Tuesday, October 30, 2007

largest fraud by a private company in U.S. history, federal prosecutors say.

National Century bribery case
Ex-president, friend indicted
Wednesday, October 24, 2007 3:42 AM
By Jodi Andes

THE COLUMBUS DISPATCH
Recordings from wiretaps are being used as the basis for the latest charge against the former president of the now-defunct National Century Financial Enterprises.

Lance K. Poulsen and his friend, Karl A. Demmler, were indicted yesterday on charges of conspiracy to obstruct justice, accused of trying to bribe a witness in the criminal case surrounding the company's collapse.

Poulsen and Demmler were recorded secretly on court-ordered wiretaps, and the witness they are accused of trying to bribe also wore a wire arranged by FBI agents, the indictment states.

The recordings show the pair wanted the witness to develop a "mental lapse" concerning National Century's dealings. Some of the conversations were recorded as recently as two weeks ago, court records show.

National Century provided financing to health-care companies by collecting money owed to them for a fee. FBI and IRS agents say company executives cooked the books using fraudulent schemes for years.

When the company collapsed in 2002, investors lost $1.9 billion, making it the largest fraud by a private company in U.S. history, federal prosecutors say.

Its collapse created a domino effect that brought down 275 health-care companies. Poulsen was arrested in Tampa, Fla., last week. U.S. marshals are expected to bring him to Columbus sometime this week, said Fred Alverson, spokesman for the U.S. attorney's office.

Demmler was in custody here.

The indictment says that the witness is a woman who previously pleaded guilty to fabricating data in the company's 1995 investment report, but does not name her.

Through Demmler, Poulsen offered to pay the witness what she had forfeited to the federal government, plus three years in lost wages, the indictment says. Demmler added that his take would be 10 percent of what Poulsen was offering her, the indictment says.

Poulsen and other executives are scheduled for trial Feb. 5 before federal Judge Algenon Marbley on the initial charges of securities fraud, money laundering and wire fraud.

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