Monday, February 18, 2008

Multi Billion $$$ Fraud and a $250,000 fine

National Century exec says colleagues lied to investorsFebruary 11, 2008 5:37 PM ET
The final hours of testimony by former National Century Financial Enterprises Inc. executive Jon Beacham became heated Monday afternoon in U.S. District Court.

The former director of securitizations at Dublin-based National Century argued with a defense lawyer over whether he believed he had engaged in a criminal act. Leonard Yelsky, an attorney for defendant James Dierker, who is standing trial with four other former National Century executives on criminal charges, implied Beacham didn't have all the facts about the company to know whether anything illegal took place.

"Sir, I don't need all the facts. I have enough," Beacham said, adding he knew all the defendants made a material omission when providing information to investors, which he said was the same as lying.

Under questioning by government attorneys Friday, Beacham testified he and other executives at the company, then the nation's largest health-care financing company, lied to investors and ratings agencies when the business issued its NPF XII fund.

"There was definitely material omissions at (investor) presentations," Beacham told jurors Friday.

Beacham, 41, headed the department that sold asset-backed bonds to investors.

When defense attorneys got their chance to question Beacham Monday, they tried to show he was an unreliable witness because he changed his earlier not guilty plea after agreeing to be a government witness. Now a stay-at-home father in Gross Pointe, Mich., Beacham pleaded guilty in July to a count each of securities fraud and conspiracy to commit securities fraud and wire fraud. He also agreed to forfeit $330,000.

He faces up to five years in prison with three years of supervised release, plus a $250,000 fine. He has yet to be sentenced, and as of January the government had not recommended his sentence be reduced.

Under later questioning by defense attorneys, Beacham testified he found out in October 2002 that National Century CEO Lance Poulsen had used all of NPF XII's reserve fund to buy additional accounts receivables. Beacham recounted how he alerted investors to the problem.

But Beacham qualified that even though the problem was disclosed in late 2002, he said there was still underlying conspiracy because no one told investors about potential problems earlier.

During Beacham's time on the witness stand Monday morning, defense lawyers spent their time asking him about his plea agreement with the government, implying he made a deal with the Justice Department not because he thought he was guilty, but because he wanted to reduce time away from his wife and four children.

Beacham was indicted in 2006 with the five executives now on trial -- National Century's chief operating officer, Donald Ayers, 71; the company's vice chairwoman, Rebecca Parrett, 58; Randolph Speer, 57, its chief financial officer; Roger Faulkenberry, 46, an executive vice president; and Dierker, 39, a vice president. The five are facing criminal charges they were behind a $3 billion fraud at the privately held company, which went bankrupt in 2002.

National Century financed health-care businesses by purchasing accounts receivables from medical providers at a discount and then packaging the accounts as bond funds. The government has accused the executives of diverting $2.84 billion for their benefit.

All have pleaded not guilty to charges that include conspiracy, securities, fraud and money laundering charges.

Poulsen, 64, is set for trial in August, five months after he is scheduled to be tried on allegations he and an associate attempted to bribe a government witness.

If found guilty, the defendants face 30 years to life in prison.

No comments: