Fate of chairman, friend up to jury
Defense denies pair swayed main witness in fraud trial
Wednesday, March 26, 2008 3:12 AM
By Jodi Andes
THE COLUMBUS DISPATCH
By the end of the day, the co-founder of National Century Financial Enterprises could be a felon or closer to becoming a free man.
Lance K. Poulsen, who founded the health-care financing company and served as chairman, chief executive and president, and his friend Karl A. Demmler have been on trial for conspiracy, obstruction of justice and two counts of witness tampering.
They're accused of actions aimed at swaying the testimony of Sherry Gibson, a former National Century executive. She is considered a key witness against Poulsen in his upcoming trial in connection with the company's bankruptcy in 2002 and a resulting loss to investors of more than $1.9 billion.
The witness-tampering case, being conducted in U.S. District Court in Columbus, was handed over late yesterday afternoon to the seven-woman, five-man jury. Deliberations are expected to resume this morning.
If convicted in this case, Poulsen, 64, and Demmler, 57, could be sentenced to a maximum of 35 years in prison.
Poulsen is to be tried on the fraud charges in the summer.
Nine other executives have been convicted or pleaded guilty in National Century's collapse. Only Poulsen and executive James Happ still await trial. However, Poulsen was the only defendant that federal Judge Algenon L. Marbley jailed pending trial, and the witness-tampering charges were a major reason, Marbley said last year.
Poulsen is accused of using Demmler as a middleman to encourage Gibson, a former National Century vice president, not to testify against Poulsen. Gibson pleaded guilty in 2003 to falsifying National Century records, went to prison and became the government's key witness in the fraud case.
The government's case against Poulsen and Demmler was based largely on wiretapped conversations between the two and between Demmler and Gibson.
In his closing yesterday, Prosecutor Leo Wise recited from one of the taped conversations in which Demmler told Gibson: "Put it this way: Next time it rains, slip and fall down. You don't remember nothing.' "
"Mr. Poulsen wanted to buy justice, but justice isn't for sale," Wise said.
Poulsen took the stand in his defense Monday, acknowledging that he had agreed when Demmler said he told Gibson to forget.
"He tried to explain it all away," Wise said. "He didn't because he couldn't."
Defense attorneys told the jurors to focus on other facts about the alleged bribes. Peter C. Anderson, one of Poulsen's three attorneys, pointed out that no money ever changed hands, that Poulsen and Gibson did not communicate directly, and that no testimony was ever changed.
Poulsen "was trying to set the record straight," Anderson said. "He was indicted based on suspicious comments."
Poulsen acted on the advice of his attorney and offered money only to help Gibson get a new attorney, Anderson said.
But Thomas Tyack, then Poulsen's attorney, testified that he told Poulsen he shouldn't loan Gibson money, Wise said.
Darryl Harper, Demmler's attorney, said that Gibson misunderstood the discussions with Demmler. "It was a continuation of a conversation she had with Demmler in prison," Harper said.
Demmler visited Gibson in prison and told her he thought she had been railroaded and could have her conviction overturned, Harper said. Demmler, a former owner of the Bogey Inn in Dublin, did not take the stand in his defense.
jandes@dispatch.com
Story tools
Friday, March 28, 2008
Gibson pleaded guilty in 2003
By Andrew Welsh-Huggins
ASSOCIATED PRESS
10:56 a.m. March 24, 2008
COLUMBUS, Ohio – The government's chief target in a $1.9 billion corporate fraud case took the stand Monday to criticize a former employee he is accused of trying to bribe to give favorable testimony.
Former health care executive Lance Poulsen testified that the key prosecution witness – Sherry Gibson, former executive vice president at National Century Financial Enterprises – didn't get along with other employees. He said two employees accused her of being physically and sexually abusive toward them. Poulsen did not give details.
Gibson's attorney, Terry Sherman, said he'd never heard the allegations and would not have his client respond to them.
“It appears to me that Lance Poulsen has every reason to demean Sherry Gibson any way he can ...,” Sherman said by telephone. “It sounds to me like he's trying to get the jury to take the eye off the ball.”
After the witness tampering trial, Poulsen goes on trial in August on multiple charges of conspiracy, securities and wire fraud and money laundering. The government alleges he misled investors about unsecured loans his company was providing health care companies such as hospitals and nursing homes.
Before that trial, he is defending himself against charges that he and longtime acquaintance Karl Demmler, a Columbus bar and restaurant owner, teamed up to persuade the witness to help Poulsen beat the fraud case against him.
Poulsen is founder and former chief executive officer of National Century, once described as the country's biggest health care financing company.
Poulsen testified that two employees slipped him a note accusing Gibson of the alleged abuse. “They just weren't going to work for her anymore,” Poulsen said under questioning by his defense attorney William Terpening.
Poulsen also said he defended Gibson from another employee's request that she be fired because she was difficult to work with.
Gibson had little involvement in the company's day-to-day operations, Poulsen said.
Government attorneys have not questioned Poulsen yet about his testimony.
Defense lawyers began their case Monday after the government spent a week playing taped phone calls and meetings for a federal jury.
Poulsen said on a tape played Friday that Gibson should explain that her previous statements to prosecutors were based on old facts.
Poulsen said on the recording of a conversation with his co-defendant Demmler that Gibson should say, “But now, there is a new set of charges and it's a new indictment and I'm not familiar with it.”
Prosecutors say Gibson was promised $500,000 if she could “have amnesia” when it came time to testify.
Gibson pleaded guilty in 2003 to a lesser charge of securities fraud in exchange for helping prosecutors.
--------------------------------------------------------------------------------
On the Net:
U.S. Attorney's Office, Southern District of Ohio: www.usdoj.gov/usao/ohs/index.html
ASSOCIATED PRESS
10:56 a.m. March 24, 2008
COLUMBUS, Ohio – The government's chief target in a $1.9 billion corporate fraud case took the stand Monday to criticize a former employee he is accused of trying to bribe to give favorable testimony.
Former health care executive Lance Poulsen testified that the key prosecution witness – Sherry Gibson, former executive vice president at National Century Financial Enterprises – didn't get along with other employees. He said two employees accused her of being physically and sexually abusive toward them. Poulsen did not give details.
Gibson's attorney, Terry Sherman, said he'd never heard the allegations and would not have his client respond to them.
“It appears to me that Lance Poulsen has every reason to demean Sherry Gibson any way he can ...,” Sherman said by telephone. “It sounds to me like he's trying to get the jury to take the eye off the ball.”
After the witness tampering trial, Poulsen goes on trial in August on multiple charges of conspiracy, securities and wire fraud and money laundering. The government alleges he misled investors about unsecured loans his company was providing health care companies such as hospitals and nursing homes.
Before that trial, he is defending himself against charges that he and longtime acquaintance Karl Demmler, a Columbus bar and restaurant owner, teamed up to persuade the witness to help Poulsen beat the fraud case against him.
Poulsen is founder and former chief executive officer of National Century, once described as the country's biggest health care financing company.
Poulsen testified that two employees slipped him a note accusing Gibson of the alleged abuse. “They just weren't going to work for her anymore,” Poulsen said under questioning by his defense attorney William Terpening.
Poulsen also said he defended Gibson from another employee's request that she be fired because she was difficult to work with.
Gibson had little involvement in the company's day-to-day operations, Poulsen said.
Government attorneys have not questioned Poulsen yet about his testimony.
Defense lawyers began their case Monday after the government spent a week playing taped phone calls and meetings for a federal jury.
Poulsen said on a tape played Friday that Gibson should explain that her previous statements to prosecutors were based on old facts.
Poulsen said on the recording of a conversation with his co-defendant Demmler that Gibson should say, “But now, there is a new set of charges and it's a new indictment and I'm not familiar with it.”
Prosecutors say Gibson was promised $500,000 if she could “have amnesia” when it came time to testify.
Gibson pleaded guilty in 2003 to a lesser charge of securities fraud in exchange for helping prosecutors.
--------------------------------------------------------------------------------
On the Net:
U.S. Attorney's Office, Southern District of Ohio: www.usdoj.gov/usao/ohs/index.html
JPMorgan to pay $2 mln to settle SEC fraud case
WASHINGTON (Reuters) - JPMorgan Chase & Co (JPM.N: Quote, Profile, Research) has agreed to pay $2 million to settle charges its subsidiaries helped now-bankrupt National Century Financial Enterprises carry out a fraud that resulted in $2.6 billion of investor losses, the U.S. Securities and Exchange Commission said on Thursday.
The SEC said JPMorgan Chase Bank and Bank One served as indenture trustees for National Century, a Dublin, Ohio, healthcare financing company, from 1999 until 2002 when the company collapsed.
The SEC said that JPMorgan helped National Century make large improper transfers among program accounts, which caused collateral shortfalls and contributed to the company's downfall.
JPMorgan settled without admitting or denying the charges. A spokesman from JPMorgan confirmed the settlement but declined to provide additional details.
The SEC said JPMorgan would pay $1.3 million in disgorgement and about $700,000 in prejudgment interest to settle the charges.
On Wednesday, the U.S. Justice Department said a federal jury in Ohio convicted National Century's former chief executive Lance Poulsen of witness tampering in a criminal fraud case.
The witness tampering charge was linked to a key witness who was scheduled to testify in the trial of Poulsen and other executives for an alleged $2 billion fraud at National Century.
The Justice Department said Poulsen would be tried on fraud charges in August. Earlier this month, five other National Century executives were found guilty of scheming to deceive investors and credit rating agencies about the company's financial health.
(Reporting by Karey Wutkowski, Editing by Toni Reinhold)
The SEC said JPMorgan Chase Bank and Bank One served as indenture trustees for National Century, a Dublin, Ohio, healthcare financing company, from 1999 until 2002 when the company collapsed.
The SEC said that JPMorgan helped National Century make large improper transfers among program accounts, which caused collateral shortfalls and contributed to the company's downfall.
JPMorgan settled without admitting or denying the charges. A spokesman from JPMorgan confirmed the settlement but declined to provide additional details.
The SEC said JPMorgan would pay $1.3 million in disgorgement and about $700,000 in prejudgment interest to settle the charges.
On Wednesday, the U.S. Justice Department said a federal jury in Ohio convicted National Century's former chief executive Lance Poulsen of witness tampering in a criminal fraud case.
The witness tampering charge was linked to a key witness who was scheduled to testify in the trial of Poulsen and other executives for an alleged $2 billion fraud at National Century.
The Justice Department said Poulsen would be tried on fraud charges in August. Earlier this month, five other National Century executives were found guilty of scheming to deceive investors and credit rating agencies about the company's financial health.
(Reporting by Karey Wutkowski, Editing by Toni Reinhold)
Convicted!!
National Century case
Prosecutors had experience in notable cases
Thursday, March 27, 2008 4:19 PM
By Jodi Andes
THE COLUMBUS DISPATCH
For nearly two weeks, legal eyes focused on the man who presided over a company involved in the nation’s largest private-sector fraud case.
Lance K. Poulsen, a founder and former president of National Century Financial Enterprises, was convicted Wednesday of trying to intimidate a key witness in the fraud case against him.
Also convicted was Karl A. Demmler, a friend of Poulsen’s who served as a middleman with the witness.
National Century, based in Dublin, provided financing to health-care providers. As a result of its collapse, investors lost $1.9 billion, and 350 local employees lost their jobs.
Two federal prosecutors in the witness-intimidation trial are no strangers to high-profile cases.
Leo Wise, a trial attorney for the Department of Justice, was one of seven prosecutors who tried top Enron Corp. executives during a four-month trial in Houston in 2006.
Enron, an energy trader, was the nation's seventh-largest company. Its collapse in 2001 wiped out more than $60 billion in market value and more than $2 billion in employees’ retirement savings, along with thousands of jobs. Kenneth Lay was Enron’s founder, Jeffrey Skilling its chief executive.
Wise could not comment on the Enron trial, because of Justice Department policy.
But the Enron and National Century cases were similar in that both companies duped auditors and investors in part because their companies were revolutionary: Enron in the energy market, National Century in health-care financing.
Skilling and Lay were convicted on fraud and conspiracy charges. Skilling was sentenced to 24 years and four months in a federal prison; Lay died of heart disease before he could be sentenced.
Assistant U.S. Attorney Doug Squires prosecuted Roger D. Blackwell, a well-known Ohio State University business professor, in 2005.
That case, too, bore similarities to the Poulsen trial.
“Both defendants took the stand, and both lied,” Squires said. Both were “extremely intelligent and sophisticated,” and both had skilled defense attorneys.
Blackwell was a board member of Worthington Foods when it was being purchased by the Kellogg Co. Squires was on the team that proved he had tipped off 14 relatives and friends to the purchase, allowing them to make profits of $890,000 on the stock.
Blackwell was convicted on 19 counts of insider trading and conspiracy, sentenced to six years in prison and ordered to pay a $1 million fine.
Despite the attention granted certain cases, “high-profile fraud is no different than street crime,” Squires said. “At the end of the day, everyone is equal under the law, rich or poor.”
jandes@dispatch.com
Prosecutors had experience in notable cases
Thursday, March 27, 2008 4:19 PM
By Jodi Andes
THE COLUMBUS DISPATCH
For nearly two weeks, legal eyes focused on the man who presided over a company involved in the nation’s largest private-sector fraud case.
Lance K. Poulsen, a founder and former president of National Century Financial Enterprises, was convicted Wednesday of trying to intimidate a key witness in the fraud case against him.
Also convicted was Karl A. Demmler, a friend of Poulsen’s who served as a middleman with the witness.
National Century, based in Dublin, provided financing to health-care providers. As a result of its collapse, investors lost $1.9 billion, and 350 local employees lost their jobs.
Two federal prosecutors in the witness-intimidation trial are no strangers to high-profile cases.
Leo Wise, a trial attorney for the Department of Justice, was one of seven prosecutors who tried top Enron Corp. executives during a four-month trial in Houston in 2006.
Enron, an energy trader, was the nation's seventh-largest company. Its collapse in 2001 wiped out more than $60 billion in market value and more than $2 billion in employees’ retirement savings, along with thousands of jobs. Kenneth Lay was Enron’s founder, Jeffrey Skilling its chief executive.
Wise could not comment on the Enron trial, because of Justice Department policy.
But the Enron and National Century cases were similar in that both companies duped auditors and investors in part because their companies were revolutionary: Enron in the energy market, National Century in health-care financing.
Skilling and Lay were convicted on fraud and conspiracy charges. Skilling was sentenced to 24 years and four months in a federal prison; Lay died of heart disease before he could be sentenced.
Assistant U.S. Attorney Doug Squires prosecuted Roger D. Blackwell, a well-known Ohio State University business professor, in 2005.
That case, too, bore similarities to the Poulsen trial.
“Both defendants took the stand, and both lied,” Squires said. Both were “extremely intelligent and sophisticated,” and both had skilled defense attorneys.
Blackwell was a board member of Worthington Foods when it was being purchased by the Kellogg Co. Squires was on the team that proved he had tipped off 14 relatives and friends to the purchase, allowing them to make profits of $890,000 on the stock.
Blackwell was convicted on 19 counts of insider trading and conspiracy, sentenced to six years in prison and ordered to pay a $1 million fine.
Despite the attention granted certain cases, “high-profile fraud is no different than street crime,” Squires said. “At the end of the day, everyone is equal under the law, rich or poor.”
jandes@dispatch.com
Monday, March 24, 2008
This reporter is on to something....."supposedly went bankrupt after NCFE’s collapse"
One might think that the embarrassing if not ignoble collapse of what was once described as “the country’s largest provider of healthcare accounts-receivable financing” would only be of interest to some affected healthcare providers, accounting nerds and burned Wall Street investors. But the criminal trial of five former executives of National Century Financial Enterprises is actually front-page news in Columbus, Ohio, where the trial got under way last week in a U.S. District courtroom.
In fact, based on a story that ran on the front page of the Columbus Dispatch the Sunday before the trial, defense attorneys motioned last week to conduct individualized and comprehensive voir dire of the dozens if not hundreds of prospective jurors. Without one-on-one questioning to determine otherwise, the attorneys said they were concerned that the prominent media coverage might have contaminated the pool.
For those of you who did not work for one of the 275 healthcare providers that supposedly went bankrupt after NCFE’s collapse, or are not accountants, burned investors or Columbus-area residents, here’s the back story: NCFE purchased medical accounts receivable from providers typically in dire financial straits, raising capital by selling AAA-rated asset-backed bonds or notes to investors. Prosecutors are alleging that it was all a sham that eventually led to the November 2002 collapse of NCFE days after FBI agents raided its Dublin, Ohio, headquarters. They claim that the fraud cost investors more than $1.9 billion.
Fortunately for the court calendar, Judge Algenon Marbley, a folksy man both pragmatic and aware of the legal rules, found a way around the voir dire motion that was amenable to both sides. Even with that, jury selection took three full days, putting the trial, which is expected to last four to six weeks, behind by a full day before it even got started.
The irony here is that jury selection traditionally gives lawyers an opportunity to taint the jury pool by their line of questioning, and this was very much apparent on the third day of questioning. The pool had already been whittled down to a mere courtroom-size group with prospective jurors sitting in every available seat, including the jury box. Marbley started things off that day by asking if a six-week trial would be a hardship for anyone. Several people raised their hands, including a waitress who said she would not get any pay and a young man who informed the judge that he worked for his family’s plumbing business.
“I was informed yesterday by my father that he would not pay me,” the young man said, lightening the mood in the courtroom.
Defense attorneys’ questions to the prospective jurors grew progressively rhetorical in nature after the jurors were first screened on direct questions like whether they had been victims of bankruptcy or whether they had ever been involved in any whistle-blower complaints. (One prospective juror had been employed by WorldCom and another by the now defunct Dublin Securities.)
Questions then seemed to get broader and more tangential as the pool was quizzed on their knowledge of financial concepts; auditors, specifically Deloitte & Touche; credit-rating agencies; trustees; and whether anyone had ever bothered to read their credit-card agreements. They also were asked how they felt about executive compensation—is $500,000 a year too much?—and whether they knew what a “144A offering” was. The pool was casually surveyed as to how many of them held job titles that had anything to do with what they actually did for a living and whether anyone had ever heard of the term “healthcare securitizations.” (No one had, or at least no one admitted they had.) During the course of this line of questioning, one woman in the back of the courtroom revealed that she is a personal friend of the chief executive officer of Deloitte and her husband had been at one time chief financial officer of Ford and Battelle. She was not selected.
Another prospective juror who was not selected was a man who works for Cardinal Health, also headquartered in Dublin, who said he reported directly to a vice president. On the other hand, one of the few people who raised their hands when asked if they actually wanted to serve on this jury was selected. When asked why he wanted to serve, he replied, “I think it’s a duty, and if anyone didn’t know anything (about this case) when they came in, I was him.”
No one connected with the trial has any inflated hopes of swift justice. Each of the five defendants had at least two defense lawyers sitting with him, and there were four lawyers sitting at the U.S. attorney’s table so that whenever there was a request for a sidebar—and there were many—there was a sea of dark suits huddling to the side of the courtroom while Musak played over the courtroom speakers. Yet for all of the dissension in the reams of motions and trial briefs that are accumulating with the case, the prosecutors and defense attorneys actually seemed to get along very well.
But missing from the defense side of the courtroom is perhaps the most contentious principal involved with NCFE: Lance Poulsen, one of NCFE’s founders and its former president, chairman and chief executive officer. Poulsen’s case was severed from the trial earlier this year; he will be tried in August. In the meantime, considered a flight risk, he is sitting in jail outside Columbus, facing separate charges of witness tampering at a trial expected to take place this spring.
Poulsen has fallen far. NCFE and Poulsen were once held in high enough regard in the Columbus area that the Dispatch profiled him in its business section in May 2000. Poulsen noted in the profile that marketing had been his primary focus over the previous 32 years of his career. His first professional position was with Hamm’s Brewery in St. Paul, Minn., according to the profile. He also said that as a result of his first job as a teenager working as a box wrapper and part-time salesman at the Robert Hall clothing store, he had learned, “Selling and marketing is more lucrative than packaging.”
As for his biggest mistake (up until that point in time), he recalled a boating accident that, in hindsight, might have been prophetic. He said: “Once while cruising in the coastal waters of Florida, I inadvertently turned the chart upside down and ran my vessel hard aground at a high speed.” How did he resolve the mistake? “I now make sure I always have the chart right-side up. Much like life, some things appear different than they actually are, and we must take time to examine the facts.”
In fact, based on a story that ran on the front page of the Columbus Dispatch the Sunday before the trial, defense attorneys motioned last week to conduct individualized and comprehensive voir dire of the dozens if not hundreds of prospective jurors. Without one-on-one questioning to determine otherwise, the attorneys said they were concerned that the prominent media coverage might have contaminated the pool.
For those of you who did not work for one of the 275 healthcare providers that supposedly went bankrupt after NCFE’s collapse, or are not accountants, burned investors or Columbus-area residents, here’s the back story: NCFE purchased medical accounts receivable from providers typically in dire financial straits, raising capital by selling AAA-rated asset-backed bonds or notes to investors. Prosecutors are alleging that it was all a sham that eventually led to the November 2002 collapse of NCFE days after FBI agents raided its Dublin, Ohio, headquarters. They claim that the fraud cost investors more than $1.9 billion.
Fortunately for the court calendar, Judge Algenon Marbley, a folksy man both pragmatic and aware of the legal rules, found a way around the voir dire motion that was amenable to both sides. Even with that, jury selection took three full days, putting the trial, which is expected to last four to six weeks, behind by a full day before it even got started.
The irony here is that jury selection traditionally gives lawyers an opportunity to taint the jury pool by their line of questioning, and this was very much apparent on the third day of questioning. The pool had already been whittled down to a mere courtroom-size group with prospective jurors sitting in every available seat, including the jury box. Marbley started things off that day by asking if a six-week trial would be a hardship for anyone. Several people raised their hands, including a waitress who said she would not get any pay and a young man who informed the judge that he worked for his family’s plumbing business.
“I was informed yesterday by my father that he would not pay me,” the young man said, lightening the mood in the courtroom.
Defense attorneys’ questions to the prospective jurors grew progressively rhetorical in nature after the jurors were first screened on direct questions like whether they had been victims of bankruptcy or whether they had ever been involved in any whistle-blower complaints. (One prospective juror had been employed by WorldCom and another by the now defunct Dublin Securities.)
Questions then seemed to get broader and more tangential as the pool was quizzed on their knowledge of financial concepts; auditors, specifically Deloitte & Touche; credit-rating agencies; trustees; and whether anyone had ever bothered to read their credit-card agreements. They also were asked how they felt about executive compensation—is $500,000 a year too much?—and whether they knew what a “144A offering” was. The pool was casually surveyed as to how many of them held job titles that had anything to do with what they actually did for a living and whether anyone had ever heard of the term “healthcare securitizations.” (No one had, or at least no one admitted they had.) During the course of this line of questioning, one woman in the back of the courtroom revealed that she is a personal friend of the chief executive officer of Deloitte and her husband had been at one time chief financial officer of Ford and Battelle. She was not selected.
Another prospective juror who was not selected was a man who works for Cardinal Health, also headquartered in Dublin, who said he reported directly to a vice president. On the other hand, one of the few people who raised their hands when asked if they actually wanted to serve on this jury was selected. When asked why he wanted to serve, he replied, “I think it’s a duty, and if anyone didn’t know anything (about this case) when they came in, I was him.”
No one connected with the trial has any inflated hopes of swift justice. Each of the five defendants had at least two defense lawyers sitting with him, and there were four lawyers sitting at the U.S. attorney’s table so that whenever there was a request for a sidebar—and there were many—there was a sea of dark suits huddling to the side of the courtroom while Musak played over the courtroom speakers. Yet for all of the dissension in the reams of motions and trial briefs that are accumulating with the case, the prosecutors and defense attorneys actually seemed to get along very well.
But missing from the defense side of the courtroom is perhaps the most contentious principal involved with NCFE: Lance Poulsen, one of NCFE’s founders and its former president, chairman and chief executive officer. Poulsen’s case was severed from the trial earlier this year; he will be tried in August. In the meantime, considered a flight risk, he is sitting in jail outside Columbus, facing separate charges of witness tampering at a trial expected to take place this spring.
Poulsen has fallen far. NCFE and Poulsen were once held in high enough regard in the Columbus area that the Dispatch profiled him in its business section in May 2000. Poulsen noted in the profile that marketing had been his primary focus over the previous 32 years of his career. His first professional position was with Hamm’s Brewery in St. Paul, Minn., according to the profile. He also said that as a result of his first job as a teenager working as a box wrapper and part-time salesman at the Robert Hall clothing store, he had learned, “Selling and marketing is more lucrative than packaging.”
As for his biggest mistake (up until that point in time), he recalled a boating accident that, in hindsight, might have been prophetic. He said: “Once while cruising in the coastal waters of Florida, I inadvertently turned the chart upside down and ran my vessel hard aground at a high speed.” How did he resolve the mistake? “I now make sure I always have the chart right-side up. Much like life, some things appear different than they actually are, and we must take time to examine the facts.”
Saturday, March 22, 2008
Gibson had served her prison sentence
Thomson Financial News
Tape played in witness tampering case
03.21.08, 11:54 AM ET
COLUMBUS, Ohio (AP) - A former health care executive accused of witness tampering in a $1.9 billion corporate fraud case suggested that a key witness tell prosecutors that she wasn't familiar with the charges against him, according to a taped phone conversation played in federal court Friday.
Lance Poulsen, founder and former chief executive officer of National Century Financial (other-otc: CYFL.PK - news - people ) Enterprises, said on the tape that the star witness should explain that her previous statements to prosecutors were based on old facts.
Poulsen said the witness should say, 'But now, there is a new set of charges and it's a new indictment and I'm not familiar with it,' Poulsen said on the recording.
Prosecutors say the witness, Sherry Gibson, a former National Century executive vice president, was offered hundreds of thousands of dollars if she could 'have amnesia' when it came time to testify.
Before its 2002 bankruptcy, the suburban Dublin-based company was described as the largest health care financing company in the country.
Poulsen goes on trial in August on multiple charges of conspiracy, securities and wire fraud and money laundering. The government alleges he misled investors about unsecured loans his company was providing health care companies such as hospitals and nursing homes.
Before that trial, he is defending himself against charges that he and longtime acquaintance Karl Demmler, a Columbus bar and restaurant owner, teamed up to persuade the witness to help Poulsen beat the fraud case against him.
Poulsen and Demmler have both pleaded not guilty.
Gibson pleaded guilty in 2003 to a lesser charge of securities fraud in exchange for helping prosecutors.
Gibson had served her prison sentence and was back in Columbus last summer when she had dinner on June 19 with Demmler and he proposed she help Poulsen, Gibson testified this week.
Demmler said, 'that Lance wanted to make me whole,' Gibson said Tuesday under questioning by federal trial attorney Leo Wise.
Gibson said she was under no illusions about what Demmler meant.
'The only thing I had to do with Lance Poulsen was to be a material witness in his trial,' Gibson testified Tuesday.
After that meeting, Gibson contacted the FBI and agreed to help them investigate Poulsen, she said. Over the next several weeks she met with Demmler at area restaurants for hours at a time while investigators recorded their conversations.
'I'm not asking you to lie,' Demmler says in a recording played Tuesday. 'You just got a mental lapse.'
Gibson 'could have amnesia,' Demmler says in another recording played Wednesday.
Prosecutors allege Poulsen promised Gibson $500,000 in monthly payments of $5,000.
National Century offered financing to health care providers by purchasing at a discount the debt owed the companies -- also known as accounts receivable -- so the companies wouldn't have to wait for insurance payments. National Century then collected the full amount of the payments.
The government says company officials moved money between accounts to cover shortfalls, fabricated data and loaded false information on a company computer system.
Earlier this month, a federal jury convicted five former National Century executives of fraud charges stemming from their role in the scheme.
Copyright 2008 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Tape played in witness tampering case
03.21.08, 11:54 AM ET
COLUMBUS, Ohio (AP) - A former health care executive accused of witness tampering in a $1.9 billion corporate fraud case suggested that a key witness tell prosecutors that she wasn't familiar with the charges against him, according to a taped phone conversation played in federal court Friday.
Lance Poulsen, founder and former chief executive officer of National Century Financial (other-otc: CYFL.PK - news - people ) Enterprises, said on the tape that the star witness should explain that her previous statements to prosecutors were based on old facts.
Poulsen said the witness should say, 'But now, there is a new set of charges and it's a new indictment and I'm not familiar with it,' Poulsen said on the recording.
Prosecutors say the witness, Sherry Gibson, a former National Century executive vice president, was offered hundreds of thousands of dollars if she could 'have amnesia' when it came time to testify.
Before its 2002 bankruptcy, the suburban Dublin-based company was described as the largest health care financing company in the country.
Poulsen goes on trial in August on multiple charges of conspiracy, securities and wire fraud and money laundering. The government alleges he misled investors about unsecured loans his company was providing health care companies such as hospitals and nursing homes.
Before that trial, he is defending himself against charges that he and longtime acquaintance Karl Demmler, a Columbus bar and restaurant owner, teamed up to persuade the witness to help Poulsen beat the fraud case against him.
Poulsen and Demmler have both pleaded not guilty.
Gibson pleaded guilty in 2003 to a lesser charge of securities fraud in exchange for helping prosecutors.
Gibson had served her prison sentence and was back in Columbus last summer when she had dinner on June 19 with Demmler and he proposed she help Poulsen, Gibson testified this week.
Demmler said, 'that Lance wanted to make me whole,' Gibson said Tuesday under questioning by federal trial attorney Leo Wise.
Gibson said she was under no illusions about what Demmler meant.
'The only thing I had to do with Lance Poulsen was to be a material witness in his trial,' Gibson testified Tuesday.
After that meeting, Gibson contacted the FBI and agreed to help them investigate Poulsen, she said. Over the next several weeks she met with Demmler at area restaurants for hours at a time while investigators recorded their conversations.
'I'm not asking you to lie,' Demmler says in a recording played Tuesday. 'You just got a mental lapse.'
Gibson 'could have amnesia,' Demmler says in another recording played Wednesday.
Prosecutors allege Poulsen promised Gibson $500,000 in monthly payments of $5,000.
National Century offered financing to health care providers by purchasing at a discount the debt owed the companies -- also known as accounts receivable -- so the companies wouldn't have to wait for insurance payments. National Century then collected the full amount of the payments.
The government says company officials moved money between accounts to cover shortfalls, fabricated data and loaded false information on a company computer system.
Earlier this month, a federal jury convicted five former National Century executives of fraud charges stemming from their role in the scheme.
Copyright 2008 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Defense launched in witness tampering trial
The middleman in an alleged witness tampering scheme had a chance to turn on his friend and the former boss of the failed National Century Financial Enterprises Inc. but didn't do it, a federal agent testified Friday afternoon.
FBI Special Agent Jeffrey Williams told a 12-member jury in Columbus that he gave Karl Demmler a chance to turn on ex-CEO Lance Poulsen, but Demmler refused. He added that Demmler may also face money laundering charges in the future.
Williams was testifying in the bribery trial of Poulsen and Demmler, both of whom are facing one count each of conspiracy to obstruct justice, witness tampering and witness tampering by influencing testimony. The government has alleged Demmler, 57, of Columbus, was working with Poulsen, 64, of Port Charlotte, Fla., to bribe former National Century executive Sherry Gibson, who is prepared to testify against Poulsen in a securities fraud trial.
The men have pleaded not guilty to the charges.
Under questioning by defense lawyer Darryl Parker on Friday afternoon, Williams said that when he arrested Demmler at Port Columbus International Airport last October, he offered him a chance to turn on Poulsen.
"I said that this was an opportunity for Demmler to help himself," Williams testified, adding he told Demmler that Poulsen likely wouldn't be his friend in the future.
After the arrest, Williams said he played for Demmler taped conversations Demmler had with Poulsen about bribing Gibson. Williams said he also played conversations of Demmler attempting to persuade Gibson to change her testimony.
Demmler refused to work with the government by taping conversations between himself and Poulsen, Williams said. The FBI agent also noted that when he arrested Demmler, the government found what it alleges were bogus promissory notes for millions of dollars in Demmler's suitcase. Williams alleged Demmler was going to try to sell the notes in Venezuela.
When asked by Demmler's attorney if Demmler has been charged with money laundering, Williams replied, "Not yet."
The government has alleged Demmler was a middleman for Poulsen and tried to bribe Gibson with $500,000 to $1 million.
In addition to the witness tampering charges, Poulsen has been accused by the government of having directed Gibson in a $3 billion fraud at Dublin-based National Century when she was an executive vice president at the firm.
On the defensive
When the government rested its case following Williams' testimony, attorneys for Poulsen and Demmler asked U.S. District Judge Algenon Marbley to order an acquittal, claiming Justice Department lawyers had failed to offer sufficient evidence to warrant a conviction of the men. Marbley denied the motions.
The defense for Poulsen began building its case with Thomas Tyack, a Columbus lawyer who once was the ex-CEO's attorney. He testified Poulsen told him he felt Gibson had been "railroaded" by the government when she pleaded guilty for her hand in the troubles at National Century and that he wanted to help her.
Gibson spent three years in prison after pleading guilty to a count of conspiracy to commit securities fraud. She also gave up her entire net worth - about $420,000 - to the government.
Tyack said he advised Poulsen not to contact Gibson. He also testified he gave a list of defense attorneys to Demmler that Gibson could call if she wanted to try to overturn her guilty plea.
Tyack testified he thought Gibson may have received bad advice from her attorney when she pleaded guilty to the government's charge. Tyack said Poulsen had hoped to help Gibson find a new attorney.
Defense attorneys have argued throughout the trial that Poulsen wasn't attempting to bribe Gibson, but wanted to help her get a new lawyer so that she could sue the government and regain her net worth.
Tyack testified he resigned from representing Poulsen because he felt he would be called to testify in Poulsen's witness tampering trial, and he could not ethically be a witness and represent Poulsen at the same time.
FBI Special Agent Jeffrey Williams told a 12-member jury in Columbus that he gave Karl Demmler a chance to turn on ex-CEO Lance Poulsen, but Demmler refused. He added that Demmler may also face money laundering charges in the future.
Williams was testifying in the bribery trial of Poulsen and Demmler, both of whom are facing one count each of conspiracy to obstruct justice, witness tampering and witness tampering by influencing testimony. The government has alleged Demmler, 57, of Columbus, was working with Poulsen, 64, of Port Charlotte, Fla., to bribe former National Century executive Sherry Gibson, who is prepared to testify against Poulsen in a securities fraud trial.
The men have pleaded not guilty to the charges.
Under questioning by defense lawyer Darryl Parker on Friday afternoon, Williams said that when he arrested Demmler at Port Columbus International Airport last October, he offered him a chance to turn on Poulsen.
"I said that this was an opportunity for Demmler to help himself," Williams testified, adding he told Demmler that Poulsen likely wouldn't be his friend in the future.
After the arrest, Williams said he played for Demmler taped conversations Demmler had with Poulsen about bribing Gibson. Williams said he also played conversations of Demmler attempting to persuade Gibson to change her testimony.
Demmler refused to work with the government by taping conversations between himself and Poulsen, Williams said. The FBI agent also noted that when he arrested Demmler, the government found what it alleges were bogus promissory notes for millions of dollars in Demmler's suitcase. Williams alleged Demmler was going to try to sell the notes in Venezuela.
When asked by Demmler's attorney if Demmler has been charged with money laundering, Williams replied, "Not yet."
The government has alleged Demmler was a middleman for Poulsen and tried to bribe Gibson with $500,000 to $1 million.
In addition to the witness tampering charges, Poulsen has been accused by the government of having directed Gibson in a $3 billion fraud at Dublin-based National Century when she was an executive vice president at the firm.
On the defensive
When the government rested its case following Williams' testimony, attorneys for Poulsen and Demmler asked U.S. District Judge Algenon Marbley to order an acquittal, claiming Justice Department lawyers had failed to offer sufficient evidence to warrant a conviction of the men. Marbley denied the motions.
The defense for Poulsen began building its case with Thomas Tyack, a Columbus lawyer who once was the ex-CEO's attorney. He testified Poulsen told him he felt Gibson had been "railroaded" by the government when she pleaded guilty for her hand in the troubles at National Century and that he wanted to help her.
Gibson spent three years in prison after pleading guilty to a count of conspiracy to commit securities fraud. She also gave up her entire net worth - about $420,000 - to the government.
Tyack said he advised Poulsen not to contact Gibson. He also testified he gave a list of defense attorneys to Demmler that Gibson could call if she wanted to try to overturn her guilty plea.
Tyack testified he thought Gibson may have received bad advice from her attorney when she pleaded guilty to the government's charge. Tyack said Poulsen had hoped to help Gibson find a new attorney.
Defense attorneys have argued throughout the trial that Poulsen wasn't attempting to bribe Gibson, but wanted to help her get a new lawyer so that she could sue the government and regain her net worth.
Tyack testified he resigned from representing Poulsen because he felt he would be called to testify in Poulsen's witness tampering trial, and he could not ethically be a witness and represent Poulsen at the same time.
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