Seven former National Century execs indicted
By Dan Wilchins
NEW YORK (Reuters) – A federal grand jury has indicted the
former chief executive and six others at National Century
Financial Enterprises, a bankrupt health-care finance company,
for engineering a $3 billion fraud, prosecutors said on Monday.
The 60-count indictment accuses the defendants, including
former Chief Executive Lance Poulsen, of lying to investors
about how their funds would be used. The charges include
conspiracy, fraud and promotion of money laundering.
“Executives bilked investors by building a financial house
of cards with deception, sleight-of-hand financing and
accounting misdeeds,” said Gregory Lockhart, U.S. Attorney for
the Southern District of Ohio, in a statement.
The criminal charges were filed five months after a U.S.
Securities and Exchange Commission civil lawsuit against three
National Century executives.
Others indicted include Rebecca Parrett, a former vice
chairman, and Donald Ayers, a former chief operating officer.
Ayers, Parrett and Poulsen are also defendants in the SEC
Other executives facing criminal charges include Roger
Faulkenberry, once director of securitizations; Randolph Speer,
a former chief financial officer; James Dierker, a former vice
president in charge of client development, and Jon Beacham, a
former vice president of securitizations.
Each money laundering and money laundering conspiracy
charge carries a maximum 20-year prison term and $500,000 fine.
The fraud counts carry maximum prison terms of five years or 20
years. Prosecutors are also seeking the forfeiture of $2
billion of property.
The indictment was filed on Friday, and unsealed on Monday,
court records show.
National Century filed for protection from creditors in
November 2002 with more than $3 billion in debt after it failed
to give investors audited financial statements and lenders
stopped advancing it money.
The company’s founders built a multibillion-dollar business
out of buying patients’ bills from health-care providers and
packaging them into bonds for investors.
According to the indictment, the former executives diverted
investors’ funds into other companies, and advanced money to
clients and others without getting medical bills in exchange.