Monday, February 18, 2008

What about HCA & IHS sales in 1999?

Two executives of health-care companies testified in the National Century Financial Enterprises Inc. trial Tuesday that the company gave them far more funding than they deserved.

In a session abbreviated because of the inclement weather, the government witnesses - both former chief financial officers of National Century customers - told jurors the Dublin business funded their financially troubled employers with millions of dollars in excess of the receivables it had purchased so the firms could continue operating.

National Century bought accounts receivable from health-care providers at a discount in exchange for fast cash to the owners. It would then package the receivables as bonds and sell them to investors, while collecting on its customers' bills. The privately held company collapsed in 2002 owing nearly $3 billion to creditors.

Bryan Weiss testified that his former employer, MediManagement, ran several southern California psychiatric clinics and a 46-bed hospital in east Los Angeles that were so strapped for money they operated week to week. He told the jury he was concerned about the long-term viability of MediManagement because it had a large amount of unsecured debt owed to National Century, its only lender.

MediManagement, Weiss said, was owned by National Century and three of its executives, CEO Lance Poulsen, Chief Operating Officer Donald Ayers and Vice Chairwoman Rebecca Parrett.

National Century financed MediManagement through its NPF XII fund, which the Justice Department has alleged the owners of National Century used to divert millions of dollars to benefit themselves.

Parrett, Ayers and three other National Century executives have been on trial since Feb. 4 in U.S. District Court in Columbus facing criminal fraud, conspiracy and money laundering charges. Also charged were CFO Randolph Speer, Executive Vice President Roger Faulkenberry and James Dierker, a vice president.

All have pleaded not guilty to the charges.

Poulsen will stand trial in late summer, after he is tried on accusations he and an associate tried to bribe a government witness. Another executive, James Happ, is scheduled to stand trial in the fall.

Business troubles
In his testimony, Weiss said Poulsen informed him in a fax that the Ohio company would stop funding MediManagement on Oct. 31, 2002, a day before the business was scheduled to issue payroll for its hospitals and 18 days before National Century would file for bankruptcy. Weiss said MediManagement went into bankruptcy a few weeks later, with a debt of more than $200 million.

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