By AmericasNewsToday.Org staff
By AmericasNewsTodayCom
James K. Happ, a certified public accountant and former executive vice president for servicer operations will face charges of conspiracy and wire fraud at trial scheduled to begin Dec. 1, 2008. Jon A. Beacham, who was responsible for ...
Lance K. Poulsen, the former chief executive officer of National Century Financial Enterprises (NCFE), was sentenced in U.S. District Court in Columbus, Ohio, today to ten years in prison for conspiring to interfere with a witness who was preparing to testify in the fraud trial against Poulsen and other NCFE executives involved in a $3 billon securities fraud scheme, announced Acting Assistant Attorney General Matthew Friedrich, U.S. Attorney Gregory G. Lockhart for the Southern District of Ohio and Keith L. Bennett, Special Agent-in-Charge of the FBI’s Cincinnati Field Division.
U.S. District Court Judge Algenon L. Marbley also fined Poulsen $17,500 as part of the sentence. Poulsen, 65, and his personal associate, Karl A. Demmler, 57, of Columbus were arrested Oct. 17, 2007, and later charged in a four-count indictment alleging that they conspired to impede the testimony of Sherry Gibson, a key witness in the securities fraud trial against Poulsen and other NCFE executives. A federal jury convicted Poulsen and Demmler on all counts on March 26, 2008, after a week-long trial. Poulsen, along with seven other NCFE executives, was indicted in July 2007 for their roles in a scheme to deceive investors about the financial health of NCFE. Five of the defendants were found guilty on all counts of the indictment in March 2008.
During the trial, the jury heard audio recordings of meetings that took place over a period of months between Demmler and Gibson and more than two months of intercepted wire communications between Poulsen and Demmler. The recordings revealed that the defendants offered Gibson money to lie and attempted to influence her testimony at the NCFE fraud trial. According to the recordings presented at trial, Demmler offered Gibson money if she would have "memory lapses" when she testified against Poulsen. The jury also heard tapes of conversations between Poulsen and Demmler discussing ways to keep the witness from testifying.
Poulsen was president, chairman, chief executive officer and an owner of Dublin, Ohio-based NCFE, one of the largest healthcare finance companies in the United States until it filed for bankruptcy in November 2002.
After the witness tampering indictment was returned, Poulsen’s fraud trial was severed from the other NCFE defendants. Poulsen will face the fraud charges at trial scheduled to begin Oct. 1, 2008. Demmler's sentencing date has not yet been set. Both men have been in custody since their arrests.
The case is being prosecuted by Assistant U.S. Attorney Doug Squires and Trial Attorneys Leo Wise and Nathan Dimock of the Criminal Division’s Fraud Section. The case was investigated by the FBI.
For more information, visit:
Former National Century Financial Enterprises Executives
Sentenced for Roles in $3 Billion Securities Fraud Scheme.
By AmericasNewsToday.Org staff
Four former National Century Financial Enterprises (NCFE) executives have been sentenced for their roles in a scheme to deceive investors about the financial health of NCFE, Acting Assistant Attorney General Matthew Friedrich and U.S. Attorney Gregory G. Lockhart of the Southern District of Ohio announced Thursday [08-07-08]. NCFE, formerly based in Dublin, Ohio, was one of the largest healthcare finance companies in the United States until it filed for bankruptcy in November 2002.
Donald H. Ayers, 72, of Fort Myers, Fla., an NCFE vice chairman, chief operating officer, director and owner of the company, was sentenced on Aug. 6, 2008, to 15 years in prison for conspiracy, securities fraud and money laundering.
Randolph H. Speer, 57, of Peachtree City, Ga., NCFE’s chief financial officer, was sentenced on Aug. 6, 2008, to 12 years in prison for conspiracy, securities fraud, wire fraud and money laundering.
Roger S. Faulkenberry, 47, of Dublin, a senior executive responsible for raising money from investors, was sentenced on Aug. 7, 2008, to ten years in prison for conspiracy, securities fraud, wire fraud and money laundering.
James E. Dierker, 40, of Powell, Ohio, associate director of marketing and vice president of client development, was sentenced on Aug. 7, 2008, to five years in prison for conspiracy and money laundering.
Rebecca S. Parrett, 59, of Carefree, Ariz., an NCFE vice chairman, secretary, treasurer, director and owner of the company, became a fugitive following the March 2008 jury verdict. She faces a maximum penalty of 75 years in prison and $2.5 million in fines.
U.S. District Court Judge Algenon Marbley also ordered the defendants to forfeit $1.7 billion of property representing the proceeds of the conspiracy and to pay restitution of $2.3 billion.
"In a scheme which lasted for years, these defendants purposely misled the investing public about National Century, its financial health, and the way in which it did business," said Acting Assistant Attorney General Matthew Friedrich. "When the facade collapsed and National Century filed for bankruptcy, investors were left holding the bag for billions of dollars in losses. The sentences handed down in this case justly reflect the gravity of the offenses."
"These sentences mark the end of a nearly six-year march to justice for the architects of the financial house of cards known as National Century," said Gregory G. Lockhart, U.S. Attorney for the Southern District of Ohio. "These crimes touched hundreds of thousands of Americans if they participated in a pension that invested in National Century, or had money in any of the financial institutions who bought securities from National Century."
"Unfortunately today’s sentencing does not immediately restore investor confidence or offer complete financial restitution for the victims of one of the largest corporate fraud investigations," said Assistant Director Kenneth W. Kaiser of the FBI Criminal Investigative Division. "The FBI and our law enforcement and regulatory partners will do whatever it takes so that no company, in small town America or major metropolitan cities alike, misrepresents their financial health and defrauds investors."
"The IRS, along with our law enforcement partners, will vigorously pursue corporate officers who victimize their investors and violate the public trust," said Internal Revenue Service (IRS) Chief of the Criminal Investigation Division Eileen Mayer. "Today's sentence demonstrates the government's determination to restore and ensure that trust."
Evidence was presented at trial in February 2008 that the defendants engaged in a scheme to deceive investors and rating agencies about the financial health of NCFE and how investor monies would be used. Between May 1998 and May 2001, NCFE sold notes to investors with a combined value of $4.4 billion, which evidence showed were actually worth approximately six cents on the dollar at the time of NCFE’s bankruptcy in November 2002.
Court documents show that NCFE presented a business model to investors and rating agencies that called for NCFE to purchase high-quality accounts receivable from healthcare providers using money NCFE obtained through the sale of asset-backed notes to institutional investors. Evidence at trial showed that the defendants knew that the business model NCFE presented to the investing public differed drastically from the way NCFE did business within its own walls and that NCFE was making up the information contained in monthly investor reports to make it appear as though NCFE was in compliance with its own governing documents.
Ayers, Speer, Faulkenberry, Dierker and Parrett were five of eight individuals indicted in the case in July 2007. Lance K. Poulsen was severed from the other defendants following his arrest on obstruction of justice charges on Oct. 18, 2007. He will be sentenced on the obstruction of justice charges on Aug. 8, 2008. Poulsen’s trial on conspiracy, securities fraud, wire fraud, mail fraud and money laundering charges is scheduled to begin Oct. 1, 2008. James K. Happ, a certified public accountant and former executive vice president for servicer operations will face charges of conspiracy and wire fraud at trial scheduled to begin Dec. 1, 2008. Jon A. Beacham, who was responsible for raising money from investors through the sale of notes, pleaded guilty to conspiracy and securities fraud on July 13, 2007, and awaits sentencing.
The case was prosecuted by Assistant U.S. Attorney Douglas Squires of the Southern District of Ohio, Senior Litigation Counsel Kathleen McGovern and Trial Attorney Wes R. Porter of the Criminal Division's Fraud Section, with assistance from Fraud Section Paralegal Specialists Crystal Curry and Sarah Marberg. The investigation was conducted by FBI agents Matt Daly, Ingrid Schmidt and Tad Morris; IRS Inspectors Greg Ruwe and Mark Bailey; U.S. Postal Inspector Dave Mooney; and U.S. Immigration and Customs Enforcement agent Celeste Koszut.
Saturday, August 9, 2008
Friday, August 8, 2008
...former CEO of National Century Financial Enterprises was sentenced to 10 years in prison
Where is this guy?
James Happ served as executive vice president of National Century Financial Enterprises ("NCFE"), a health care financing company and the primary lender of Med Diversified.
In his three years in this role, he restructured the Servicer department to improve
operational performance and accelerated the utilization of technology to
increase operational efficiency.
The former CEO of National Century Financial Enterprises was sentenced to 10 years in prison today for witness tampering and obstruction of justice -- charges related to the fraud that brought down the company in 2002.
Lance K. Poulsen was convicted in March in the courtroom of federal Judge Algenon L. Marbley, who sentenced him.
Poulsen, 65, and his friend Karl A. Demmler, 57, were found guilty of trying to convince the government's key witness in the company fraud case to fake amnesia.
Wire taps on the phones of Demmler and Poulsen showed how they offered Sherry Gibson money if she would forget facts about National Century dealings.
Demmler was scheduled for sentencing today but his attorney was granted a continuance for a psychological evaluation. Demmler has become mentally unstable and has told jail employees that he has been drinking his urine to help with his problems, his attorney said in court filings.
National Century was a Dublin-based company that, for a fee, collected accounts receivable for health-care providers. National Century used investors' money to give cash to the providers so they could pay their bills.
When National Century collapsed in November 2002, more than 275 health-care providers went bankrupt. Investors lost nearly $2 billion in what prosecutors have billed as the nation's largest case of private-sector fraud.
Five former executives of National Century were convicted of fraud-related charges in March. Four were sentenced this week:
Donald H. Ayers, 72, to 15 years
James E. Dierker Jr., 40, to five years
Roger Faulkenberry, 47, to 10 years
Randolph H. Speer, 57, to 12 years
The fifth, Rebecca S. Parrett, disappeared after the verdict and remains at large.
Poulsen faces fraud charges as well and is scheduled for trial Oct. 1.
jandes@dispatch.com
James Happ served as executive vice president of National Century Financial Enterprises ("NCFE"), a health care financing company and the primary lender of Med Diversified.
In his three years in this role, he restructured the Servicer department to improve
operational performance and accelerated the utilization of technology to
increase operational efficiency.
The former CEO of National Century Financial Enterprises was sentenced to 10 years in prison today for witness tampering and obstruction of justice -- charges related to the fraud that brought down the company in 2002.
Lance K. Poulsen was convicted in March in the courtroom of federal Judge Algenon L. Marbley, who sentenced him.
Poulsen, 65, and his friend Karl A. Demmler, 57, were found guilty of trying to convince the government's key witness in the company fraud case to fake amnesia.
Wire taps on the phones of Demmler and Poulsen showed how they offered Sherry Gibson money if she would forget facts about National Century dealings.
Demmler was scheduled for sentencing today but his attorney was granted a continuance for a psychological evaluation. Demmler has become mentally unstable and has told jail employees that he has been drinking his urine to help with his problems, his attorney said in court filings.
National Century was a Dublin-based company that, for a fee, collected accounts receivable for health-care providers. National Century used investors' money to give cash to the providers so they could pay their bills.
When National Century collapsed in November 2002, more than 275 health-care providers went bankrupt. Investors lost nearly $2 billion in what prosecutors have billed as the nation's largest case of private-sector fraud.
Five former executives of National Century were convicted of fraud-related charges in March. Four were sentenced this week:
Donald H. Ayers, 72, to 15 years
James E. Dierker Jr., 40, to five years
Roger Faulkenberry, 47, to 10 years
Randolph H. Speer, 57, to 12 years
The fifth, Rebecca S. Parrett, disappeared after the verdict and remains at large.
Poulsen faces fraud charges as well and is scheduled for trial Oct. 1.
jandes@dispatch.com
Final National Century exec .......FINAL? Are you kidding me?
How is this the FINAL EXEC?
Final National Century exec gets 5 years; colleague got 10Business First of Columbus - by Kevin Kemper
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En masse, they came to show their support.
Nearly half an hour before marketing executive James Dierker would learn his punishment for involvement in one of the largest frauds at a private company, the courtroom gallery where he would be sentenced was already pulsing Thursday afternoon.
By the time proceedings began, the gallery was nearly bursting with Dierker’s family, friends and coworkers.
Then U.S. District Judge Algenon Marbley emerged and sentenced the 40-year-old Dierker to spend the next five years in prison. Dierker’s sentence was the fourth – and lightest – handed down this week involving convicted former executives of National Century Financial Enterprises Inc.
“There is no doubt in the court’s mind that Mr. Dierker is the least culpable,” Marbley said. “Though Mr. Dierker may not have known the outer limits of the fraud that was perpetrated, he knew of the fraud.”
A jury convicted Dierker in March of one count of conspiracy to commit securities/wire fraud and three counts of money laundering. He was one of four other former executives at what was once the nation’s largest health-care financing company to be found guilty.
In a tearful statement, Dierker spoke of trying to teach his young sons to do right and think of others, and asked Marbley to consider the letters sent by his friends and family.
“My prayer today is that the court will consider the life that I’ve lived,” he said. “Quite simply, the life that defines me as a human being.”
Marbley noted the court had received more than 100 letters asking for leniency, and he paid particular attention to those letters from Dierker’s supervisors from Victoria’s Secret Direct who recounted the promotion of Dierker to vice president of marketing, even after he was indicted.
Still, Marbley noted he wanted to send a message to other executives who may know of fraud but keep quiet.
National Century specialized in buying receivables from health-care providers at a discount for quick cash. It packaged the receivables as asset-backed bonds and sold them to investors. The company fell into bankruptcy in 2002, taking down other companies with it. The government argued the former executives essentially ran a Ponzi scheme.
THIS IS DEBATABLE? Weren;t these companies already in TROUBLE! Remember, HEALTH CARE REFORM 1997? (Late 1997)
The government has alleged that as much as $2.89 billion of investor cash was lost between 1991 when National Century was founded and 2002 when it collapsed.
Unlike the other three executives, Marbley did not hold Dierker equally responsible for the more than $2.3 billion in losses the government contends is outstanding. He pegged Dierker’s responsibility at $7.89 million. He granted the government an order requiring Dierker to forfeit and liquidate personal assets to pay back the $1.77 billion the government proved at trial that had gone missing from National Century between May 1998 and May 2002.
$7.89million but pay back the $1.77 BILLION GONE MISSING!!
Three of Dierker’s convicted coworkers, Donald Ayers, Randolph Speer and Roger Faulkenberry, were sentenced on Wednesday and Thursday morning, and Marbley gave Dierker the lightest of the four sentences.
Ayers, 72, the company’s former chief operating officer and co-founder, will spend 15 years in prison. Speer, 57, was National Century’s one-time chief financial officer and will serve 12 years, while the 47-year-old Faulkenbery, the company’s former executive vice president of securitizations, will spend 10 years in jail.
‘Credibility issues’
Unlike his previously sentenced coworkers who entered the courtroom in shackles and prison jumpsuits, Dierker wore a suit and tie. He has been under house arrest since the conviction, while Ayers, Speer and Faulkenberry were put in the Pickaway County jail after government officials became convinced they planned to flee the country.
The alleged escape plan came to light after Rebecca Parrett, a National Century co-founder and Ayers’ ex-wife, disappeared from her Arizona home following the trial. She remains at large.
The government accused Dierker of trying to escape as well, but thanks in large part to letters sent to Marbley by many of those assembled in the courtroom on Thursday, Dierker remained under house arrest. Following his sentencing, Marbley gave Dierker 30 days to report to prison.
Before Marbley handed down his sentence, attorneys for Dierker and the government sparred over the presentence investigation report, a recommendation compiled by Dierker’s probation officer to aid the court in sentencing.
Angelo Lonardo, attorney for Dierker, objected to a portion of the report that suggested Dierker should receive more time in prison for perjuring himself during his testimony at the criminal trial. The government and presentence investigation report alleged Dierker lied when he said he didn’t fully understand the operations of National Century.
Dierker tried to evade questions from prosecutors, said Wes Porter, attorney for the government.
Marbley agreed with Lonardo that Dierker did not perjure himself.
“I think these are credibility issues,” Marbley said.
Final National Century exec gets 5 years; colleague got 10Business First of Columbus - by Kevin Kemper
Print Email Reprints RSS Feeds Add to Del.icio.us Digg This Comments (4)
En masse, they came to show their support.
Nearly half an hour before marketing executive James Dierker would learn his punishment for involvement in one of the largest frauds at a private company, the courtroom gallery where he would be sentenced was already pulsing Thursday afternoon.
By the time proceedings began, the gallery was nearly bursting with Dierker’s family, friends and coworkers.
Then U.S. District Judge Algenon Marbley emerged and sentenced the 40-year-old Dierker to spend the next five years in prison. Dierker’s sentence was the fourth – and lightest – handed down this week involving convicted former executives of National Century Financial Enterprises Inc.
“There is no doubt in the court’s mind that Mr. Dierker is the least culpable,” Marbley said. “Though Mr. Dierker may not have known the outer limits of the fraud that was perpetrated, he knew of the fraud.”
A jury convicted Dierker in March of one count of conspiracy to commit securities/wire fraud and three counts of money laundering. He was one of four other former executives at what was once the nation’s largest health-care financing company to be found guilty.
In a tearful statement, Dierker spoke of trying to teach his young sons to do right and think of others, and asked Marbley to consider the letters sent by his friends and family.
“My prayer today is that the court will consider the life that I’ve lived,” he said. “Quite simply, the life that defines me as a human being.”
Marbley noted the court had received more than 100 letters asking for leniency, and he paid particular attention to those letters from Dierker’s supervisors from Victoria’s Secret Direct who recounted the promotion of Dierker to vice president of marketing, even after he was indicted.
Still, Marbley noted he wanted to send a message to other executives who may know of fraud but keep quiet.
National Century specialized in buying receivables from health-care providers at a discount for quick cash. It packaged the receivables as asset-backed bonds and sold them to investors. The company fell into bankruptcy in 2002, taking down other companies with it. The government argued the former executives essentially ran a Ponzi scheme.
THIS IS DEBATABLE? Weren;t these companies already in TROUBLE! Remember, HEALTH CARE REFORM 1997? (Late 1997)
The government has alleged that as much as $2.89 billion of investor cash was lost between 1991 when National Century was founded and 2002 when it collapsed.
Unlike the other three executives, Marbley did not hold Dierker equally responsible for the more than $2.3 billion in losses the government contends is outstanding. He pegged Dierker’s responsibility at $7.89 million. He granted the government an order requiring Dierker to forfeit and liquidate personal assets to pay back the $1.77 billion the government proved at trial that had gone missing from National Century between May 1998 and May 2002.
$7.89million but pay back the $1.77 BILLION GONE MISSING!!
Three of Dierker’s convicted coworkers, Donald Ayers, Randolph Speer and Roger Faulkenberry, were sentenced on Wednesday and Thursday morning, and Marbley gave Dierker the lightest of the four sentences.
Ayers, 72, the company’s former chief operating officer and co-founder, will spend 15 years in prison. Speer, 57, was National Century’s one-time chief financial officer and will serve 12 years, while the 47-year-old Faulkenbery, the company’s former executive vice president of securitizations, will spend 10 years in jail.
‘Credibility issues’
Unlike his previously sentenced coworkers who entered the courtroom in shackles and prison jumpsuits, Dierker wore a suit and tie. He has been under house arrest since the conviction, while Ayers, Speer and Faulkenberry were put in the Pickaway County jail after government officials became convinced they planned to flee the country.
The alleged escape plan came to light after Rebecca Parrett, a National Century co-founder and Ayers’ ex-wife, disappeared from her Arizona home following the trial. She remains at large.
The government accused Dierker of trying to escape as well, but thanks in large part to letters sent to Marbley by many of those assembled in the courtroom on Thursday, Dierker remained under house arrest. Following his sentencing, Marbley gave Dierker 30 days to report to prison.
Before Marbley handed down his sentence, attorneys for Dierker and the government sparred over the presentence investigation report, a recommendation compiled by Dierker’s probation officer to aid the court in sentencing.
Angelo Lonardo, attorney for Dierker, objected to a portion of the report that suggested Dierker should receive more time in prison for perjuring himself during his testimony at the criminal trial. The government and presentence investigation report alleged Dierker lied when he said he didn’t fully understand the operations of National Century.
Dierker tried to evade questions from prosecutors, said Wes Porter, attorney for the government.
Marbley agreed with Lonardo that Dierker did not perjure himself.
“I think these are credibility issues,” Marbley said.
$3 Billion Securities Fraud Scheme......
Former NCFE Executives Sentenced for Roles in $3 Billion Securities Fraud Scheme
August 8, 2008
Four former National Century Financial Enterprises (NCFE) executives have been sentenced for their roles in a scheme to deceive investors about the financial health of NCFE. NCFE, formerly based in Dublin, Ohio, was one of the largest healthcare finance companies in the United States until it filed for bankruptcy in November 2002.
Donald H. Ayers, 72, of Fort Myers, Fla., an NCFE vice chairman, chief operating officer, director and owner of the company, was sentenced on Aug. 6, 2008, to 15 years in prison for conspiracy, securities fraud and money laundering.
Randolph H. Speer, 57, of Peachtree City, Ga., NCFE’s chief financial officer, was sentenced on Aug. 6, 2008, to 12 years in prison for conspiracy, securities fraud, wire fraud and money laundering.
Roger S. Faulkenberry, 47, of Dublin, a senior executive responsible for raising money from investors, was sentenced on Aug. 7, 2008, to ten years in prison for conspiracy, securities fraud, wire fraud and money laundering.
James E. Dierker, 40, of Powell, Ohio, associate director of marketing and vice president of client development, was sentenced on Aug. 7, 2008, to five years in prison for conspiracy and money laundering.
Rebecca S. Parrett, 59, of Carefree, Ariz., an NCFE vice chairman, secretary, treasurer, director and owner of the company, became a fugitive following the March 2008 jury verdict. She faces a maximum penalty of 75 years in prison and $2.5 million in fines.
U.S. District Court Judge Algenon Marbley also ordered the defendants to forfeit $1.7 billion of property representing the proceeds of the conspiracy and to pay restitution of $2.3 billion.
“In a scheme which lasted for years, these defendants purposely misled the investing public about National Century, its financial health, and the way in which it did business,” said Acting Assistant Attorney General Matthew Friedrich. “When the facade collapsed and National Century filed for bankruptcy, investors were left holding the bag for billions of dollars in losses. The sentences handed down in this case justly reflect the gravity of the offenses.”
“These sentences mark the end of a nearly six-year march to justice for the architects of the financial house of cards known as National Century,” said Gregory G. Lockhart, U.S. Attorney for the Southern District of Ohio. “These crimes touched hundreds of thousands of Americans if they participated in a pension that invested in National Century, or had money in any of the financial institutions who bought securities from National Century.”
“Unfortunately today’s sentencing does not immediately restore investor confidence or offer complete financial restitution for the victims of one of the largest corporate fraud investigations,” said Assistant Director Kenneth W. Kaiser of the FBI Criminal Investigative Division. “The FBI and our law enforcement and regulatory partners will do whatever it takes so that no company, in small town America or major metropolitan cities alike, misrepresents their financial health and defrauds investors.”
“The IRS, along with our law enforcement partners, will vigorously pursue corporate officers who victimize their investors and violate the public trust,” said Internal Revenue Service (IRS) Chief of the Criminal Investigation Division Eileen Mayer. “Today’s sentence demonstrates the government’s determination to restore and ensure that trust.”
Evidence was presented at trial in February 2008 that the defendants engaged in a scheme to deceive investors and rating agencies about the financial health of NCFE and how investor monies would be used. Between May 1998 and May 2001, NCFE sold notes to investors with a combined value of $4.4 billion, which evidence showed were actually worth approximately six cents on the dollar at the time of NCFE’s bankruptcy in November 2002.
Court documents show that NCFE presented a business model to investors and rating agencies that called for NCFE to purchase high-quality accounts receivable from healthcare providers using money NCFE obtained through the sale of asset-backed notes to institutional investors. Evidence at trial showed that the defendants knew that the business model NCFE presented to the investing public differed drastically from the way NCFE did business within its own walls and that NCFE was making up the information contained in monthly investor reports to make it appear as though NCFE was in compliance with its own governing documents.
Ayers, Speer, Faulkenberry, Dierker and Parrett were five of eight individuals indicted in the case in July 2007. Lance K. Poulsen was severed from the other defendants following his arrest on obstruction of justice charges on Oct. 18, 2007. He will be sentenced on the obstruction of justice charges on Aug. 8, 2008. Poulsen’s trial on conspiracy, securities fraud, wire fraud, mail fraud and money laundering charges is scheduled to begin Oct. 1, 2008. James K. Happ, a certified public accountant and former executive vice president for servicer operations will face charges of conspiracy and wire fraud at trial scheduled to begin Dec. 1, 2008. Jon A. Beacham, who was responsible for raising money from investors through the sale of notes, pleaded guilty to conspiracy and securities fraud on July 13, 2007, and awaits sentencing.
The case was prosecuted by Assistant U.S. Attorney Douglas Squires of the Southern District of Ohio, Senior Litigation Counsel Kathleen McGovern and Trial Attorney Wes R. Porter of the Criminal Division’s Fraud Section, with assistance from Fraud Section Paralegal Specialists Crystal Curry and Sarah Marberg. The investigation was conducted by FBI agents Matt Daly, Ingrid Schmidt and Tad Morris; IRS Inspectors Greg Ruwe and Mark Bailey; U.S. Postal Inspector Dave Mooney; and U.S. Immigration and Customs Enforcement agent Celeste Koszut.
Source: DoJ
August 8, 2008
Four former National Century Financial Enterprises (NCFE) executives have been sentenced for their roles in a scheme to deceive investors about the financial health of NCFE. NCFE, formerly based in Dublin, Ohio, was one of the largest healthcare finance companies in the United States until it filed for bankruptcy in November 2002.
Donald H. Ayers, 72, of Fort Myers, Fla., an NCFE vice chairman, chief operating officer, director and owner of the company, was sentenced on Aug. 6, 2008, to 15 years in prison for conspiracy, securities fraud and money laundering.
Randolph H. Speer, 57, of Peachtree City, Ga., NCFE’s chief financial officer, was sentenced on Aug. 6, 2008, to 12 years in prison for conspiracy, securities fraud, wire fraud and money laundering.
Roger S. Faulkenberry, 47, of Dublin, a senior executive responsible for raising money from investors, was sentenced on Aug. 7, 2008, to ten years in prison for conspiracy, securities fraud, wire fraud and money laundering.
James E. Dierker, 40, of Powell, Ohio, associate director of marketing and vice president of client development, was sentenced on Aug. 7, 2008, to five years in prison for conspiracy and money laundering.
Rebecca S. Parrett, 59, of Carefree, Ariz., an NCFE vice chairman, secretary, treasurer, director and owner of the company, became a fugitive following the March 2008 jury verdict. She faces a maximum penalty of 75 years in prison and $2.5 million in fines.
U.S. District Court Judge Algenon Marbley also ordered the defendants to forfeit $1.7 billion of property representing the proceeds of the conspiracy and to pay restitution of $2.3 billion.
“In a scheme which lasted for years, these defendants purposely misled the investing public about National Century, its financial health, and the way in which it did business,” said Acting Assistant Attorney General Matthew Friedrich. “When the facade collapsed and National Century filed for bankruptcy, investors were left holding the bag for billions of dollars in losses. The sentences handed down in this case justly reflect the gravity of the offenses.”
“These sentences mark the end of a nearly six-year march to justice for the architects of the financial house of cards known as National Century,” said Gregory G. Lockhart, U.S. Attorney for the Southern District of Ohio. “These crimes touched hundreds of thousands of Americans if they participated in a pension that invested in National Century, or had money in any of the financial institutions who bought securities from National Century.”
“Unfortunately today’s sentencing does not immediately restore investor confidence or offer complete financial restitution for the victims of one of the largest corporate fraud investigations,” said Assistant Director Kenneth W. Kaiser of the FBI Criminal Investigative Division. “The FBI and our law enforcement and regulatory partners will do whatever it takes so that no company, in small town America or major metropolitan cities alike, misrepresents their financial health and defrauds investors.”
“The IRS, along with our law enforcement partners, will vigorously pursue corporate officers who victimize their investors and violate the public trust,” said Internal Revenue Service (IRS) Chief of the Criminal Investigation Division Eileen Mayer. “Today’s sentence demonstrates the government’s determination to restore and ensure that trust.”
Evidence was presented at trial in February 2008 that the defendants engaged in a scheme to deceive investors and rating agencies about the financial health of NCFE and how investor monies would be used. Between May 1998 and May 2001, NCFE sold notes to investors with a combined value of $4.4 billion, which evidence showed were actually worth approximately six cents on the dollar at the time of NCFE’s bankruptcy in November 2002.
Court documents show that NCFE presented a business model to investors and rating agencies that called for NCFE to purchase high-quality accounts receivable from healthcare providers using money NCFE obtained through the sale of asset-backed notes to institutional investors. Evidence at trial showed that the defendants knew that the business model NCFE presented to the investing public differed drastically from the way NCFE did business within its own walls and that NCFE was making up the information contained in monthly investor reports to make it appear as though NCFE was in compliance with its own governing documents.
Ayers, Speer, Faulkenberry, Dierker and Parrett were five of eight individuals indicted in the case in July 2007. Lance K. Poulsen was severed from the other defendants following his arrest on obstruction of justice charges on Oct. 18, 2007. He will be sentenced on the obstruction of justice charges on Aug. 8, 2008. Poulsen’s trial on conspiracy, securities fraud, wire fraud, mail fraud and money laundering charges is scheduled to begin Oct. 1, 2008. James K. Happ, a certified public accountant and former executive vice president for servicer operations will face charges of conspiracy and wire fraud at trial scheduled to begin Dec. 1, 2008. Jon A. Beacham, who was responsible for raising money from investors through the sale of notes, pleaded guilty to conspiracy and securities fraud on July 13, 2007, and awaits sentencing.
The case was prosecuted by Assistant U.S. Attorney Douglas Squires of the Southern District of Ohio, Senior Litigation Counsel Kathleen McGovern and Trial Attorney Wes R. Porter of the Criminal Division’s Fraud Section, with assistance from Fraud Section Paralegal Specialists Crystal Curry and Sarah Marberg. The investigation was conducted by FBI agents Matt Daly, Ingrid Schmidt and Tad Morris; IRS Inspectors Greg Ruwe and Mark Bailey; U.S. Postal Inspector Dave Mooney; and U.S. Immigration and Customs Enforcement agent Celeste Koszut.
Source: DoJ
Ayers, Speer, Faulkenberry, Dierker and Parrett were five of eight .....
But why not all eight? Are their reasons acceptable?
Pick upon this:
Between May 1998 and May 2001, NCFE sold notes to investors with a combined value of $4.4 billion
Ask yourself:
1) What was going on in the Healthcare Arena in 1998? Healthcare Reform was passed late 1997. (Republican Congress)
2) What were the price of stocks for the Healthcare Companies that would be affected by the Reform?
3) What did those Publicly Traded Companies need to do to improve their Stockholder Confidence?
4) How did they succeed with their "Divestitures" and to whom did they diverse to?
Former National Century Financial Enterprises Executives Sentenced for Roles in $3 Billion Securities Fraud Scheme
Last update: 7:01 p.m. EDT Aug. 7, 2008
WASHINGTON, Aug 07, 2008 /PRNewswire-USNewswire via COMTEX/ -- Four former National Century Financial Enterprises (NCFE) executives have been sentenced for their roles in a scheme to deceive investors about the financial health of NCFE, Acting Assistant Attorney General Matthew Friedrich and U.S. Attorney Gregory G. Lockhart of the Southern District of Ohio announced today. NCFE, formerly based in Dublin, Ohio, was one of the largest healthcare finance companies in the United States until it filed for bankruptcy in November 2002.
Donald H. Ayers, 72, of Fort Myers, Fla., NCFE vice chairman, chief operating officer, director and owner of the company, was sentenced on Aug. 6, 2008, to 15 years in prison for conspiracy, securities fraud and money laundering.
Randolph H. Speer, 57, of Peachtree City, Ga., NCFE's chief financial officer, was sentenced on Aug. 6, 2008, to 12 years in prison for conspiracy, securities fraud, wire fraud and money laundering.
Roger S. Faulkenberry, 47, of Dublin, a senior executive responsible for raising money from investors, was sentenced on Aug. 7, 2008, to ten years in prison for conspiracy, securities fraud, wire fraud and money laundering.
James E. Dierker, 40, of Powell, Ohio, associate director of marketing and vice president of client development, was sentenced on Aug. 7, 2008, to five years in prison for conspiracy and money laundering.
Rebecca S. Parrett, 59, of Carefree, Ariz., an NCFE vice chairman, secretary, treasurer, director and owner of the company, became a fugitive following the March 2008 jury verdict. She faces a maximum penalty of 75 years in prison and $2.5 million in fines.
U.S. District Court Judge Algenon Marbley also ordered the defendants to forfeit $1.7 billion of property representing the proceeds of the conspiracy and to pay restitution of $2.3 billion.
"In a scheme which lasted for years, these defendants purposely misled the investing public about National Century, its financial health, and the way in which it did business," said Acting Assistant Attorney General Matthew Friedrich. "When the facade collapsed and National Century filed for bankruptcy, investors were left holding the bag for billions of dollars in losses. The sentences handed down in this case justly reflect the gravity of the offenses."
"These sentences mark the end of a nearly six-year march to justice for the architects of the financial house of cards known as National Century," said Gregory G. Lockhart, U.S. Attorney for the Southern District of Ohio. "These crimes touched hundreds of thousands of Americans if they participated in a pension that invested in National Century, or had money in any of the financial institutions who bought securities from National Century."
"Unfortunately today's sentencing does not immediately restore investor confidence or offer complete financial restitution for the victims of one of the largest corporate fraud investigations," said Assistant Director Kenneth W. Kaiser of the FBI Criminal Investigative Division. "The FBI and our law enforcement and regulatory partners will do whatever it takes so that no company, in small town America or major metropolitan cities alike, misrepresents their financial health and defrauds investors."
"The IRS, along with our law enforcement partners, will vigorously pursue corporate officers who victimize their investors and violate the public trust," said Internal Revenue Service (IRS) Chief of the Criminal Investigation Division Eileen Mayer. "Today's sentence demonstrates the government's determination to restore and ensure that trust."
Evidence was presented at trial in February 2008 that the defendants engaged in a scheme to deceive investors and rating agencies about the financial health of NCFE and how investor monies would be used. Between May 1998 and May 2001, NCFE sold notes to investors with a combined value of $4.4 billion, which evidence showed were actually worth approximately six cents on the dollar at the time of NCFE's bankruptcy in November 2002.
Court documents show that NCFE presented a business model to investors and rating agencies that called for NCFE to purchase high-quality accounts receivable from healthcare providers using money NCFE obtained through the sale of asset-backed notes to institutional investors. Evidence at trial showed that the defendants knew that the business model NCFE presented to the investing public differed drastically from the way NCFE did business within its own walls and that NCFE was making up the information contained in monthly investor reports to make it appear as though NCFE was in compliance with its own governing documents.
Ayers, Speer, Faulkenberry, Dierker and Parrett were five of eight individuals indicted in the case in July 2007. Lance K. Poulsen was severed from the other defendants following his arrest on obstruction of justice charges on Oct. 18, 2007. He will be sentenced on the obstruction of justice charges on Aug. 8, 2008. Poulsen's trial on conspiracy, securities fraud, wire fraud, mail fraud and money laundering charges is scheduled to begin Oct. 1, 2008. James K. Happ, a certified public accountant and former executive vice president for servicer operations will face charges of conspiracy and wire fraud at trial scheduled to begin Dec. 1, 2008. Jon A. Beacham, who was responsible for raising money from investors through the sale of notes, pleaded guilty to conspiracy and securities fraud on July 13, 2007, and awaits sentencing.
The case was prosecuted by Assistant U.S. Attorney Douglas Squires of the Southern District of Ohio, Senior Litigation Counsel Kathleen McGovern and Trial Attorney Wes R. Porter of the Criminal Division's Fraud Section, with assistance from Fraud Section Paralegal Specialists Crystal Curry and Sarah Marberg. The investigation was conducted by FBI agents Matt Daly, Ingrid Schmidt and Tad Morris; IRS Inspectors Greg Ruwe and Mark Bailey; U.S. Postal Inspector Dave Mooney; and U.S. Immigration and Customs Enforcement agent Celeste Koszut.
SOURCE U.S. Department of Justice
http://www.USDOJ.gov
Copyright (C) 2008 PR Newswire. All rights reserved
Pick upon this:
Between May 1998 and May 2001, NCFE sold notes to investors with a combined value of $4.4 billion
Ask yourself:
1) What was going on in the Healthcare Arena in 1998? Healthcare Reform was passed late 1997. (Republican Congress)
2) What were the price of stocks for the Healthcare Companies that would be affected by the Reform?
3) What did those Publicly Traded Companies need to do to improve their Stockholder Confidence?
4) How did they succeed with their "Divestitures" and to whom did they diverse to?
Former National Century Financial Enterprises Executives Sentenced for Roles in $3 Billion Securities Fraud Scheme
Last update: 7:01 p.m. EDT Aug. 7, 2008
WASHINGTON, Aug 07, 2008 /PRNewswire-USNewswire via COMTEX/ -- Four former National Century Financial Enterprises (NCFE) executives have been sentenced for their roles in a scheme to deceive investors about the financial health of NCFE, Acting Assistant Attorney General Matthew Friedrich and U.S. Attorney Gregory G. Lockhart of the Southern District of Ohio announced today. NCFE, formerly based in Dublin, Ohio, was one of the largest healthcare finance companies in the United States until it filed for bankruptcy in November 2002.
Donald H. Ayers, 72, of Fort Myers, Fla., NCFE vice chairman, chief operating officer, director and owner of the company, was sentenced on Aug. 6, 2008, to 15 years in prison for conspiracy, securities fraud and money laundering.
Randolph H. Speer, 57, of Peachtree City, Ga., NCFE's chief financial officer, was sentenced on Aug. 6, 2008, to 12 years in prison for conspiracy, securities fraud, wire fraud and money laundering.
Roger S. Faulkenberry, 47, of Dublin, a senior executive responsible for raising money from investors, was sentenced on Aug. 7, 2008, to ten years in prison for conspiracy, securities fraud, wire fraud and money laundering.
James E. Dierker, 40, of Powell, Ohio, associate director of marketing and vice president of client development, was sentenced on Aug. 7, 2008, to five years in prison for conspiracy and money laundering.
Rebecca S. Parrett, 59, of Carefree, Ariz., an NCFE vice chairman, secretary, treasurer, director and owner of the company, became a fugitive following the March 2008 jury verdict. She faces a maximum penalty of 75 years in prison and $2.5 million in fines.
U.S. District Court Judge Algenon Marbley also ordered the defendants to forfeit $1.7 billion of property representing the proceeds of the conspiracy and to pay restitution of $2.3 billion.
"In a scheme which lasted for years, these defendants purposely misled the investing public about National Century, its financial health, and the way in which it did business," said Acting Assistant Attorney General Matthew Friedrich. "When the facade collapsed and National Century filed for bankruptcy, investors were left holding the bag for billions of dollars in losses. The sentences handed down in this case justly reflect the gravity of the offenses."
"These sentences mark the end of a nearly six-year march to justice for the architects of the financial house of cards known as National Century," said Gregory G. Lockhart, U.S. Attorney for the Southern District of Ohio. "These crimes touched hundreds of thousands of Americans if they participated in a pension that invested in National Century, or had money in any of the financial institutions who bought securities from National Century."
"Unfortunately today's sentencing does not immediately restore investor confidence or offer complete financial restitution for the victims of one of the largest corporate fraud investigations," said Assistant Director Kenneth W. Kaiser of the FBI Criminal Investigative Division. "The FBI and our law enforcement and regulatory partners will do whatever it takes so that no company, in small town America or major metropolitan cities alike, misrepresents their financial health and defrauds investors."
"The IRS, along with our law enforcement partners, will vigorously pursue corporate officers who victimize their investors and violate the public trust," said Internal Revenue Service (IRS) Chief of the Criminal Investigation Division Eileen Mayer. "Today's sentence demonstrates the government's determination to restore and ensure that trust."
Evidence was presented at trial in February 2008 that the defendants engaged in a scheme to deceive investors and rating agencies about the financial health of NCFE and how investor monies would be used. Between May 1998 and May 2001, NCFE sold notes to investors with a combined value of $4.4 billion, which evidence showed were actually worth approximately six cents on the dollar at the time of NCFE's bankruptcy in November 2002.
Court documents show that NCFE presented a business model to investors and rating agencies that called for NCFE to purchase high-quality accounts receivable from healthcare providers using money NCFE obtained through the sale of asset-backed notes to institutional investors. Evidence at trial showed that the defendants knew that the business model NCFE presented to the investing public differed drastically from the way NCFE did business within its own walls and that NCFE was making up the information contained in monthly investor reports to make it appear as though NCFE was in compliance with its own governing documents.
Ayers, Speer, Faulkenberry, Dierker and Parrett were five of eight individuals indicted in the case in July 2007. Lance K. Poulsen was severed from the other defendants following his arrest on obstruction of justice charges on Oct. 18, 2007. He will be sentenced on the obstruction of justice charges on Aug. 8, 2008. Poulsen's trial on conspiracy, securities fraud, wire fraud, mail fraud and money laundering charges is scheduled to begin Oct. 1, 2008. James K. Happ, a certified public accountant and former executive vice president for servicer operations will face charges of conspiracy and wire fraud at trial scheduled to begin Dec. 1, 2008. Jon A. Beacham, who was responsible for raising money from investors through the sale of notes, pleaded guilty to conspiracy and securities fraud on July 13, 2007, and awaits sentencing.
The case was prosecuted by Assistant U.S. Attorney Douglas Squires of the Southern District of Ohio, Senior Litigation Counsel Kathleen McGovern and Trial Attorney Wes R. Porter of the Criminal Division's Fraud Section, with assistance from Fraud Section Paralegal Specialists Crystal Curry and Sarah Marberg. The investigation was conducted by FBI agents Matt Daly, Ingrid Schmidt and Tad Morris; IRS Inspectors Greg Ruwe and Mark Bailey; U.S. Postal Inspector Dave Mooney; and U.S. Immigration and Customs Enforcement agent Celeste Koszut.
SOURCE U.S. Department of Justice
http://www.USDOJ.gov
Copyright (C) 2008 PR Newswire. All rights reserved
Thursday, August 7, 2008
Prosecutors have compared the Dublin-based company's collapse to Enron and Worldcom
National Century Founder, Executive Sentenced
Prosecutors have compared the Dublin-based company's collapse to Enron and Worldcom.
By WTVN Newsroom
Wednesday, August 6, 2008
A federal judge on Wednesday sentenced two former executives of Dublin-based National Century Financial Enterprises for their roles in the massive fraud case.
Founder Donald Ayers, 72, who must also repay billions of dollars to investors and co-defendents, faced up to 55 years for his role in the $1.9 billion fraud that brought down the health care financing firm.
U.S. District Judge Algenon Marbley sentenced Ayers to 15 years.A jury convicted Ayers of conspiracy to commit securities or wire fraud, six counts of securities fraud and conspiracy to commit money laundering in March.
Marbley said the 12-year prison term for 52-year-old Randolph Speer was enough to punish Speer and deter others from committing similar crimes. Marbley also ruled that Speer must repay billions of dollars to investors along with his co-defendants.
They are the first of six defendants to be sentenced.
Roger Faulkenberry and James Dierker Jr. are scheduled to appear before the judge on Thursday.
Former CEO Lance Poulsen and his friend, Karl Demmler, are set for sentencing on Friday. They were convicted of obstructing justice in trying to get a witness to fake amnesia.
The Associated Press contributed to this story
Copyright © 2003-2008 Clear Channel. All rights reserved.
Prosecutors have compared the Dublin-based company's collapse to Enron and Worldcom.
By WTVN Newsroom
Wednesday, August 6, 2008
A federal judge on Wednesday sentenced two former executives of Dublin-based National Century Financial Enterprises for their roles in the massive fraud case.
Founder Donald Ayers, 72, who must also repay billions of dollars to investors and co-defendents, faced up to 55 years for his role in the $1.9 billion fraud that brought down the health care financing firm.
U.S. District Judge Algenon Marbley sentenced Ayers to 15 years.A jury convicted Ayers of conspiracy to commit securities or wire fraud, six counts of securities fraud and conspiracy to commit money laundering in March.
Marbley said the 12-year prison term for 52-year-old Randolph Speer was enough to punish Speer and deter others from committing similar crimes. Marbley also ruled that Speer must repay billions of dollars to investors along with his co-defendants.
They are the first of six defendants to be sentenced.
Roger Faulkenberry and James Dierker Jr. are scheduled to appear before the judge on Thursday.
Former CEO Lance Poulsen and his friend, Karl Demmler, are set for sentencing on Friday. They were convicted of obstructing justice in trying to get a witness to fake amnesia.
The Associated Press contributed to this story
Copyright © 2003-2008 Clear Channel. All rights reserved.
National Century Executives Sentenced to Prison Time....(but only some)
Not all of them tho......some have yet to even go to trial.....and we need
to ask ourselves WHY?
National Century Executives Sentenced to Prison Time (Update3)
By Sophia Pearson and Denise Trowbridge
Aug. 6 (Bloomberg) -- National Century Financial Enterprises Inc. co-founder Donald Ayers and former executive Randolph Speer were sentenced to 15 years and 12 years in prison, respectively, for their roles in bilking investors out of $2.9 billion before the health-care financing company's bankruptcy in 2002.
U.S. District Judge Algenon Marbley in Columbus, Ohio, imposed the sentence today, rejecting defense lawyers' arguments that the men led exemplary lives and had family responsibilities. Ayers, 72, Speer, 57, and three other executives were convicted in March of securities fraud, conspiracy and money laundering.
``This company was a poster child for a sophisticated scheme,'' the judge said. ``It was a high-level shell game. Everyone knew, but they were hedging their bets that they wouldn't be discovered. But they were.''
National Century, based in Dublin, Ohio, loaned money to struggling health-care providers, including hospitals and clinics, and claimed to secure the loans with incoming payments that backed bonds sold to investors. Many receivables were worthless IOUs, forcing National Century to use new money to pay old investors.
Ayers and the other executives, Roger S. Faulkenberry, Speer, James Dierker and Rebecca Parrett, lied to auditors and in monthly reports to bondholders, prosecutors said. The company advanced funds to providers owned by former Chief Executive Officer Lance Poulsen, Ayers and Parrett, letting them pay debts, settle lawsuits and buy other companies. National Century's collapse led to bankruptcies by 275 providers.
Concurrent Sentences
Ayers was sentenced to 15 years for money laundering and five years for securities fraud, with the sentences to run concurrently. Marbley ordered Ayers, who faced up to 55 years in prison, and the other executives to pay $2.3 billion in restitution.
Speer received concurrent sentences of 12 years for money laundering and five years for securities and wire fraud. He faced a maximum of 125 years in prison. Faulkenberry and Dierker are to be sentenced tomorrow.
Ayers must liquidate his Merrill Lynch money-market and retirement accounts and sell all his vehicles but one within 30 days. If employed, the men will have to pay as much as 50 percent of their earnings toward restitution, Marbley said.
Speer, Ayers and Faulkenberry have been behind bars since April after prosecutors uncovered a plot to flee to Aruba. Dierker was released on house arrest.
Parrett a Fugitive
Parrett, who was once married to Ayers, was declared a fugitive on March 27 after failing to report for an electronic ankle bracelet to monitor her movements. She is still missing.
Defense lawyer Brian Dickerson urged Marbley to consider Ayers's age and exemplary life. The former executive, who has been divorced twice, is a stay-at-home father to two adopted children from his current wife and recently suffered a stroke. His medical needs should be considered, Dickerson said.
``There should be another category for someone who is 72 years old who doesn't have a blemish on his record,'' Dickerson said.
Marbley rejected those claims along with Ayers's denial of the fraud.
``The court cannot find any evidence to believe that Mr. Ayers did not know what was going on,'' Marbley said. ``I believe he along with Becky Parrett and Lance Poulsen were the architects of this scheme and perpetuated it. Evidence of the defendant's guilt in this case is overwhelming.''
Wife's Testimony
Speer's wife, Kathy, testified that her husband of 20 years was ``soft-spoken and down to earth.''
``He is the center of my family,'' she said. ``His absence from home has been absolutely devastating to our family.''
Speer, the company's chief financial officer from 1999 to 2002, should have been sentenced to seven to 10 years, attorney Fred Benton argued. He asked that Speer be placed at a low- security facility in the Talladega, Alabama, area.
Ayers requested placement at the Eglin Federal Prison Camp in Eglin, Florida. That facility was named one of the best places to go to prison by Forbes Magazine in 2006.
National Century's fraud claimed among its victims Pacific Investment Management Co., the world's largest bond fund, and the state of Arizona.
JPMorgan Chase & Co., the third-largest U.S. bank, agreed to pay $425 million in 2006 to settle with Arizona noteholders who claimed it and other banks underwrote or were trustees of the notes used to defraud investors.
Prosecutors previously secured four guilty pleas from executives at National Century, including Sherry Gibson, a former vice president of compliance. Gibson, who spent almost three years in prison, was the main government witness at the trial.
Poulsen will face fraud charges at a separate trial later this year. He was convicted in March of trying to bribe a witness to change her testimony against him.
The case is U.S. v. Poulsen, 06-129, U.S. District Court, Southern District of Ohio (Columbus).
To contact the reporters on this story: Sophia Pearson in Wilmington, Delaware, at spearson3@bloomberg.net; Denise Trowbridge in Columbus, Ohio, t .
to ask ourselves WHY?
National Century Executives Sentenced to Prison Time (Update3)
By Sophia Pearson and Denise Trowbridge
Aug. 6 (Bloomberg) -- National Century Financial Enterprises Inc. co-founder Donald Ayers and former executive Randolph Speer were sentenced to 15 years and 12 years in prison, respectively, for their roles in bilking investors out of $2.9 billion before the health-care financing company's bankruptcy in 2002.
U.S. District Judge Algenon Marbley in Columbus, Ohio, imposed the sentence today, rejecting defense lawyers' arguments that the men led exemplary lives and had family responsibilities. Ayers, 72, Speer, 57, and three other executives were convicted in March of securities fraud, conspiracy and money laundering.
``This company was a poster child for a sophisticated scheme,'' the judge said. ``It was a high-level shell game. Everyone knew, but they were hedging their bets that they wouldn't be discovered. But they were.''
National Century, based in Dublin, Ohio, loaned money to struggling health-care providers, including hospitals and clinics, and claimed to secure the loans with incoming payments that backed bonds sold to investors. Many receivables were worthless IOUs, forcing National Century to use new money to pay old investors.
Ayers and the other executives, Roger S. Faulkenberry, Speer, James Dierker and Rebecca Parrett, lied to auditors and in monthly reports to bondholders, prosecutors said. The company advanced funds to providers owned by former Chief Executive Officer Lance Poulsen, Ayers and Parrett, letting them pay debts, settle lawsuits and buy other companies. National Century's collapse led to bankruptcies by 275 providers.
Concurrent Sentences
Ayers was sentenced to 15 years for money laundering and five years for securities fraud, with the sentences to run concurrently. Marbley ordered Ayers, who faced up to 55 years in prison, and the other executives to pay $2.3 billion in restitution.
Speer received concurrent sentences of 12 years for money laundering and five years for securities and wire fraud. He faced a maximum of 125 years in prison. Faulkenberry and Dierker are to be sentenced tomorrow.
Ayers must liquidate his Merrill Lynch money-market and retirement accounts and sell all his vehicles but one within 30 days. If employed, the men will have to pay as much as 50 percent of their earnings toward restitution, Marbley said.
Speer, Ayers and Faulkenberry have been behind bars since April after prosecutors uncovered a plot to flee to Aruba. Dierker was released on house arrest.
Parrett a Fugitive
Parrett, who was once married to Ayers, was declared a fugitive on March 27 after failing to report for an electronic ankle bracelet to monitor her movements. She is still missing.
Defense lawyer Brian Dickerson urged Marbley to consider Ayers's age and exemplary life. The former executive, who has been divorced twice, is a stay-at-home father to two adopted children from his current wife and recently suffered a stroke. His medical needs should be considered, Dickerson said.
``There should be another category for someone who is 72 years old who doesn't have a blemish on his record,'' Dickerson said.
Marbley rejected those claims along with Ayers's denial of the fraud.
``The court cannot find any evidence to believe that Mr. Ayers did not know what was going on,'' Marbley said. ``I believe he along with Becky Parrett and Lance Poulsen were the architects of this scheme and perpetuated it. Evidence of the defendant's guilt in this case is overwhelming.''
Wife's Testimony
Speer's wife, Kathy, testified that her husband of 20 years was ``soft-spoken and down to earth.''
``He is the center of my family,'' she said. ``His absence from home has been absolutely devastating to our family.''
Speer, the company's chief financial officer from 1999 to 2002, should have been sentenced to seven to 10 years, attorney Fred Benton argued. He asked that Speer be placed at a low- security facility in the Talladega, Alabama, area.
Ayers requested placement at the Eglin Federal Prison Camp in Eglin, Florida. That facility was named one of the best places to go to prison by Forbes Magazine in 2006.
National Century's fraud claimed among its victims Pacific Investment Management Co., the world's largest bond fund, and the state of Arizona.
JPMorgan Chase & Co., the third-largest U.S. bank, agreed to pay $425 million in 2006 to settle with Arizona noteholders who claimed it and other banks underwrote or were trustees of the notes used to defraud investors.
Prosecutors previously secured four guilty pleas from executives at National Century, including Sherry Gibson, a former vice president of compliance. Gibson, who spent almost three years in prison, was the main government witness at the trial.
Poulsen will face fraud charges at a separate trial later this year. He was convicted in March of trying to bribe a witness to change her testimony against him.
The case is U.S. v. Poulsen, 06-129, U.S. District Court, Southern District of Ohio (Columbus).
To contact the reporters on this story: Sophia Pearson in Wilmington, Delaware, at spearson3@bloomberg.net; Denise Trowbridge in Columbus, Ohio, t .
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