispatch that defense attorneys knew he had talked to the FBI.
But asked whether he previously told them that he gave federal authorities company documents, he said, "No. It kinda slipped my mind."
Defense attorneys said they don't comment on witnesses and didn't continue to question Bryant much on the stand once the prosecutor was done.
"You realize that the FBI considers you a confidential informant," defense attorney Greg Peterson asked Bryant in front of jurors. "But do you stand by your analysis of the AS 400 (computer system)?"
Bryant said he did.
jandes@dispatch.com
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