Does anyone see a conflict of interest with this Secretary?
Or is it just me?
Tuesday, July 31, 2007
When Does "Conflict of Interest " Apply?
The LEAVITT GROUP
COMPANIES REPRESENT
(Per their Website)
St. Paul Travelers ; Burns & Wilcox ;Allied Insurance ; Employers Ins. Co of Nevada ;Progressive; Hallmark General Agency ;Hartford ; Transwestern General Agency ; Safeco ; Risk Placement Services ; Auto Owners; Chubb Insurance
State Compensation Insurance; Mercury Casualty Company ; Pinnacol Assurance; Blue Cross ; CNA ; State Insurance Fund ; Allstate; Swett & Crawford; Employers Mutual Casualty ; Lemac & Associates ; Zurich; Financial Pacific ; Montana State Fund; Golden Eagle Insurance Company ; Idaho State Insurance Fund; Insurance Company Of The West ; Sterling West ; ACUITY ; Unigard ; United Fire & Casualty
z; Metropolitan ; Workers Comp Fund of Utah Rocky Mountain HMO ; Continental Western ; CRC Insurance Services Inc ;
Oregon Mutual ; Adler-Downey & Associates ; Encompass ;
Travis-Pederson & Associates ; Bituminous Insurance Co ; SAIF ; San Luis Valley HMO ; Fireman's Fund ; Colonial General Agency ; Mutual Of Enumclaw ; Ohio Casualty ; Colorado Casualty
COMPANIES REPRESENT
(Per their Website)
St. Paul Travelers ; Burns & Wilcox ;Allied Insurance ; Employers Ins. Co of Nevada ;Progressive; Hallmark General Agency ;Hartford ; Transwestern General Agency ; Safeco ; Risk Placement Services ; Auto Owners; Chubb Insurance
State Compensation Insurance; Mercury Casualty Company ; Pinnacol Assurance; Blue Cross ; CNA ; State Insurance Fund ; Allstate; Swett & Crawford; Employers Mutual Casualty ; Lemac & Associates ; Zurich; Financial Pacific ; Montana State Fund; Golden Eagle Insurance Company ; Idaho State Insurance Fund; Insurance Company Of The West ; Sterling West ; ACUITY ; Unigard ; United Fire & Casualty
z; Metropolitan ; Workers Comp Fund of Utah Rocky Mountain HMO ; Continental Western ; CRC Insurance Services Inc ;
Oregon Mutual ; Adler-Downey & Associates ; Encompass ;
Travis-Pederson & Associates ; Bituminous Insurance Co ; SAIF ; San Luis Valley HMO ; Fireman's Fund ; Colonial General Agency ; Mutual Of Enumclaw ; Ohio Casualty ; Colorado Casualty
United Health Group, Inc.
United Health Group, Inc. and United Healthcare
A class action lawsuit has been filed against the health groups alleging misrepresentation and fraudulent marketing in violation of the Florida Medicare Supplement Act. The Florida statewide civil lawsuit was filed in Pinellas County Civil Court. The suit claims United Health Group, Inc. and United Healthcare of Florida Inc. enrolled Medicare recipients into their Medical Advantage HMO and PPO plans without obtaining signatures or consent to enter into the insurance contract and without informing or advising clients that enrollment into their HMO and PPO Medicare advantage plans disenrolls them from their rightful benefits under the United States Medicare Program.
These enrollees were also not informed that the Medicare Advantage Plans such as Secure Horizons and Complete Care provide limited or no skilled nursing home care, while US Medicare covers 100% of such care for 20 weeks. The companies also failed to inform clients that the United plans have significant co-payments and significantly more limited availability of physicians who will accept their plan than will accept medicare.
The suit also states that United Healthcare's marketing practices fraudulently implie by names such as CompleteCare and SecureHorizons that the United insurance policies provide equal or complete care when in fact they provide far less care that the Medicare coverage that they replace.
A class action lawsuit has been filed against the health groups alleging misrepresentation and fraudulent marketing in violation of the Florida Medicare Supplement Act. The Florida statewide civil lawsuit was filed in Pinellas County Civil Court. The suit claims United Health Group, Inc. and United Healthcare of Florida Inc. enrolled Medicare recipients into their Medical Advantage HMO and PPO plans without obtaining signatures or consent to enter into the insurance contract and without informing or advising clients that enrollment into their HMO and PPO Medicare advantage plans disenrolls them from their rightful benefits under the United States Medicare Program.
These enrollees were also not informed that the Medicare Advantage Plans such as Secure Horizons and Complete Care provide limited or no skilled nursing home care, while US Medicare covers 100% of such care for 20 weeks. The companies also failed to inform clients that the United plans have significant co-payments and significantly more limited availability of physicians who will accept their plan than will accept medicare.
The suit also states that United Healthcare's marketing practices fraudulently implie by names such as CompleteCare and SecureHorizons that the United insurance policies provide equal or complete care when in fact they provide far less care that the Medicare coverage that they replace.
Monday, July 30, 2007
The Leavitt Group
The Leavitt Group, founded in 1952, is one of the largest insurance brokerages in the United States. Leavitt Group affiliates are able to provide effective, sophisticated and creative risk management and risk transfer solutions to all types of businesses.
The Leavitt Group’s team of insurance professionals consists of individuals with a wide range of expertise, many of whom are considered regional and national leaders in their respective fields. Because the Leavitt Group ranks in the top 1% of brokerages in the United States, its broad geographic footprint and strong national buying power afford clients the most appropriate and affordable coverages.
Further, because of its focus on local markets and providing direct ownership and incentive to those in each local area, clients of the Leavitt Group can be assured access to local decision makers who have a direct stake in the success of each client’s insurance program. Each affiliated agency is a separate entity, typically owned by its on-site manager and by Leavitt Group Enterprises, Inc.
The Leavitt Group’s team of insurance professionals consists of individuals with a wide range of expertise, many of whom are considered regional and national leaders in their respective fields. Because the Leavitt Group ranks in the top 1% of brokerages in the United States, its broad geographic footprint and strong national buying power afford clients the most appropriate and affordable coverages.
Further, because of its focus on local markets and providing direct ownership and incentive to those in each local area, clients of the Leavitt Group can be assured access to local decision makers who have a direct stake in the success of each client’s insurance program. Each affiliated agency is a separate entity, typically owned by its on-site manager and by Leavitt Group Enterprises, Inc.
Leavitt Group Enterprises, Inc. (Where is DHHS Secretary)
Geez, I wonder why this Secretary of Department of Human Health Services promotes Market Driven Health Care.......
Apparently he states the reason our Health Care is in a crisis is becuase of government progrmas. Funny, I thought it has been Market Driven.
Lets just look at his company for the last 18years:
Moving forward: Since year-end 1989 the Leavitt Group has grown from 29 agencies to 71 agencies in 115 locations. Annualized premiums have climbed from $8 million to $1.2 billion. Throughout this period of growth and success, agency profitability ratios have remained well above industry averages. Leavitt Group Enterprises continues its pattern of carefully expanding into new areas by working with qualified individuals to create or acquire independent insurance agencies and to recruit effective producers.
Although, currently he is not any of the :
Officers & Directors
Dane Leavitt, Chief Executive Officer
Eric Leavitt, President
Mark Kenney, Chief Financial Officer
Bruce Crankshaw, Chief Operating Officer
Kelly Russell, Chief Affiliation Officer
Mark Leavitt, Affiliation Marketing Director
Caylor Dalley, Senior Executive Vice President
Rod Leavitt, Senior Executive Vice President
Vance Smith, Senior Executive Vice President
Nate Esplin, Treasurer
Mike Chidester, General Counsel
Board of Directors
Dixie Leavitt
Dane Leavitt
Eric Leavitt
Mark Leavitt
Kelly Russell
Rod Leavitt
Calvin Barlocker
David Leavitt
Matthew Leavitt
Apparently he states the reason our Health Care is in a crisis is becuase of government progrmas. Funny, I thought it has been Market Driven.
Lets just look at his company for the last 18years:
Moving forward: Since year-end 1989 the Leavitt Group has grown from 29 agencies to 71 agencies in 115 locations. Annualized premiums have climbed from $8 million to $1.2 billion. Throughout this period of growth and success, agency profitability ratios have remained well above industry averages. Leavitt Group Enterprises continues its pattern of carefully expanding into new areas by working with qualified individuals to create or acquire independent insurance agencies and to recruit effective producers.
Although, currently he is not any of the :
Officers & Directors
Dane Leavitt, Chief Executive Officer
Eric Leavitt, President
Mark Kenney, Chief Financial Officer
Bruce Crankshaw, Chief Operating Officer
Kelly Russell, Chief Affiliation Officer
Mark Leavitt, Affiliation Marketing Director
Caylor Dalley, Senior Executive Vice President
Rod Leavitt, Senior Executive Vice President
Vance Smith, Senior Executive Vice President
Nate Esplin, Treasurer
Mike Chidester, General Counsel
Board of Directors
Dixie Leavitt
Dane Leavitt
Eric Leavitt
Mark Leavitt
Kelly Russell
Rod Leavitt
Calvin Barlocker
David Leavitt
Matthew Leavitt
JUST Follow the Money......This is our Secretary of DHHS
HEALTH CARE: MARKET DRIVEN
Of course, let's really take a look at the SEC of DHHS record of CONNECTIONS & Contributions
Mike Leavitt was Utah’s governor for 11 years until 2003, when he joined the Bush administration as administrator of the Environmental Protection Agency. Leavitt took over the Department of Health and Human Services from departing Secretary Tommy Thompson. The department has more than 67,000 employees and a 2005 budget of $580 billion. Prior to entering public service, Leavitt headed the Leavitt Group, a regional insurance provider in Utah. Leavitt took over an agency that critics of the Bush administration charged was too sympathetic to the agenda of corporations and special interests. One of his biggest jobs was to implement President Bush’s controversial prescription drug card program, which took effect in 2006. Leavitt raised $1.9 million in his final campaign for governor in 2000, about $1.1 million more than any other gubernatorial candidate during that election cycle, according to the Institute on Money in State Politics. Candidate and party committees provided about $1.2 million of Leavitt’s campaign contributions. The television and movie industry was Leavitt’s next highest contributor, having given about $50,000. The state is home to the popular Sundance Film Festival.
Feel free to distribute or cite this material, but please credit the Center for Responsive Politics.
Of course, let's really take a look at the SEC of DHHS record of CONNECTIONS & Contributions
Mike Leavitt was Utah’s governor for 11 years until 2003, when he joined the Bush administration as administrator of the Environmental Protection Agency. Leavitt took over the Department of Health and Human Services from departing Secretary Tommy Thompson. The department has more than 67,000 employees and a 2005 budget of $580 billion. Prior to entering public service, Leavitt headed the Leavitt Group, a regional insurance provider in Utah. Leavitt took over an agency that critics of the Bush administration charged was too sympathetic to the agenda of corporations and special interests. One of his biggest jobs was to implement President Bush’s controversial prescription drug card program, which took effect in 2006. Leavitt raised $1.9 million in his final campaign for governor in 2000, about $1.1 million more than any other gubernatorial candidate during that election cycle, according to the Institute on Money in State Politics. Candidate and party committees provided about $1.2 million of Leavitt’s campaign contributions. The television and movie industry was Leavitt’s next highest contributor, having given about $50,000. The state is home to the popular Sundance Film Festival.
Feel free to distribute or cite this material, but please credit the Center for Responsive Politics.
Thursday, July 19, 2007
CRITICAL CONDITION: HOW HEALTH CARE IN AMERICA BECAME BIG BUSINESS AND BAD MEDICINE
“Bestselling investigative journalists Barlett and Steele (America: What Went Wrong?) deliver a devastating indictment, supported by excellent research, of a health-care system that they say is failing to provide first-rate services to its citizens. . .” --Publishers Weekly.
“. . .in Critical Condition, Barlett and Steele pan their unsparing searchlight across the whole landscape of corporate medicine: hospitals, HMOs, physicians and the ubiquitous pharmaceutical industry.” --San Diego Tribune.
“If only all journalists demonstrated the expertise of Barlett and Steele, the world would be a better place.” --Baltimore Sun.
“The U.S. health care system described in Critical Condition is somewhere between dead and a persistent vegetative state. . . Barlett and Steele, famous investigative journalists, are searing in their indictment of the system.“ -- Minneapolis Star-Tribune. “ Problems with health care in the United States seemingly are no longer news. . .But when Barlett-Steele write about those problems, almost nothing seems old. Part of their successful formula is relentless, long-term reporting that includes human sources and documents undiscovered by other journalists.” -- Houston Chronicle.
“. . .in Critical Condition, Barlett and Steele pan their unsparing searchlight across the whole landscape of corporate medicine: hospitals, HMOs, physicians and the ubiquitous pharmaceutical industry.” --San Diego Tribune.
“If only all journalists demonstrated the expertise of Barlett and Steele, the world would be a better place.” --Baltimore Sun.
“The U.S. health care system described in Critical Condition is somewhere between dead and a persistent vegetative state. . . Barlett and Steele, famous investigative journalists, are searing in their indictment of the system.“ -- Minneapolis Star-Tribune. “ Problems with health care in the United States seemingly are no longer news. . .But when Barlett-Steele write about those problems, almost nothing seems old. Part of their successful formula is relentless, long-term reporting that includes human sources and documents undiscovered by other journalists.” -- Houston Chronicle.
America: What Went Wrong?
“George Bush and Bill Clinton should take a day off to read America: What Went Wrong? . . .Then they should tell us how they plan to start making things right.” -- Boston Globe.
“Donald L. Barlett and James B. Steele's lively and accessible Critical Condition … dissects the consequences of privatizing many medical institutions, including hospitals, HMOs, physician practices and nursing homes. They argue that this conversion to market-driven medicine caused many of today's deficiencies.” -- Washington Post.
“Donald L. Barlett and James B. Steele's lively and accessible Critical Condition … dissects the consequences of privatizing many medical institutions, including hospitals, HMOs, physician practices and nursing homes. They argue that this conversion to market-driven medicine caused many of today's deficiencies.” -- Washington Post.
Bush flew to Melbourne, FL on a NCFE jet
September 2002
Salt Lake City Deseret News reporting (Cox News Service) that Gov. Jeb Bush in September flew to Melbourne on a National Century Financial jet.
Salt Lake City Deseret News reporting (Cox News Service) that Gov. Jeb Bush in September flew to Melbourne on a National Century Financial jet.
Blame NCFE for the Healthcare Industry Bankruptcies? I don't think so...
Former National Century execs charged in $3B case
Posted 5/22/2006
By Edward Iwata, USA TODAY
More than 200 health care providers filed for bankruptcy protection after National Century's fell apart, the SEC said.
Do they really think this is the cause of the Healthcare Bankruptcies? Think again
Posted 5/22/2006
By Edward Iwata, USA TODAY
More than 200 health care providers filed for bankruptcy protection after National Century's fell apart, the SEC said.
Do they really think this is the cause of the Healthcare Bankruptcies? Think again
More Dots to connect....Bush & NCFE
Former National Century execs charged in $3B case
Posted 5/22/2006 10:38 PM ET
By Edward Iwata, USA TODAY
In what the FBI calls its largest investigation ever of a privately held company, seven former executives of National Century Financial Enterprises in Dublin, Ohio, were charged in a $3 billion accounting scheme, an indictment unsealed Monday says.
Lance Poulsen, the 62-year-old former CEO of National Century, was charged with 47 counts of securities, wire and mail fraud and money laundering.
Before the company's sudden financial collapse in 2002, Poulsen was a well-known figure in Florida business and political circles, hosting fundraisers and hobnobbing with Florida Gov. Jeb Bush. ........Last year, the Securities and Exchange Commission filed civil securities fraud charges against Poulsen, Ayers, Parrett and Speer. More than 200 health care providers filed for bankruptcy protection after National Century's fell apart, the SEC said.
Posted 5/22/2006 10:38 PM ET
By Edward Iwata, USA TODAY
In what the FBI calls its largest investigation ever of a privately held company, seven former executives of National Century Financial Enterprises in Dublin, Ohio, were charged in a $3 billion accounting scheme, an indictment unsealed Monday says.
Lance Poulsen, the 62-year-old former CEO of National Century, was charged with 47 counts of securities, wire and mail fraud and money laundering.
Before the company's sudden financial collapse in 2002, Poulsen was a well-known figure in Florida business and political circles, hosting fundraisers and hobnobbing with Florida Gov. Jeb Bush. ........Last year, the Securities and Exchange Commission filed civil securities fraud charges against Poulsen, Ayers, Parrett and Speer. More than 200 health care providers filed for bankruptcy protection after National Century's fell apart, the SEC said.
Why new Laws for Fraud Prevention in Los Angeles & Houston ONLY?
Senior Citizen Alerts
Fraud of Senior Citizens by Home Health Agencies is Target for Government Initiative
Initial efforts to focus on Greater Los Angeles and Houston areas
July 17, 2007 – An alarm about fraud of senior citizens by home health care providers was raised today by an announcement that Health and Human Services will begin an initiative designed to protect Medicare beneficiaries from fraudulent Home Health Agency (HHA) providers.
This two-year project will focus on preventing deceptive providers from operating in the greater Los Angeles and Houston areas, according to HHS Secretary Michael Leavitt.
“HHS is working to protect the public from fraud by stopping it before it happens,” Leavitt said.
“Our joint effort with the Department of Justice shows that we have zero tolerance for those who would prey on the system. This demonstration project works to bar unlawful Home Health Agencies from entering the Medicare billing system.”
In May, HHS and the Department of Justice announced the establishment of a multi-agency team of federal, state and local investigators designed specifically to combat Medicare fraud through the use of real-time analysis of Medicare billing.
The HHA project follows the announcement of a demonstration project targeting another high-risk industry, fraudulent billing by suppliers of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) in South Florida and Los Angeles. The HHA demonstration is being implemented in the greater Los Angeles and Houston areas, which have shown a high frequency of home health care fraud.
The Centers for Medicare & Medicaid Services (CMS) will now require home health care providers who operate in the greater Los Angeles and Houston areas to immediately resubmit applications to be considered a qualified Medicare HHA.
Those who fail to reapply within 60 days of receiving a notice to reapply from CMS will have their Medicare billing privileges revoked.
Also, home health care providers that fail to report a change in ownership or change of address; have owners, partners, directors or managing employees who have had a felony conviction within the last 10 years; or, no longer meet each and every provider enrollment requirement; will have their billing privileges revoked.
In addition to the reapplication process, the HHA demonstration will require a State survey for any HHA that underwent an ownership change within the last two years.
http://www.seniorjournal.com/NEWS/Al...udOfSenCit.htm
Fraud of Senior Citizens by Home Health Agencies is Target for Government Initiative
Initial efforts to focus on Greater Los Angeles and Houston areas
July 17, 2007 – An alarm about fraud of senior citizens by home health care providers was raised today by an announcement that Health and Human Services will begin an initiative designed to protect Medicare beneficiaries from fraudulent Home Health Agency (HHA) providers.
This two-year project will focus on preventing deceptive providers from operating in the greater Los Angeles and Houston areas, according to HHS Secretary Michael Leavitt.
“HHS is working to protect the public from fraud by stopping it before it happens,” Leavitt said.
“Our joint effort with the Department of Justice shows that we have zero tolerance for those who would prey on the system. This demonstration project works to bar unlawful Home Health Agencies from entering the Medicare billing system.”
In May, HHS and the Department of Justice announced the establishment of a multi-agency team of federal, state and local investigators designed specifically to combat Medicare fraud through the use of real-time analysis of Medicare billing.
The HHA project follows the announcement of a demonstration project targeting another high-risk industry, fraudulent billing by suppliers of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) in South Florida and Los Angeles. The HHA demonstration is being implemented in the greater Los Angeles and Houston areas, which have shown a high frequency of home health care fraud.
The Centers for Medicare & Medicaid Services (CMS) will now require home health care providers who operate in the greater Los Angeles and Houston areas to immediately resubmit applications to be considered a qualified Medicare HHA.
Those who fail to reapply within 60 days of receiving a notice to reapply from CMS will have their Medicare billing privileges revoked.
Also, home health care providers that fail to report a change in ownership or change of address; have owners, partners, directors or managing employees who have had a felony conviction within the last 10 years; or, no longer meet each and every provider enrollment requirement; will have their billing privileges revoked.
In addition to the reapplication process, the HHA demonstration will require a State survey for any HHA that underwent an ownership change within the last two years.
http://www.seniorjournal.com/NEWS/Al...udOfSenCit.htm
Wednesday, July 18, 2007
Dots to Connect......James K Happ
Source:
FOR IMMEDIATE RELEASE
TUESDAY, JULY 10, 2007
http://www.usdoj.gov/usao/ohs
SUPERSEDING INDICTMENT CHARGES FORMER EXECUTIVES OF HEALTH CARE FINANCING COMPANY WITH CONSPIRACY, FRAUD, MONEY LAUNDERING
COLUMBUS – A federal grand jury here today returned a superseding indictment charging eight former executives of National Century Financial Enterprises (NCFE) with conspiring to defraud investors by diverting millions of dollars in investors’ funds, fabricating data in investor reports, and moving money back and forth between accounts in order to conceal investor fund shortfalls. NCFE, based in Dublin, Ohio, was one of the largest healthcare finance companies in the United States until it filed for bankruptcy in November, 2002. All defendants, except for Happ, were initially indicted in May, 2006. United States District Judge Algenon L. Marbley will preside over the case which is scheduled for trial on November 5, 2007.
( James K Happ) ........
Now pay attention to who James K Happ really is.......
Source : ANNUAL MEETING OF STOCKHOLDERS-SEPTEMBER 9, 2003-Med Diversified Inc.
Mr. Happ also served as chief financial officer of the
Dallas-based Columbia Homecare Group, Inc., a home care company with more than 500 locations nationwide and more than $1 billion in revenue in 1997. In this role, he directed the company through the challenging reimbursement climate, known as the interim payment system, and participated in the divestiture of all of Columbia/HCA's home care operations.
Funny,,,,,He left Columbia/HCA and went over to NCFE.
SMELL A RAT????
More to come........
FOR IMMEDIATE RELEASE
TUESDAY, JULY 10, 2007
http://www.usdoj.gov/usao/ohs
SUPERSEDING INDICTMENT CHARGES FORMER EXECUTIVES OF HEALTH CARE FINANCING COMPANY WITH CONSPIRACY, FRAUD, MONEY LAUNDERING
COLUMBUS – A federal grand jury here today returned a superseding indictment charging eight former executives of National Century Financial Enterprises (NCFE) with conspiring to defraud investors by diverting millions of dollars in investors’ funds, fabricating data in investor reports, and moving money back and forth between accounts in order to conceal investor fund shortfalls. NCFE, based in Dublin, Ohio, was one of the largest healthcare finance companies in the United States until it filed for bankruptcy in November, 2002. All defendants, except for Happ, were initially indicted in May, 2006. United States District Judge Algenon L. Marbley will preside over the case which is scheduled for trial on November 5, 2007.
( James K Happ) ........
Now pay attention to who James K Happ really is.......
Source : ANNUAL MEETING OF STOCKHOLDERS-SEPTEMBER 9, 2003-Med Diversified Inc.
Mr. Happ also served as chief financial officer of the
Dallas-based Columbia Homecare Group, Inc., a home care company with more than 500 locations nationwide and more than $1 billion in revenue in 1997. In this role, he directed the company through the challenging reimbursement climate, known as the interim payment system, and participated in the divestiture of all of Columbia/HCA's home care operations.
Funny,,,,,He left Columbia/HCA and went over to NCFE.
SMELL A RAT????
More to come........
Tuesday, July 17, 2007
Crescent Capital Investments ...
Tender Loving Care Health Care Services, Inc. Company Profile
A little TLC goes a long way. Tender Loving Care Health Care Services provides home health care services and staff from nearly 70 offices in about 20 states. The company offers disease management, cardiac care, pulmonary and wound management, infusion therapy, respiratory therapy, hospice support, and patient and family counseling. Tender Loving Care Health Care Services also provides continuing education programs (disease management and specialized patient care) for nurses through its Tender Loving Care Staff Builders program. Crescent Capital Investments bought the company out of bankruptcy in 2005.
A little TLC goes a long way. Tender Loving Care Health Care Services provides home health care services and staff from nearly 70 offices in about 20 states. The company offers disease management, cardiac care, pulmonary and wound management, infusion therapy, respiratory therapy, hospice support, and patient and family counseling. Tender Loving Care Health Care Services also provides continuing education programs (disease management and specialized patient care) for nurses through its Tender Loving Care Staff Builders program. Crescent Capital Investments bought the company out of bankruptcy in 2005.
Tender Loving Care
Form:8-K Filing Date:2/13/2004
Continuecare Corp
Exhibit 2.2
Re: Sunset Harbor Home Health, Inc., a Florida corporation ("Sunset
Harbor")
This Letter Agreement is entered into as of the 15th day of December, 2003,
by and between Sunset Harbor and TLC Medicare Services of Dade, Inc. d/b/a
Tender Loving Care ("Tender Loving Care").
Sunset Harbor owns and operates a Medicare certified home health agency in
Miami-Dade County, Florida (the "Business"). Upon a future date, which is to be
determined, Sunset Harbor intends to transfer its Medicare fee-for-service
component of its Business. As consideration for the transfer of the Medicare
fee-for-service component of the Business, Tender Loving Care, subject to the
terms and conditions of this Letter Agreement, will hire certain employees of
Sunset Harbor thereby eliminating Sunset Harbor's cost and liability associated
with payroll, benefits and severance of those certain employees. Tender Loving
Care will not acquire any of the assets or liabilities of the Business, other
than those specifically detailed in this Letter Agreement.
....................
Sincerely,
TLC Medicare Services of Dade,
Inc. d/b/a Tender Loving Care
By: /s/ James K. Happ
James K. Happ,
Chairman and CEO
Continuecare Corp
Exhibit 2.2
Re: Sunset Harbor Home Health, Inc., a Florida corporation ("Sunset
Harbor")
This Letter Agreement is entered into as of the 15th day of December, 2003,
by and between Sunset Harbor and TLC Medicare Services of Dade, Inc. d/b/a
Tender Loving Care ("Tender Loving Care").
Sunset Harbor owns and operates a Medicare certified home health agency in
Miami-Dade County, Florida (the "Business"). Upon a future date, which is to be
determined, Sunset Harbor intends to transfer its Medicare fee-for-service
component of its Business. As consideration for the transfer of the Medicare
fee-for-service component of the Business, Tender Loving Care, subject to the
terms and conditions of this Letter Agreement, will hire certain employees of
Sunset Harbor thereby eliminating Sunset Harbor's cost and liability associated
with payroll, benefits and severance of those certain employees. Tender Loving
Care will not acquire any of the assets or liabilities of the Business, other
than those specifically detailed in this Letter Agreement.
....................
Sincerely,
TLC Medicare Services of Dade,
Inc. d/b/a Tender Loving Care
By: /s/ James K. Happ
James K. Happ,
Chairman and CEO
Connecting the DOTS.....to HCA James K Happ
James Happ, vice president of servicer operations since 1999,
was promoted to executive vice president of servicer operations,
responsible for processing, lock box and accounts receivable functions.
Prior to joining NCFE, Happ was chief financial officer of
Columbia/HCA's Homecare Group
based in Dallas, Texas. He holds a bachelor of science degree in
business administration with a major in accounting from
Miami University, Oxford Ohio, and a master's of business administration degree
from Nova University in Fort Lauderdale, Florida.
Prior to joining Med Diversified, 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. Mr. Happ has substantial experience in the home health care industry. Previously,
he served as chief financial officer of the
Dallas-based Columbia Homecare Group, Inc.,
a home care company with more than 500 locations nationally and more than
$1 billion in revenue in 1997. In this role, he directed the company through the
challenging reimbursement climate known as the interim payment system, and he
participated in the divestiture of all of Columbia/HCA's home care operations. He
also held senior executive positions with Olsten of Columbus, Inc., a home care
and staffing services franchise of the Olsten Corporation,
and with Interim Services, Inc.,
a Florida-based Staffing and home care company.
was promoted to executive vice president of servicer operations,
responsible for processing, lock box and accounts receivable functions.
Prior to joining NCFE, Happ was chief financial officer of
Columbia/HCA's Homecare Group
based in Dallas, Texas. He holds a bachelor of science degree in
business administration with a major in accounting from
Miami University, Oxford Ohio, and a master's of business administration degree
from Nova University in Fort Lauderdale, Florida.
Prior to joining Med Diversified, 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. Mr. Happ has substantial experience in the home health care industry. Previously,
he served as chief financial officer of the
Dallas-based Columbia Homecare Group, Inc.,
a home care company with more than 500 locations nationally and more than
$1 billion in revenue in 1997. In this role, he directed the company through the
challenging reimbursement climate known as the interim payment system, and he
participated in the divestiture of all of Columbia/HCA's home care operations. He
also held senior executive positions with Olsten of Columbus, Inc., a home care
and staffing services franchise of the Olsten Corporation,
and with Interim Services, Inc.,
a Florida-based Staffing and home care company.
Richard Rainwater, GW Bush & HCA
Right on the Money: The George W. Bush Profile
From The Buying of the President 2000
Part 2 of 3
When Bush first embarked on the deal to buy the Texas Rangers in 1988, he already had his eye on the governor's mansion in Austin. But he knew that to have a shot at winning, he would need better credentials than a string of unsuccessful oil companies and a failed bid for a seat in the U.S. House of Representatives. In 1989 he told Time magazine, "My biggest liability in Texas is the question, 'What's the boy ever done?' He could be riding on Daddy's name."
But his father's connections were instrumental in helping Bush overcome that perception. Back in 1973, when his father was the chairman of the RNC, Bush befriended one of his father's assistants, Karl Rove. Rove cut his teeth alongside the senior Bush's chief political strategist, Lee Atwater. Rove would become George W.'s own Atwater, helping to run his 1978 bid for Congress and laying the groundwork for his 1994 run for governor. As the Rangers deal got underway, Rove told Bush that baseball was his ticket to the big-time. "It gives him . . . exposure and gives him something that will be easily recalled by people," Rove said.
Rove's calculation turned out to be right on the money.
Career Patrons
Read about the top 25 career patrons of George W. Bush.
It all began in fall of 1988, when William DeWitt, Jr., Bush's partner in Spectrum 7, called to let him know that Eddie Chiles, the owner of the Texas Rangers, was looking for a buyer. Chiles, a family friend who called Bush "Young Pup" when he was a kid, was eager to sell to Bush. And so Bush and DeWitt quickly assembled a team of investors. They hit a snag when Peter Ueberroth, the commissioner of Major League Baseball, told them he wouldn't approve the sale without more investors from Texas. Ueberroth believed that local owners would be less likely to relocate the team. The commissioner, a GOP donor himself, wanted the deal approved before his term expired at the end of 1989, and so he and American League president Bobby Brown took it on themselves to line up Fort Worth financier Richard E. Rainwater.
Rainwater and Bush weren't exactly strangers. Rainwater was a contributor to his father's presidential campaigns and, later, an overnight guest in the Bush White House. Until 1986 he was the chief money manager for the Bass brothers, the Fort Worth billionaires who financed Harken's drilling in Bahrain. By 1988, Rainwater was managing his own fortune. He agreed to put money in the Rangers, but only if his trusted associate, Edward "Rusty" Rose, was installed as general managing partner along with Bush.
With this arrangement in place, Bush and his partners bought the team from Chiles on April 21, 1989, for $86 million. To scrape together his $500,000 stake in the Rangers, Bush borrowed the money from a bank in Midland where he once was a director. He owned 1.8 percent of the Rangers. (He later invested an additional $106,302).
Bush made up for his minor stake by taking more than his share of credit for bringing the owners together. "I wasn't going to let this deal fail," he said last year. "I wanted to put together the group. I was tenacious."
Others close to the deal paint a different picture.
"George W. Bush deserves great credit for the development of the franchise," Ueberroth said. "However, the bringing together of the buying group was the result of Richard Rainwater, Rusty Rose, Dr. Bobby Brown, and the commissioner."
Nonetheless, Bush's partners rewarded him by upping his ownership stake in the Rangers, giving him another ten percent of the team.
"He had a well-known name, and that created interest in the franchise," Tom Schieffer, the Rangers president, said last year. "It gave us a little celebrity."
Usually parked in a front-row seat by the dugout, with his feet up and a bag of peanuts perched in his lap, Bush put a congenial face on a crooked deal, at the heart of which lay a complicated land play.
When they bought the team, the Rangers were playing in an old minor-league stadium. It didn't have the fancy sky boxes and other amenities that helped make other franchises much more profitable. As a result the team couldn't compete with other big-city teams for good players. But the new owners weren't willing to finance the construction of a new ballpark. They decided to hit up taxpayers for the money.
First, the new owners threatened to move the team out of Arlington, Texas, sending local officials scurrying to put together a deal they couldn't refuse. Under the resulting agreement, the taxpayers of Arlington would raise $135 million, the bulk of the cost of construction, through a hike in sales taxes. During a campaign to sell the sales tax increase to Arlington voters, Mayor Richard Greene said the team owners would put $50 million of their own money into the deal up front. It didn't quite work out that way; the owners raised a hefty portion of their down payment from fans, through a one dollar surcharge on tickets.
The city spent $150,000 on an advertising campaign to persuade voters.. Opponents of the deal couldn't compete with glossy brochures, telemarketing calls, and a "Hands Around Arlington Day." On January 19, 1991, citizens of Arlington voted two-to-one to approve a sales-tax increase dedicated to building the new park.
Between the sales tax revenue, state tax exemptions, and other financial incentives, Texas taxpayers handed the privately owned Rangers more than $200 million in public subsidies. Taxpayers didn't get a return from the stadium's surging new revenues, either. The profits went almost exclusively to the team's already wealthy owners.
The stadium's lease is a case in point. Unlike an apartment tenant, the rent that the team's owners pay is applied toward purchasing the stadium. The maximum yearly rent and maintenance fees for the Rangers are $5 million; the total purchase price for the Ballpark at Arlington is $60 million. Thus, after twelve years the owners will have bought the stadium for less than half of what taxpayers spent on it.
But Bush and his partners weren't satisfied lining their pockets with average Texans' hard-earned cash. They wanted land around the stadium to further boost its value. To that end, they orchestrated a land grab that shortchanged local landowners by several million dollars.
As part of the deal, the city created a separate corporation, the Arlington Sports Facilities Development Authority (ASFDA), to manage construction. Using authority granted to it by the city, ASFDA seized several tracts of land around the stadium site for parking and future development.
While on paper ASFDA was a public entity, in practice it was merely a puppet for Bush and his partners. According to documents obtained by the Center, the owners would identify the land they wanted to acquire. A Rangers owner, realtor Mike Reilly, would then offer to buy the parcels for prices he set, which in several cases were well below what the owners believed their property was worth. If the landowners refused to sell to the Rangers at the offered price, AFSDA could take possession of their land and leave the price to be determined in court.
Several of the landowners took ASFDA to court over the seizures and won settlements totaling $11 million. In a final insult to taxpayers, the Rangers resisted paying the settlements, trying to pass off yet another cost to Arlington residents. (In 1999 the Rangers, under new ownership, finally agreed to pay up.)
When confronted with the seamy details of the land grab, Bush professed ignorance. But Tom Schieffer, the team's president, has testified that he kept Bush aware of the land transfers. In October 1990, Bush also let slip to a reporter for the Fort Worth Star- Telegram, "The idea of making a land play, absolutely, to plunk the field down in the middle of a big piece of land, that's kind of always been the strategy."
It was a strategy that would have an enormous payoff for Bush personally.
After he became governor of Texas, Bush put his all of his assets into a blind trust, with one notable exception: his stake in the Rangers. Schieffer kept Bush apprised of the owner's efforts to sell the team to Thomas Hicks, the chairman of Hicks, Muse, Tate and Furst, Inc., a firm that specializes in leveraged buyouts and owns AMFM, Inc., the nation's largest chain of radio stations. Hicks and employees of his companies are Bush's No. 4 career patron, having given him at least $290,400.
In 1998, Hicks helped provide Bush with an even greater windfall. He bought the Texas Rangers for $250 million, three times what Bush and his partners had paid ten years earlier. The new stadium and the real estate around it greatly boosted the final sale price. And, since his partners had upped Bush's stake in the team from 1.8 to 11.8 percent, his cut from the proceeds of the sale was $14.9 million, a twenty-five-fold return on his investment of $606,302. Rainwater, who had put far more money into the team than Bush, made $25 million.
Just as important as the cash, however, was the cachet that came with the deal's success. The Ballpark at Arlington finally opened in April 1994, just as Bush was running for governor. He touted the new stadium as a win-win proposition for taxpayers and the team. "Am I going to benefit off it financially?" he asked reporters. He answered his own question: "I hope so." Four years later, everyone would know by how much.
* * *
In his first race for political office in sixteen years, Bush showed that he had learned a lot all those years on the sidelines of his father's campaigns. He went up against Governor Ann Richards, a sharp-tongued Texas Democrat who, at the 1988 Democratic National Convention, took a shot at his father by saying, "Poor George, he can't help it, he was born with a silver foot in his mouth." She gave the younger George much the same treatment with nicknames like "shrub" (little Bush). But Bush didn't respond. Instead he stayed on four themes: frivolous lawsuits, welfare reform, juvenile justice, and education. His focus prompted Richards to comment years later, "If you said to George, 'What time is it?' he would say, 'We must teach our children to read.'" But his message reached voters, and in November they elected him with nearly 54 percent of the vote.
When Bush moved into the governor's mansion in January 1995, he arrived indebted to dozens of industries and wealthy patrons. He repaid some of his supporters with choice political appointments.
One of the most prestigious of political appointments in Texas is a seat on the University of Texas Board of Regents. The board is filled with Bush's top-dollar donors. The chair of the U.T. Regents is Donald Evans, Bush's old friend and longtime fund-raiser who, as the finance chairman for Bush's presidential bid, has overseen the campaign's record-shattering fund-raising drive.
Evans is the chief executive officer of Tom Brown, Inc., an oil and gas company based in Midland, Texas. In 1989, Bush joined the board as an outside director. He received $12,000 a year plus stock options for attending several meetings and participating in conference calls. He also sat on the compensation committee that boosted Evans's salary by $75,000 and awarded him a bonus of $35,000 before Bush left the company in 1994.
Shortly after he was elected governor of Texas, Bush sold his Tom Brown holdings for a profit of $297,550.
Another regent and top Bush patron is A.R. "Tony" Sanchez, the chairman and chief executive officer of Sanchez-O'Brien Oil and Gas Corporation. Sanchez started the company with his father and his father's business partner in 1974 after they discovered a major natural-gas source. Sanchez and his mother also own a controlling stake in International Bancshares Corporation, the holding company of International Bank of Commerce, a Texas banking chain founded by his father in 1966. Over Bush's career, Sanchez, members of his family, and employees of his companies have given him at least $320,150, making them his No. 2 career patron.
But Bush owed few people more than Richard E. Rainwater, the Fort Worth financier. "[Rainwater] just loves to make people rich," observed Alfred Checci, the former chairman of Northwest Airlines, who worked with Rainwater in the early 1980s. That's a passion Rainwater has had ample opportunity to indulge. When Rainwater started with the Bass brothers in 1970, they had an inheritance of $50 million. When he left in 1986, the family fortune had grown to at least $4 billion.
Rainwater provided much the same service for Bush. He was the man behind the Rangers deal that would ultimately net Bush a profit of more than $15 million. And when Bush was first elected governor, more than 60 percent of his income came from businesses in which he and Rainwater were partners, according to his 1994 financial disclosure statement.
Rainwater himself hails from modest roots. His father was a wholesale grocer and his mother worked at JC Penney to put him through school. At fifty-five, he still likes to cut million-dollar deals in faded jeans, tasseled loafers, and a baseball cap rather than a business suit.
Getting his name on a plaque wasn't going to cut it for the governor's personal rainmaker. With Bush in Austin, Rainwater soon found himself awash in potential windfalls. While some never materialized, many did.
One of Rainwater's first ventures after leaving Bass Enterprises was the creation of Columbia/HCA, Inc., which is now the nation's largest for-profit hospital chain. Columbia/HCA's operations were controversial from the start. Physicians at the hospital chain have a financial stake in the operation, which critics say carries the risk that they will put their own profits ahead of patient care. In 1997, federal agents raided Columbia/HCA facilities in Florida, Texas, and other states as part of an investigation, still ongoing, into whether the company had defrauded the federal government out of millions of dollars in Medicare reimbursements. The FBI, the Internal Revenue Service, and the Department of Health and Human Services are all involved in the probe.
In 1995, Bush vetoed a Patient Protection Act that, among other things, spelled out the obligations hospitals and health-care providers have to those who need medical care. In a written statement explaining his veto decision, the governor argued that the bill "unfairly impacts some health care providers while exempting others." He ultimately instructed his Insurance Commissioner to implement many of the bill's provisions as new state regulations. One notable exception was a provision that would have cut into the profits of Columbia/HCA.
The provision in question would have required health maintenance organizations to let patients see doctors outside their own networks. Giving patients this choice would undermine Columbia/HCA's ability to hammer out agreements with health maintenance organizations (HMOs) and preferred provider organizations (PPOs).
In 1997, Bush proposed in his biannual budget that the state look into privatizing Texas's mental-health hospitals, just as Rainwater was in the midst of building a mental-health-care chain. Rainwater launched an investment company in 1994, Crescent Real Estate Equities Company. Besides Rainwater, Crescent's management team included Bush's fellow Rangers owners Gerald Haddock and John Goff and Rangers lawyer William Miller. In 1997, Crescent purchased ninety-five mental-health hospitals from Magellan Health Care Services of Atlanta and also became a fifty-fifty partner in Magellan's Charter Behavioral Health Systems. It quickly became the nation's largest provider of private mental-health-care services. The governor's proposal was never enacted. Charter Behavioral struggled for profitability, and Crescent's plan to buy out Magellan for sole ownership of the chain soon collapsed.
In 1997, Bush backed a plan to cut state property taxes that would have saved Crescent some $2.5 million in state taxes. Though the Texas House passed the proposal, the Texas Senate ended up scuttling it and passing a scaled-back version.
Later that year, however, Bush signed a bill into law that produced a $10 million windfall for Crescent, and millions more for Ross Perot, Jr., and Thomas Hicks, the leveraged buyout expert who bought the Rangers from Bush and his partners in 1998. Perot, who owns the Dallas Mavericks basketball team, and Hicks, who owns the Dallas Stars hockey team, wanted to build a new stadium to enhance the value of their teams.
Just as with the Rangers deal, Dallas taxpayers were to foot most of the bill for the new sports arena. But before city officials could negotiate with the team's owners, the state legislature had to pass a bill allowing cities to raise taxes to finance the project. While the bill wended its way through the Texas Legislature, Rainwater, through Crescent, bought a 12 percent stake in the Mavericks. Under the purchase agreement, Crescent will get the $10 million when the arena is completed in the fall of 2001. Then the legislature passed the bill allowing the sales-tax hike and Bush signed it in June 1997.
When it comes to taxpayer money, Bush has been more than willing to use it to repay the largesse he's received over the years from his patrons. The Texas Teachers Retirement System, which manages the pension fund for the state's 800,000 public school teachers, sold two office buildings and a mortgage on a third to Crescent in 1996 and 1997 at a $70.4 million loss. As first reported by R.G. Ratcliffe of the Houston Chronicle, two of the sales were done without public bids, and the Teachers Retirement System refused to disclose what the initial bids were on the third. At the time of at least one of the sales, Bush owned about $100,000 worth of Crescent stock.
The University of Texas Investment Management Company, which manages the state university system's $12 billion worth of assets, sank at least $8.9 million into Crescent Real Estate. The company's chairman is none other than Hicks. Under Hicks's watch, UTIMCO has steered close to $1.7 billion of its assets into private investments; a third of that money has gone into funds run either by his business partners or by Bush patrons.
In July 1998, a month after Hicks purchased the Rangers from Bush and his partners, he led a meeting of UTIMCO directors hundreds of miles away from UTIMCO's office, in the boardroom of the Ballpark at Arlington. There, they approved a $96 million investment into Maverick Capital Fund of Dallas, a hedge fund run by Sam and Charles Wyly of Dallas. The Wyly brothers are ninth on Bush's list of career patrons.
Finally, nine years after its investment in Harken helped save Bush from financial ruin, Harvard Management Company got a deal on a piece of real estate it bought from the Texas Teachers Retirement System. In 1995 the TRS sold the Anatole Hotel in Dallas to a partnership that included the Crow family, which owns a controlling interest in Trammell Crow Company, one of the nation's top real estate management companies, and Harvard Management. Without taking bids, the TRS reportedly sold the hotel for $27 million less than it had spent to make improvements on the structure.
Harvard, Rainwater, and Hicks are not alone among Bush patrons who have received favors from the governor. Industries that have provided the bulk of Bush's campaign contributions have gotten his help in a variety of endeavors, from staving off pesky environmental regulations and shielding themselves from consumer lawsuits to driving off meddlesome investigators.
Continued
From The Buying of the President 2000
Part 2 of 3
When Bush first embarked on the deal to buy the Texas Rangers in 1988, he already had his eye on the governor's mansion in Austin. But he knew that to have a shot at winning, he would need better credentials than a string of unsuccessful oil companies and a failed bid for a seat in the U.S. House of Representatives. In 1989 he told Time magazine, "My biggest liability in Texas is the question, 'What's the boy ever done?' He could be riding on Daddy's name."
But his father's connections were instrumental in helping Bush overcome that perception. Back in 1973, when his father was the chairman of the RNC, Bush befriended one of his father's assistants, Karl Rove. Rove cut his teeth alongside the senior Bush's chief political strategist, Lee Atwater. Rove would become George W.'s own Atwater, helping to run his 1978 bid for Congress and laying the groundwork for his 1994 run for governor. As the Rangers deal got underway, Rove told Bush that baseball was his ticket to the big-time. "It gives him . . . exposure and gives him something that will be easily recalled by people," Rove said.
Rove's calculation turned out to be right on the money.
Career Patrons
Read about the top 25 career patrons of George W. Bush.
It all began in fall of 1988, when William DeWitt, Jr., Bush's partner in Spectrum 7, called to let him know that Eddie Chiles, the owner of the Texas Rangers, was looking for a buyer. Chiles, a family friend who called Bush "Young Pup" when he was a kid, was eager to sell to Bush. And so Bush and DeWitt quickly assembled a team of investors. They hit a snag when Peter Ueberroth, the commissioner of Major League Baseball, told them he wouldn't approve the sale without more investors from Texas. Ueberroth believed that local owners would be less likely to relocate the team. The commissioner, a GOP donor himself, wanted the deal approved before his term expired at the end of 1989, and so he and American League president Bobby Brown took it on themselves to line up Fort Worth financier Richard E. Rainwater.
Rainwater and Bush weren't exactly strangers. Rainwater was a contributor to his father's presidential campaigns and, later, an overnight guest in the Bush White House. Until 1986 he was the chief money manager for the Bass brothers, the Fort Worth billionaires who financed Harken's drilling in Bahrain. By 1988, Rainwater was managing his own fortune. He agreed to put money in the Rangers, but only if his trusted associate, Edward "Rusty" Rose, was installed as general managing partner along with Bush.
With this arrangement in place, Bush and his partners bought the team from Chiles on April 21, 1989, for $86 million. To scrape together his $500,000 stake in the Rangers, Bush borrowed the money from a bank in Midland where he once was a director. He owned 1.8 percent of the Rangers. (He later invested an additional $106,302).
Bush made up for his minor stake by taking more than his share of credit for bringing the owners together. "I wasn't going to let this deal fail," he said last year. "I wanted to put together the group. I was tenacious."
Others close to the deal paint a different picture.
"George W. Bush deserves great credit for the development of the franchise," Ueberroth said. "However, the bringing together of the buying group was the result of Richard Rainwater, Rusty Rose, Dr. Bobby Brown, and the commissioner."
Nonetheless, Bush's partners rewarded him by upping his ownership stake in the Rangers, giving him another ten percent of the team.
"He had a well-known name, and that created interest in the franchise," Tom Schieffer, the Rangers president, said last year. "It gave us a little celebrity."
Usually parked in a front-row seat by the dugout, with his feet up and a bag of peanuts perched in his lap, Bush put a congenial face on a crooked deal, at the heart of which lay a complicated land play.
When they bought the team, the Rangers were playing in an old minor-league stadium. It didn't have the fancy sky boxes and other amenities that helped make other franchises much more profitable. As a result the team couldn't compete with other big-city teams for good players. But the new owners weren't willing to finance the construction of a new ballpark. They decided to hit up taxpayers for the money.
First, the new owners threatened to move the team out of Arlington, Texas, sending local officials scurrying to put together a deal they couldn't refuse. Under the resulting agreement, the taxpayers of Arlington would raise $135 million, the bulk of the cost of construction, through a hike in sales taxes. During a campaign to sell the sales tax increase to Arlington voters, Mayor Richard Greene said the team owners would put $50 million of their own money into the deal up front. It didn't quite work out that way; the owners raised a hefty portion of their down payment from fans, through a one dollar surcharge on tickets.
The city spent $150,000 on an advertising campaign to persuade voters.. Opponents of the deal couldn't compete with glossy brochures, telemarketing calls, and a "Hands Around Arlington Day." On January 19, 1991, citizens of Arlington voted two-to-one to approve a sales-tax increase dedicated to building the new park.
Between the sales tax revenue, state tax exemptions, and other financial incentives, Texas taxpayers handed the privately owned Rangers more than $200 million in public subsidies. Taxpayers didn't get a return from the stadium's surging new revenues, either. The profits went almost exclusively to the team's already wealthy owners.
The stadium's lease is a case in point. Unlike an apartment tenant, the rent that the team's owners pay is applied toward purchasing the stadium. The maximum yearly rent and maintenance fees for the Rangers are $5 million; the total purchase price for the Ballpark at Arlington is $60 million. Thus, after twelve years the owners will have bought the stadium for less than half of what taxpayers spent on it.
But Bush and his partners weren't satisfied lining their pockets with average Texans' hard-earned cash. They wanted land around the stadium to further boost its value. To that end, they orchestrated a land grab that shortchanged local landowners by several million dollars.
As part of the deal, the city created a separate corporation, the Arlington Sports Facilities Development Authority (ASFDA), to manage construction. Using authority granted to it by the city, ASFDA seized several tracts of land around the stadium site for parking and future development.
While on paper ASFDA was a public entity, in practice it was merely a puppet for Bush and his partners. According to documents obtained by the Center, the owners would identify the land they wanted to acquire. A Rangers owner, realtor Mike Reilly, would then offer to buy the parcels for prices he set, which in several cases were well below what the owners believed their property was worth. If the landowners refused to sell to the Rangers at the offered price, AFSDA could take possession of their land and leave the price to be determined in court.
Several of the landowners took ASFDA to court over the seizures and won settlements totaling $11 million. In a final insult to taxpayers, the Rangers resisted paying the settlements, trying to pass off yet another cost to Arlington residents. (In 1999 the Rangers, under new ownership, finally agreed to pay up.)
When confronted with the seamy details of the land grab, Bush professed ignorance. But Tom Schieffer, the team's president, has testified that he kept Bush aware of the land transfers. In October 1990, Bush also let slip to a reporter for the Fort Worth Star- Telegram, "The idea of making a land play, absolutely, to plunk the field down in the middle of a big piece of land, that's kind of always been the strategy."
It was a strategy that would have an enormous payoff for Bush personally.
After he became governor of Texas, Bush put his all of his assets into a blind trust, with one notable exception: his stake in the Rangers. Schieffer kept Bush apprised of the owner's efforts to sell the team to Thomas Hicks, the chairman of Hicks, Muse, Tate and Furst, Inc., a firm that specializes in leveraged buyouts and owns AMFM, Inc., the nation's largest chain of radio stations. Hicks and employees of his companies are Bush's No. 4 career patron, having given him at least $290,400.
In 1998, Hicks helped provide Bush with an even greater windfall. He bought the Texas Rangers for $250 million, three times what Bush and his partners had paid ten years earlier. The new stadium and the real estate around it greatly boosted the final sale price. And, since his partners had upped Bush's stake in the team from 1.8 to 11.8 percent, his cut from the proceeds of the sale was $14.9 million, a twenty-five-fold return on his investment of $606,302. Rainwater, who had put far more money into the team than Bush, made $25 million.
Just as important as the cash, however, was the cachet that came with the deal's success. The Ballpark at Arlington finally opened in April 1994, just as Bush was running for governor. He touted the new stadium as a win-win proposition for taxpayers and the team. "Am I going to benefit off it financially?" he asked reporters. He answered his own question: "I hope so." Four years later, everyone would know by how much.
* * *
In his first race for political office in sixteen years, Bush showed that he had learned a lot all those years on the sidelines of his father's campaigns. He went up against Governor Ann Richards, a sharp-tongued Texas Democrat who, at the 1988 Democratic National Convention, took a shot at his father by saying, "Poor George, he can't help it, he was born with a silver foot in his mouth." She gave the younger George much the same treatment with nicknames like "shrub" (little Bush). But Bush didn't respond. Instead he stayed on four themes: frivolous lawsuits, welfare reform, juvenile justice, and education. His focus prompted Richards to comment years later, "If you said to George, 'What time is it?' he would say, 'We must teach our children to read.'" But his message reached voters, and in November they elected him with nearly 54 percent of the vote.
When Bush moved into the governor's mansion in January 1995, he arrived indebted to dozens of industries and wealthy patrons. He repaid some of his supporters with choice political appointments.
One of the most prestigious of political appointments in Texas is a seat on the University of Texas Board of Regents. The board is filled with Bush's top-dollar donors. The chair of the U.T. Regents is Donald Evans, Bush's old friend and longtime fund-raiser who, as the finance chairman for Bush's presidential bid, has overseen the campaign's record-shattering fund-raising drive.
Evans is the chief executive officer of Tom Brown, Inc., an oil and gas company based in Midland, Texas. In 1989, Bush joined the board as an outside director. He received $12,000 a year plus stock options for attending several meetings and participating in conference calls. He also sat on the compensation committee that boosted Evans's salary by $75,000 and awarded him a bonus of $35,000 before Bush left the company in 1994.
Shortly after he was elected governor of Texas, Bush sold his Tom Brown holdings for a profit of $297,550.
Another regent and top Bush patron is A.R. "Tony" Sanchez, the chairman and chief executive officer of Sanchez-O'Brien Oil and Gas Corporation. Sanchez started the company with his father and his father's business partner in 1974 after they discovered a major natural-gas source. Sanchez and his mother also own a controlling stake in International Bancshares Corporation, the holding company of International Bank of Commerce, a Texas banking chain founded by his father in 1966. Over Bush's career, Sanchez, members of his family, and employees of his companies have given him at least $320,150, making them his No. 2 career patron.
But Bush owed few people more than Richard E. Rainwater, the Fort Worth financier. "[Rainwater] just loves to make people rich," observed Alfred Checci, the former chairman of Northwest Airlines, who worked with Rainwater in the early 1980s. That's a passion Rainwater has had ample opportunity to indulge. When Rainwater started with the Bass brothers in 1970, they had an inheritance of $50 million. When he left in 1986, the family fortune had grown to at least $4 billion.
Rainwater provided much the same service for Bush. He was the man behind the Rangers deal that would ultimately net Bush a profit of more than $15 million. And when Bush was first elected governor, more than 60 percent of his income came from businesses in which he and Rainwater were partners, according to his 1994 financial disclosure statement.
Rainwater himself hails from modest roots. His father was a wholesale grocer and his mother worked at JC Penney to put him through school. At fifty-five, he still likes to cut million-dollar deals in faded jeans, tasseled loafers, and a baseball cap rather than a business suit.
Getting his name on a plaque wasn't going to cut it for the governor's personal rainmaker. With Bush in Austin, Rainwater soon found himself awash in potential windfalls. While some never materialized, many did.
One of Rainwater's first ventures after leaving Bass Enterprises was the creation of Columbia/HCA, Inc., which is now the nation's largest for-profit hospital chain. Columbia/HCA's operations were controversial from the start. Physicians at the hospital chain have a financial stake in the operation, which critics say carries the risk that they will put their own profits ahead of patient care. In 1997, federal agents raided Columbia/HCA facilities in Florida, Texas, and other states as part of an investigation, still ongoing, into whether the company had defrauded the federal government out of millions of dollars in Medicare reimbursements. The FBI, the Internal Revenue Service, and the Department of Health and Human Services are all involved in the probe.
In 1995, Bush vetoed a Patient Protection Act that, among other things, spelled out the obligations hospitals and health-care providers have to those who need medical care. In a written statement explaining his veto decision, the governor argued that the bill "unfairly impacts some health care providers while exempting others." He ultimately instructed his Insurance Commissioner to implement many of the bill's provisions as new state regulations. One notable exception was a provision that would have cut into the profits of Columbia/HCA.
The provision in question would have required health maintenance organizations to let patients see doctors outside their own networks. Giving patients this choice would undermine Columbia/HCA's ability to hammer out agreements with health maintenance organizations (HMOs) and preferred provider organizations (PPOs).
In 1997, Bush proposed in his biannual budget that the state look into privatizing Texas's mental-health hospitals, just as Rainwater was in the midst of building a mental-health-care chain. Rainwater launched an investment company in 1994, Crescent Real Estate Equities Company. Besides Rainwater, Crescent's management team included Bush's fellow Rangers owners Gerald Haddock and John Goff and Rangers lawyer William Miller. In 1997, Crescent purchased ninety-five mental-health hospitals from Magellan Health Care Services of Atlanta and also became a fifty-fifty partner in Magellan's Charter Behavioral Health Systems. It quickly became the nation's largest provider of private mental-health-care services. The governor's proposal was never enacted. Charter Behavioral struggled for profitability, and Crescent's plan to buy out Magellan for sole ownership of the chain soon collapsed.
In 1997, Bush backed a plan to cut state property taxes that would have saved Crescent some $2.5 million in state taxes. Though the Texas House passed the proposal, the Texas Senate ended up scuttling it and passing a scaled-back version.
Later that year, however, Bush signed a bill into law that produced a $10 million windfall for Crescent, and millions more for Ross Perot, Jr., and Thomas Hicks, the leveraged buyout expert who bought the Rangers from Bush and his partners in 1998. Perot, who owns the Dallas Mavericks basketball team, and Hicks, who owns the Dallas Stars hockey team, wanted to build a new stadium to enhance the value of their teams.
Just as with the Rangers deal, Dallas taxpayers were to foot most of the bill for the new sports arena. But before city officials could negotiate with the team's owners, the state legislature had to pass a bill allowing cities to raise taxes to finance the project. While the bill wended its way through the Texas Legislature, Rainwater, through Crescent, bought a 12 percent stake in the Mavericks. Under the purchase agreement, Crescent will get the $10 million when the arena is completed in the fall of 2001. Then the legislature passed the bill allowing the sales-tax hike and Bush signed it in June 1997.
When it comes to taxpayer money, Bush has been more than willing to use it to repay the largesse he's received over the years from his patrons. The Texas Teachers Retirement System, which manages the pension fund for the state's 800,000 public school teachers, sold two office buildings and a mortgage on a third to Crescent in 1996 and 1997 at a $70.4 million loss. As first reported by R.G. Ratcliffe of the Houston Chronicle, two of the sales were done without public bids, and the Teachers Retirement System refused to disclose what the initial bids were on the third. At the time of at least one of the sales, Bush owned about $100,000 worth of Crescent stock.
The University of Texas Investment Management Company, which manages the state university system's $12 billion worth of assets, sank at least $8.9 million into Crescent Real Estate. The company's chairman is none other than Hicks. Under Hicks's watch, UTIMCO has steered close to $1.7 billion of its assets into private investments; a third of that money has gone into funds run either by his business partners or by Bush patrons.
In July 1998, a month after Hicks purchased the Rangers from Bush and his partners, he led a meeting of UTIMCO directors hundreds of miles away from UTIMCO's office, in the boardroom of the Ballpark at Arlington. There, they approved a $96 million investment into Maverick Capital Fund of Dallas, a hedge fund run by Sam and Charles Wyly of Dallas. The Wyly brothers are ninth on Bush's list of career patrons.
Finally, nine years after its investment in Harken helped save Bush from financial ruin, Harvard Management Company got a deal on a piece of real estate it bought from the Texas Teachers Retirement System. In 1995 the TRS sold the Anatole Hotel in Dallas to a partnership that included the Crow family, which owns a controlling interest in Trammell Crow Company, one of the nation's top real estate management companies, and Harvard Management. Without taking bids, the TRS reportedly sold the hotel for $27 million less than it had spent to make improvements on the structure.
Harvard, Rainwater, and Hicks are not alone among Bush patrons who have received favors from the governor. Industries that have provided the bulk of Bush's campaign contributions have gotten his help in a variety of endeavors, from staving off pesky environmental regulations and shielding themselves from consumer lawsuits to driving off meddlesome investigators.
Continued
Monday, July 16, 2007
Purchasing accounts receivable from health-care providers at a discount
7 indicted in National Century failure
Business First of Columbus - May 22, 2006 by Kevin KemperBusiness First
Seven former executives of the defunct National Century Financial Enterprises were indicted Monday on money laundering, conspiracy and securities fraud charges stemming from the Dublin company's 2002 collapse.
Officials alleged the company's collapse was the largest corporate fraud case involving a privately held company that the FBI has investigated. The 60-count indictment seeks to recover about $2 billion in property.
The indictment alleges about $3 billion disappeared in a complex accounting scheme run by executives of the health-care financial services firm. U.S. Attorney Gregory G. Lockhart said that in the almost three years since the company collapsed, investigators have been able to recover $1 billion.
National Century filed for Chapter 11 bankruptcy protection after ratings on its bonds were cut to "junk" grade, employees started receiving bad checks from the business and the FBI raided the company's headquarters.
The company's bread and butter was purchasing accounts receivable from health-care providers at a discount, then giving the providers their money up front. National Century would then package the receivables as asset-backed bonds and sell them to raise cash.
The government has alleged executives falsified the company's books and tried to conceal the fraud from investors.
The collapse pushed several health-care companies into bankruptcy when they stopped receiving money.
"The types of criminal acts uncovered by this investigation and charged in this indictment are not crimes of passion but rather crimes of immense greed," said Brian Moskowitz, special agent in charge at the Bureau of Immigration and Customs Enforcement.
Indicted were:
Lance K. Poulsen, 62, president, chairman and director, charged with a count of conspiracy, six counts of securities fraud, 11 counts of mail fraud, 14 counts of wire fraud, one count of money laundering conspiracy, seven counts of promotion of money laundering and seven counts of concealment of money laundering.
Rebecca S. Parrett, 57, vice chairwoman, charged with one count of conspiracy, six counts of securities fraud, 11 counts of mail fraud, 10 counts of wire fraud, one count of money laundering conspiracy, and seven counts of promotion of money laundering.
Donald H. Ayers, 70, also vice chairman and chief operating officer, charged with a count of conspiracy, six counts of securities fraud, 11 counts of mail fraud, nine counts of wire fraud, a count of money laundering conspiracy and seven counts of promotion of money laundering.
Roger S. Faulkenberry, 45, director of securitizations, charged with a count of conspiracy, six counts of securities fraud, 11 counts of mail fraud, 10 counts of wire fraud, one count of money laundering conspiracy and two counts of concealment of money laundering.
Randolph H. Speer, 55, chief financial officer and executive vice president, charged with one count of conspiracy, three counts of securities fraud, 11 counts of mail fraud, 13 counts of wire fraud, one count of money laundering conspiracy, seven counts of promotion of money laundering and six counts of concealment of money laundering.
James E. Dierker, 38, vice president in charge of client development, charged with one count of conspiracy, 11 counts of mail fraud, nine counts of wire fraud, one count of money laundering conspiracy, and three counts of concealment of money laundering.
Jon A. Beacham, 39, a director and vice president of securitizations, charged with one count of conspiracy, six counts of securities fraud, 11 counts of mail fraud, 12 counts of wire fraud, and one count of money laundering conspiracy.
In addition to the seven recently indicted, three other former NCFE executives have pleaded guilty to charges linked to the business' collapse.
Sherry L. Gibson, executive vice president, pleaded guilty in 2003 and was ordered to forfeit her entire net worth, estimated between $300,000 and $500,000.
Brian J. Stucke, director of compliance, pleaded guilty in 2003 to a felony count of conspiracy to commit securities fraud.
John Allen Snoble, controller, pleaded guilty to a charge of conspiracy to launder money in 2004.
Business First of Columbus - May 22, 2006 by Kevin KemperBusiness First
Seven former executives of the defunct National Century Financial Enterprises were indicted Monday on money laundering, conspiracy and securities fraud charges stemming from the Dublin company's 2002 collapse.
Officials alleged the company's collapse was the largest corporate fraud case involving a privately held company that the FBI has investigated. The 60-count indictment seeks to recover about $2 billion in property.
The indictment alleges about $3 billion disappeared in a complex accounting scheme run by executives of the health-care financial services firm. U.S. Attorney Gregory G. Lockhart said that in the almost three years since the company collapsed, investigators have been able to recover $1 billion.
National Century filed for Chapter 11 bankruptcy protection after ratings on its bonds were cut to "junk" grade, employees started receiving bad checks from the business and the FBI raided the company's headquarters.
The company's bread and butter was purchasing accounts receivable from health-care providers at a discount, then giving the providers their money up front. National Century would then package the receivables as asset-backed bonds and sell them to raise cash.
The government has alleged executives falsified the company's books and tried to conceal the fraud from investors.
The collapse pushed several health-care companies into bankruptcy when they stopped receiving money.
"The types of criminal acts uncovered by this investigation and charged in this indictment are not crimes of passion but rather crimes of immense greed," said Brian Moskowitz, special agent in charge at the Bureau of Immigration and Customs Enforcement.
Indicted were:
Lance K. Poulsen, 62, president, chairman and director, charged with a count of conspiracy, six counts of securities fraud, 11 counts of mail fraud, 14 counts of wire fraud, one count of money laundering conspiracy, seven counts of promotion of money laundering and seven counts of concealment of money laundering.
Rebecca S. Parrett, 57, vice chairwoman, charged with one count of conspiracy, six counts of securities fraud, 11 counts of mail fraud, 10 counts of wire fraud, one count of money laundering conspiracy, and seven counts of promotion of money laundering.
Donald H. Ayers, 70, also vice chairman and chief operating officer, charged with a count of conspiracy, six counts of securities fraud, 11 counts of mail fraud, nine counts of wire fraud, a count of money laundering conspiracy and seven counts of promotion of money laundering.
Roger S. Faulkenberry, 45, director of securitizations, charged with a count of conspiracy, six counts of securities fraud, 11 counts of mail fraud, 10 counts of wire fraud, one count of money laundering conspiracy and two counts of concealment of money laundering.
Randolph H. Speer, 55, chief financial officer and executive vice president, charged with one count of conspiracy, three counts of securities fraud, 11 counts of mail fraud, 13 counts of wire fraud, one count of money laundering conspiracy, seven counts of promotion of money laundering and six counts of concealment of money laundering.
James E. Dierker, 38, vice president in charge of client development, charged with one count of conspiracy, 11 counts of mail fraud, nine counts of wire fraud, one count of money laundering conspiracy, and three counts of concealment of money laundering.
Jon A. Beacham, 39, a director and vice president of securitizations, charged with one count of conspiracy, six counts of securities fraud, 11 counts of mail fraud, 12 counts of wire fraud, and one count of money laundering conspiracy.
In addition to the seven recently indicted, three other former NCFE executives have pleaded guilty to charges linked to the business' collapse.
Sherry L. Gibson, executive vice president, pleaded guilty in 2003 and was ordered to forfeit her entire net worth, estimated between $300,000 and $500,000.
Brian J. Stucke, director of compliance, pleaded guilty in 2003 to a felony count of conspiracy to commit securities fraud.
John Allen Snoble, controller, pleaded guilty to a charge of conspiracy to launder money in 2004.
FBI RAIDS
washingtonpost.com
FBI Raids National Century Offices
Search Comes as Health-Care Lender Considers Filing for Bankruptcy
By Robert O'harrow Jr. and Bill Brubaker
Washington Post Staff Writers
Sunday, November 17, 2002; Page A12
FBI agents yesterday morning raided the Dublin, Ohio, offices of National Century Financial Enterprises Inc., whose financial implosion has threatened patient care and health industry jobs around the country and billions of dollars in bondholders' investments.
The arrival of federal agents with a search warrant was the latest blow to the company, one of the largest funders of last resort to struggling health-care providers, such as Greater Southeast Community Hospital in the District. Two customers, a provider of home health care and a firm that supplies emergency-room doctors, have filed for bankruptcy.
The FBI agents took away computer equipment and scores of books and records. James L. Turgal, chief counsel for the FBI's Cincinnati office, which covers Dublin, said the affidavit supporting the search warrant was filed under seal so the FBI could "continue on with an investigation without certain facts getting out to potential suspects."
The raid came as accountants hired by bondholders struggled through a morass of financial transactions in a search for hundreds of millions of dollars in unaccounted funds. "They walked in and took all the records," one person close to the company said of the FBI search. "They're in control now." Company officials declined to comment except to say National Century would cooperate fully with the FBI search and investigation.
Controlling owner and founder Lance K. Poulsen resigned as chief executive last week after a credit agency withdrew ratings on some of the company's bonds. National Century said it was considering filing for Chapter 11 bankruptcy protection as well.
National Century long promoted itself as the "genius" of its business, a leader in the giant market for bonds backed by the assets of borrowers. By lending money to health-care companies in exchange for control of their receipts from private and government insurers, Poulsen's creation claimed dazzling returns. He said its net income was $40 million last year on revenue of more than $300 million.
Hundreds of businesses came to rely on regular cash infusions from National Century -- paying large fees and interest, and sometimes giving up control of their stock -- to remain afloat. The company then sold bonds linked to those receivables and used the influx of cash, more than $15 billion over the years, to make more deals.
The reasons for National Century's swift tumble remain a mystery, even to the outside accountants examining its books. A person familiar with that review said the accountants have found a maze of transactions that has been nearly impenetrable so far.
Interviews and the review of hundreds of business records and court documents indicate that Poulsen and his partners have for years engaged in financial deals that have been challenged as questionable. And they have used an array of partnerships to invest personally in some of the health-care providers their company finances. In court documents, Poulsen and associates have repeatedly denied all allegations of wrongdoing.
In recent weeks, two leading bond-rating services have said that National Century may not have sufficient reserves to back about $3.35 billion worth of bonds it services. Officials at Fitch Ratings withdrew the ratings on bonds issued by subsidiaries of the company after officials at National Century "completely cut them out of the loop" about its finances, they said.
Moody's Investors Service lowered the company's ratings to junk-bond status recently, after it said National Century misused cash reserves to finance new deals. Moody's said its action reflects "concern about NCFE's financial stability."
Like many of the corporate collapses after the fall of the "bubble economy," questions about National Century's finances revolve around the role of its accountants, the credit rating agencies who once said its debt was rated AAA, and the bankers who underwrote the bond issues and collected handsome fees creating the "asset-backed securities" they sold to bond and mutual funds.
Two executive from J.P. Morgan Chase & Co. are on the National Century board of directors. Credit Suisse First Boston Corp. underwrote some of the bond sales.
Even before the FBI raid, many of the players were squaring off in court and blaming one another for the collapse. Health care companies want to know why the financial experts weren't minding the store. The financial side, in turn, pointed fingers at health-care operators for failing to disclose an array of financial ties to Poulsen and other directors of the company.
Moody's Vice President Jay Eisbruck said it isn't the rating agency's job to "conduct full due diligence." It's up to others, including auditors and banks, to do that, he said.
Since the crisis began, neither Poulsen nor his partners have returned telephone calls. "The principals aren't here at all," spokesman James M. Nickell said recently from the company's headquarters. "I have no idea where they are. They speak for themselves."
Until a few months ago, Poulsen, 59, was living the good life. He is described by associates as a driven and often charming entrepreneur who lives in a $1 million house in Port Charlotte, Fla., complete with a pool and a waterfall. In recent years he has become active in politics, too, donating $44,000 recently to the Florida Republican Party and in September letting Gov. Jeb Bush use the company jet on a campaign swing.
It was in the late 1980s that Poulsen hit upon the idea of converting leases on expensive heavy equipment into marketable securities, through a company called National Premier Financial Services. In 1991 he created National Century to expand into the health-care world, offering similar services to struggling hospitals and other providers.
It was a golden bet.
From the mid-1990s on, National Century approached 40 percent annual growth. From 1999 through 2001, company sales rose from about $67 million to about $254 million, a 280 percent increase, according to a Dun & Bradstreet report.
But behind the company's glowing claims were repeated allegations of huge hidden fees and conflicting interests. At times National Century and its affiliate overfunded some of its clients, officials said.
For example, shareholders of PhyAmerica Physician Group Inc., one of National Century's larger customers, accused Poulsen and others of conspiring with PhyAmerica owner Steven M. Scott to skim money from the company, in a lawsuit filed in North Carolina.
National Century was effectively charging 26 percent or more in fees for its loans and other services, the suit alleged. Though PhyAmerica could have substantially offset those fees, the company never did, shareholders claimed. Scott never made clear that he personally was receiving millions of dollars in loans from National Century, they charged. PhyAmerica agreed to pay shareholders about $4.6 million to settle the suit.
PhyAmerica's general counsel, Eugene F. Dauchert Jr., said National Century paid PhyAmerica more than the value of receivables it offered as collateral. "We did get overfunded. . . . We put a value on our receivables, and the money that we got in was much in excess of that value. . . . This created a humongous profit for NCFE." PhyAmerica, which supplies emergency-room services and doctors to hospitals in 30 states, filed for Chapter 11 bankruptcy protection last week.
National Century's ties to Med Diversified Inc., a home health-care provider, are even more complex. Med Diversified and its affiliates were among National Century's largest customers in recent years. At the same time, National Century officials, including Poulsen, his wife and two other directors of the Ohio company, owned 43 percent of Med Diversified's stock.
One of Med Diversified's subsidiaries, Tender Loving Care Health Care Services Inc., declared bankruptcy protection earlier this month.
A short time later, Med Diversified filed a lawsuit in U.S. District Court in Massachusetts charging that Poulsen and another director, as well as J.P. Morgan Chase and Bank One Corp., used the receivables arrangements to take advantage of the company and place it in "significant financial risk."
Poulsen and his wife, Barbara, and two other National Century investors are directors of a company that owns 48 percent of another National Century customer, Rx Medical Services Corp. of Fort Lauderdale, Fla., which said it, too, may have to file for Chapter 11 bankruptcy protection. And National Century owns 11.5 percent of Doctors Community Healthcare Corp., which since September has had trouble paying vendors and doctors at Hadley, Greater Southeast and three hospitals in Chicago and California.
Staff researcher Richard Drezen contributed to this report.
© 2002 The Washington Post Company
FBI Raids National Century Offices
Search Comes as Health-Care Lender Considers Filing for Bankruptcy
By Robert O'harrow Jr. and Bill Brubaker
Washington Post Staff Writers
Sunday, November 17, 2002; Page A12
FBI agents yesterday morning raided the Dublin, Ohio, offices of National Century Financial Enterprises Inc., whose financial implosion has threatened patient care and health industry jobs around the country and billions of dollars in bondholders' investments.
The arrival of federal agents with a search warrant was the latest blow to the company, one of the largest funders of last resort to struggling health-care providers, such as Greater Southeast Community Hospital in the District. Two customers, a provider of home health care and a firm that supplies emergency-room doctors, have filed for bankruptcy.
The FBI agents took away computer equipment and scores of books and records. James L. Turgal, chief counsel for the FBI's Cincinnati office, which covers Dublin, said the affidavit supporting the search warrant was filed under seal so the FBI could "continue on with an investigation without certain facts getting out to potential suspects."
The raid came as accountants hired by bondholders struggled through a morass of financial transactions in a search for hundreds of millions of dollars in unaccounted funds. "They walked in and took all the records," one person close to the company said of the FBI search. "They're in control now." Company officials declined to comment except to say National Century would cooperate fully with the FBI search and investigation.
Controlling owner and founder Lance K. Poulsen resigned as chief executive last week after a credit agency withdrew ratings on some of the company's bonds. National Century said it was considering filing for Chapter 11 bankruptcy protection as well.
National Century long promoted itself as the "genius" of its business, a leader in the giant market for bonds backed by the assets of borrowers. By lending money to health-care companies in exchange for control of their receipts from private and government insurers, Poulsen's creation claimed dazzling returns. He said its net income was $40 million last year on revenue of more than $300 million.
Hundreds of businesses came to rely on regular cash infusions from National Century -- paying large fees and interest, and sometimes giving up control of their stock -- to remain afloat. The company then sold bonds linked to those receivables and used the influx of cash, more than $15 billion over the years, to make more deals.
The reasons for National Century's swift tumble remain a mystery, even to the outside accountants examining its books. A person familiar with that review said the accountants have found a maze of transactions that has been nearly impenetrable so far.
Interviews and the review of hundreds of business records and court documents indicate that Poulsen and his partners have for years engaged in financial deals that have been challenged as questionable. And they have used an array of partnerships to invest personally in some of the health-care providers their company finances. In court documents, Poulsen and associates have repeatedly denied all allegations of wrongdoing.
In recent weeks, two leading bond-rating services have said that National Century may not have sufficient reserves to back about $3.35 billion worth of bonds it services. Officials at Fitch Ratings withdrew the ratings on bonds issued by subsidiaries of the company after officials at National Century "completely cut them out of the loop" about its finances, they said.
Moody's Investors Service lowered the company's ratings to junk-bond status recently, after it said National Century misused cash reserves to finance new deals. Moody's said its action reflects "concern about NCFE's financial stability."
Like many of the corporate collapses after the fall of the "bubble economy," questions about National Century's finances revolve around the role of its accountants, the credit rating agencies who once said its debt was rated AAA, and the bankers who underwrote the bond issues and collected handsome fees creating the "asset-backed securities" they sold to bond and mutual funds.
Two executive from J.P. Morgan Chase & Co. are on the National Century board of directors. Credit Suisse First Boston Corp. underwrote some of the bond sales.
Even before the FBI raid, many of the players were squaring off in court and blaming one another for the collapse. Health care companies want to know why the financial experts weren't minding the store. The financial side, in turn, pointed fingers at health-care operators for failing to disclose an array of financial ties to Poulsen and other directors of the company.
Moody's Vice President Jay Eisbruck said it isn't the rating agency's job to "conduct full due diligence." It's up to others, including auditors and banks, to do that, he said.
Since the crisis began, neither Poulsen nor his partners have returned telephone calls. "The principals aren't here at all," spokesman James M. Nickell said recently from the company's headquarters. "I have no idea where they are. They speak for themselves."
Until a few months ago, Poulsen, 59, was living the good life. He is described by associates as a driven and often charming entrepreneur who lives in a $1 million house in Port Charlotte, Fla., complete with a pool and a waterfall. In recent years he has become active in politics, too, donating $44,000 recently to the Florida Republican Party and in September letting Gov. Jeb Bush use the company jet on a campaign swing.
It was in the late 1980s that Poulsen hit upon the idea of converting leases on expensive heavy equipment into marketable securities, through a company called National Premier Financial Services. In 1991 he created National Century to expand into the health-care world, offering similar services to struggling hospitals and other providers.
It was a golden bet.
From the mid-1990s on, National Century approached 40 percent annual growth. From 1999 through 2001, company sales rose from about $67 million to about $254 million, a 280 percent increase, according to a Dun & Bradstreet report.
But behind the company's glowing claims were repeated allegations of huge hidden fees and conflicting interests. At times National Century and its affiliate overfunded some of its clients, officials said.
For example, shareholders of PhyAmerica Physician Group Inc., one of National Century's larger customers, accused Poulsen and others of conspiring with PhyAmerica owner Steven M. Scott to skim money from the company, in a lawsuit filed in North Carolina.
National Century was effectively charging 26 percent or more in fees for its loans and other services, the suit alleged. Though PhyAmerica could have substantially offset those fees, the company never did, shareholders claimed. Scott never made clear that he personally was receiving millions of dollars in loans from National Century, they charged. PhyAmerica agreed to pay shareholders about $4.6 million to settle the suit.
PhyAmerica's general counsel, Eugene F. Dauchert Jr., said National Century paid PhyAmerica more than the value of receivables it offered as collateral. "We did get overfunded. . . . We put a value on our receivables, and the money that we got in was much in excess of that value. . . . This created a humongous profit for NCFE." PhyAmerica, which supplies emergency-room services and doctors to hospitals in 30 states, filed for Chapter 11 bankruptcy protection last week.
National Century's ties to Med Diversified Inc., a home health-care provider, are even more complex. Med Diversified and its affiliates were among National Century's largest customers in recent years. At the same time, National Century officials, including Poulsen, his wife and two other directors of the Ohio company, owned 43 percent of Med Diversified's stock.
One of Med Diversified's subsidiaries, Tender Loving Care Health Care Services Inc., declared bankruptcy protection earlier this month.
A short time later, Med Diversified filed a lawsuit in U.S. District Court in Massachusetts charging that Poulsen and another director, as well as J.P. Morgan Chase and Bank One Corp., used the receivables arrangements to take advantage of the company and place it in "significant financial risk."
Poulsen and his wife, Barbara, and two other National Century investors are directors of a company that owns 48 percent of another National Century customer, Rx Medical Services Corp. of Fort Lauderdale, Fla., which said it, too, may have to file for Chapter 11 bankruptcy protection. And National Century owns 11.5 percent of Doctors Community Healthcare Corp., which since September has had trouble paying vendors and doctors at Hadley, Greater Southeast and three hospitals in Chicago and California.
Staff researcher Richard Drezen contributed to this report.
© 2002 The Washington Post Company
FBI RAIDS
washingtonpost.com
FBI Raids National Century Offices
Search Comes as Health-Care Lender Considers Filing for Bankruptcy
By Robert O'harrow Jr. and Bill Brubaker
Washington Post Staff Writers
Sunday, November 17, 2002; Page A12
FBI agents yesterday morning raided the Dublin, Ohio, offices of National Century Financial Enterprises Inc., whose financial implosion has threatened patient care and health industry jobs around the country and billions of dollars in bondholders' investments.
The arrival of federal agents with a search warrant was the latest blow to the company, one of the largest funders of last resort to struggling health-care providers, such as Greater Southeast Community Hospital in the District. Two customers, a provider of home health care and a firm that supplies emergency-room doctors, have filed for bankruptcy.
The FBI agents took away computer equipment and scores of books and records. James L. Turgal, chief counsel for the FBI's Cincinnati office, which covers Dublin, said the affidavit supporting the search warrant was filed under seal so the FBI could "continue on with an investigation without certain facts getting out to potential suspects."
The raid came as accountants hired by bondholders struggled through a morass of financial transactions in a search for hundreds of millions of dollars in unaccounted funds. "They walked in and took all the records," one person close to the company said of the FBI search. "They're in control now." Company officials declined to comment except to say National Century would cooperate fully with the FBI search and investigation.
Controlling owner and founder Lance K. Poulsen resigned as chief executive last week after a credit agency withdrew ratings on some of the company's bonds. National Century said it was considering filing for Chapter 11 bankruptcy protection as well.
National Century long promoted itself as the "genius" of its business, a leader in the giant market for bonds backed by the assets of borrowers. By lending money to health-care companies in exchange for control of their receipts from private and government insurers, Poulsen's creation claimed dazzling returns. He said its net income was $40 million last year on revenue of more than $300 million.
Hundreds of businesses came to rely on regular cash infusions from National Century -- paying large fees and interest, and sometimes giving up control of their stock -- to remain afloat. The company then sold bonds linked to those receivables and used the influx of cash, more than $15 billion over the years, to make more deals.
The reasons for National Century's swift tumble remain a mystery, even to the outside accountants examining its books. A person familiar with that review said the accountants have found a maze of transactions that has been nearly impenetrable so far.
Interviews and the review of hundreds of business records and court documents indicate that Poulsen and his partners have for years engaged in financial deals that have been challenged as questionable. And they have used an array of partnerships to invest personally in some of the health-care providers their company finances. In court documents, Poulsen and associates have repeatedly denied all allegations of wrongdoing.
In recent weeks, two leading bond-rating services have said that National Century may not have sufficient reserves to back about $3.35 billion worth of bonds it services. Officials at Fitch Ratings withdrew the ratings on bonds issued by subsidiaries of the company after officials at National Century "completely cut them out of the loop" about its finances, they said.
Moody's Investors Service lowered the company's ratings to junk-bond status recently, after it said National Century misused cash reserves to finance new deals. Moody's said its action reflects "concern about NCFE's financial stability."
Like many of the corporate collapses after the fall of the "bubble economy," questions about National Century's finances revolve around the role of its accountants, the credit rating agencies who once said its debt was rated AAA, and the bankers who underwrote the bond issues and collected handsome fees creating the "asset-backed securities" they sold to bond and mutual funds.
Two executive from J.P. Morgan Chase & Co. are on the National Century board of directors. Credit Suisse First Boston Corp. underwrote some of the bond sales.
Even before the FBI raid, many of the players were squaring off in court and blaming one another for the collapse. Health care companies want to know why the financial experts weren't minding the store. The financial side, in turn, pointed fingers at health-care operators for failing to disclose an array of financial ties to Poulsen and other directors of the company.
Moody's Vice President Jay Eisbruck said it isn't the rating agency's job to "conduct full due diligence." It's up to others, including auditors and banks, to do that, he said.
Since the crisis began, neither Poulsen nor his partners have returned telephone calls. "The principals aren't here at all," spokesman James M. Nickell said recently from the company's headquarters. "I have no idea where they are. They speak for themselves."
Until a few months ago, Poulsen, 59, was living the good life. He is described by associates as a driven and often charming entrepreneur who lives in a $1 million house in Port Charlotte, Fla., complete with a pool and a waterfall. In recent years he has become active in politics, too, donating $44,000 recently to the Florida Republican Party and in September letting Gov. Jeb Bush use the company jet on a campaign swing.
It was in the late 1980s that Poulsen hit upon the idea of converting leases on expensive heavy equipment into marketable securities, through a company called National Premier Financial Services. In 1991 he created National Century to expand into the health-care world, offering similar services to struggling hospitals and other providers.
It was a golden bet.
From the mid-1990s on, National Century approached 40 percent annual growth. From 1999 through 2001, company sales rose from about $67 million to about $254 million, a 280 percent increase, according to a Dun & Bradstreet report.
But behind the company's glowing claims were repeated allegations of huge hidden fees and conflicting interests. At times National Century and its affiliate overfunded some of its clients, officials said.
For example, shareholders of PhyAmerica Physician Group Inc., one of National Century's larger customers, accused Poulsen and others of conspiring with PhyAmerica owner Steven M. Scott to skim money from the company, in a lawsuit filed in North Carolina.
National Century was effectively charging 26 percent or more in fees for its loans and other services, the suit alleged. Though PhyAmerica could have substantially offset those fees, the company never did, shareholders claimed. Scott never made clear that he personally was receiving millions of dollars in loans from National Century, they charged. PhyAmerica agreed to pay shareholders about $4.6 million to settle the suit.
PhyAmerica's general counsel, Eugene F. Dauchert Jr., said National Century paid PhyAmerica more than the value of receivables it offered as collateral. "We did get overfunded. . . . We put a value on our receivables, and the money that we got in was much in excess of that value. . . . This created a humongous profit for NCFE." PhyAmerica, which supplies emergency-room services and doctors to hospitals in 30 states, filed for Chapter 11 bankruptcy protection last week.
National Century's ties to Med Diversified Inc., a home health-care provider, are even more complex. Med Diversified and its affiliates were among National Century's largest customers in recent years. At the same time, National Century officials, including Poulsen, his wife and two other directors of the Ohio company, owned 43 percent of Med Diversified's stock.
One of Med Diversified's subsidiaries, Tender Loving Care Health Care Services Inc., declared bankruptcy protection earlier this month.
A short time later, Med Diversified filed a lawsuit in U.S. District Court in Massachusetts charging that Poulsen and another director, as well as J.P. Morgan Chase and Bank One Corp., used the receivables arrangements to take advantage of the company and place it in "significant financial risk."
Poulsen and his wife, Barbara, and two other National Century investors are directors of a company that owns 48 percent of another National Century customer, Rx Medical Services Corp. of Fort Lauderdale, Fla., which said it, too, may have to file for Chapter 11 bankruptcy protection. And National Century owns 11.5 percent of Doctors Community Healthcare Corp., which since September has had trouble paying vendors and doctors at Hadley, Greater Southeast and three hospitals in Chicago and California.
Staff researcher Richard Drezen contributed to this report.
© 2002 The Washington Post Company
FBI Raids National Century Offices
Search Comes as Health-Care Lender Considers Filing for Bankruptcy
By Robert O'harrow Jr. and Bill Brubaker
Washington Post Staff Writers
Sunday, November 17, 2002; Page A12
FBI agents yesterday morning raided the Dublin, Ohio, offices of National Century Financial Enterprises Inc., whose financial implosion has threatened patient care and health industry jobs around the country and billions of dollars in bondholders' investments.
The arrival of federal agents with a search warrant was the latest blow to the company, one of the largest funders of last resort to struggling health-care providers, such as Greater Southeast Community Hospital in the District. Two customers, a provider of home health care and a firm that supplies emergency-room doctors, have filed for bankruptcy.
The FBI agents took away computer equipment and scores of books and records. James L. Turgal, chief counsel for the FBI's Cincinnati office, which covers Dublin, said the affidavit supporting the search warrant was filed under seal so the FBI could "continue on with an investigation without certain facts getting out to potential suspects."
The raid came as accountants hired by bondholders struggled through a morass of financial transactions in a search for hundreds of millions of dollars in unaccounted funds. "They walked in and took all the records," one person close to the company said of the FBI search. "They're in control now." Company officials declined to comment except to say National Century would cooperate fully with the FBI search and investigation.
Controlling owner and founder Lance K. Poulsen resigned as chief executive last week after a credit agency withdrew ratings on some of the company's bonds. National Century said it was considering filing for Chapter 11 bankruptcy protection as well.
National Century long promoted itself as the "genius" of its business, a leader in the giant market for bonds backed by the assets of borrowers. By lending money to health-care companies in exchange for control of their receipts from private and government insurers, Poulsen's creation claimed dazzling returns. He said its net income was $40 million last year on revenue of more than $300 million.
Hundreds of businesses came to rely on regular cash infusions from National Century -- paying large fees and interest, and sometimes giving up control of their stock -- to remain afloat. The company then sold bonds linked to those receivables and used the influx of cash, more than $15 billion over the years, to make more deals.
The reasons for National Century's swift tumble remain a mystery, even to the outside accountants examining its books. A person familiar with that review said the accountants have found a maze of transactions that has been nearly impenetrable so far.
Interviews and the review of hundreds of business records and court documents indicate that Poulsen and his partners have for years engaged in financial deals that have been challenged as questionable. And they have used an array of partnerships to invest personally in some of the health-care providers their company finances. In court documents, Poulsen and associates have repeatedly denied all allegations of wrongdoing.
In recent weeks, two leading bond-rating services have said that National Century may not have sufficient reserves to back about $3.35 billion worth of bonds it services. Officials at Fitch Ratings withdrew the ratings on bonds issued by subsidiaries of the company after officials at National Century "completely cut them out of the loop" about its finances, they said.
Moody's Investors Service lowered the company's ratings to junk-bond status recently, after it said National Century misused cash reserves to finance new deals. Moody's said its action reflects "concern about NCFE's financial stability."
Like many of the corporate collapses after the fall of the "bubble economy," questions about National Century's finances revolve around the role of its accountants, the credit rating agencies who once said its debt was rated AAA, and the bankers who underwrote the bond issues and collected handsome fees creating the "asset-backed securities" they sold to bond and mutual funds.
Two executive from J.P. Morgan Chase & Co. are on the National Century board of directors. Credit Suisse First Boston Corp. underwrote some of the bond sales.
Even before the FBI raid, many of the players were squaring off in court and blaming one another for the collapse. Health care companies want to know why the financial experts weren't minding the store. The financial side, in turn, pointed fingers at health-care operators for failing to disclose an array of financial ties to Poulsen and other directors of the company.
Moody's Vice President Jay Eisbruck said it isn't the rating agency's job to "conduct full due diligence." It's up to others, including auditors and banks, to do that, he said.
Since the crisis began, neither Poulsen nor his partners have returned telephone calls. "The principals aren't here at all," spokesman James M. Nickell said recently from the company's headquarters. "I have no idea where they are. They speak for themselves."
Until a few months ago, Poulsen, 59, was living the good life. He is described by associates as a driven and often charming entrepreneur who lives in a $1 million house in Port Charlotte, Fla., complete with a pool and a waterfall. In recent years he has become active in politics, too, donating $44,000 recently to the Florida Republican Party and in September letting Gov. Jeb Bush use the company jet on a campaign swing.
It was in the late 1980s that Poulsen hit upon the idea of converting leases on expensive heavy equipment into marketable securities, through a company called National Premier Financial Services. In 1991 he created National Century to expand into the health-care world, offering similar services to struggling hospitals and other providers.
It was a golden bet.
From the mid-1990s on, National Century approached 40 percent annual growth. From 1999 through 2001, company sales rose from about $67 million to about $254 million, a 280 percent increase, according to a Dun & Bradstreet report.
But behind the company's glowing claims were repeated allegations of huge hidden fees and conflicting interests. At times National Century and its affiliate overfunded some of its clients, officials said.
For example, shareholders of PhyAmerica Physician Group Inc., one of National Century's larger customers, accused Poulsen and others of conspiring with PhyAmerica owner Steven M. Scott to skim money from the company, in a lawsuit filed in North Carolina.
National Century was effectively charging 26 percent or more in fees for its loans and other services, the suit alleged. Though PhyAmerica could have substantially offset those fees, the company never did, shareholders claimed. Scott never made clear that he personally was receiving millions of dollars in loans from National Century, they charged. PhyAmerica agreed to pay shareholders about $4.6 million to settle the suit.
PhyAmerica's general counsel, Eugene F. Dauchert Jr., said National Century paid PhyAmerica more than the value of receivables it offered as collateral. "We did get overfunded. . . . We put a value on our receivables, and the money that we got in was much in excess of that value. . . . This created a humongous profit for NCFE." PhyAmerica, which supplies emergency-room services and doctors to hospitals in 30 states, filed for Chapter 11 bankruptcy protection last week.
National Century's ties to Med Diversified Inc., a home health-care provider, are even more complex. Med Diversified and its affiliates were among National Century's largest customers in recent years. At the same time, National Century officials, including Poulsen, his wife and two other directors of the Ohio company, owned 43 percent of Med Diversified's stock.
One of Med Diversified's subsidiaries, Tender Loving Care Health Care Services Inc., declared bankruptcy protection earlier this month.
A short time later, Med Diversified filed a lawsuit in U.S. District Court in Massachusetts charging that Poulsen and another director, as well as J.P. Morgan Chase and Bank One Corp., used the receivables arrangements to take advantage of the company and place it in "significant financial risk."
Poulsen and his wife, Barbara, and two other National Century investors are directors of a company that owns 48 percent of another National Century customer, Rx Medical Services Corp. of Fort Lauderdale, Fla., which said it, too, may have to file for Chapter 11 bankruptcy protection. And National Century owns 11.5 percent of Doctors Community Healthcare Corp., which since September has had trouble paying vendors and doctors at Hadley, Greater Southeast and three hospitals in Chicago and California.
Staff researcher Richard Drezen contributed to this report.
© 2002 The Washington Post Company
How financing worked
How financing worked
Here is how National Century Financial Enterprises arranged financing with health care firms:
National Century loaned millions of dollars to cash-hungry health care firms and hospitals. In turn, the health care firms gave National Century control of their insurance claims and medical bills.
The health care firms used the cash to run their businesses, and also paid fees to National Century.
National Century used the insurance claims as collateral to issue billions of dollars in bonds to Wall Street investors.
National Century used the proceeds from the bond sales to buy more insurance claims from medical firms.
Sources: USA TODAY research, National Century
Here is how National Century Financial Enterprises arranged financing with health care firms:
National Century loaned millions of dollars to cash-hungry health care firms and hospitals. In turn, the health care firms gave National Century control of their insurance claims and medical bills.
The health care firms used the cash to run their businesses, and also paid fees to National Century.
National Century used the insurance claims as collateral to issue billions of dollars in bonds to Wall Street investors.
National Century used the proceeds from the bond sales to buy more insurance claims from medical firms.
Sources: USA TODAY research, National Century
INDICTMENTS ..Connect this to Largest Bankruptcy in Tennessee
PressZoom) - COLUMBUS – A federal grand jury here today returned a superseding indictment charging eight former executives of National Century Financial Enterprises ( NCFE ) with conspiring to defraud investors by diverting millions of dollars in investors’ funds, fabricating data in investor reports, and moving money back and forth between accounts in order to conceal investor fund shortfalls. NCFE, based in Dublin, Ohio, was one of the largest healthcare finance companies in the United States until it filed for bankruptcy in November, 2002.
Gregory G. Lockhart, United States Attorney for the Southern District of Ohio, J. Mark Batts, Acting Special Agent in Charge, Federal Bureau of Investigation, Cincinnati Field Division; Gerald A. O’Farrell, Assistant Inspector in Charge, U.S. Postal Inspection Service; Jose Gonzalez, Special Agent in Charge, Internal Revenue Service Criminal Investigation, and Brian M. Moskowitz, Special Agent-in-Charge of the U.S. Immigration and Customs Enforcement ( ICE ) Office of Investigations in Detroit announced the superseding indictment.
The 27-count indictment alleges conspiracy, securities fraud, wire fraud, money laundering, and money laundering conspiracy. The indictment also seeks $1.9 billion in forfeiture of property representing the proceeds of the conspiracy.
Named in the indictment are:
* Lance K. Poulsen, of Port Charlotte, Florida. Poulsen served as President, Chairman, Chief Executive Officer and an owner of NCFE.
* Donald H. Ayers, of Fort Myers, Florida, was the Vice Chairman, Chief Operating Officer, Director and an owner of NCFE.
* Rebecca S. Parrett, now in Carefree, Arizona, was the Vice Chairman, Secretary, Treasurer, Director and an owner of NCFE.
* Randolph H. Speer, now residing in Peachtree City, Georgia, was NCFE’s Chief Financial Officer.
* Roger S. Faulkenberry, now residing in Dublin, Ohio, was responsible for raising money from investors through the sale of notes.
* Jon A. Beacham, now residing in Grosse Pointe, Michigan, was also responsible for raising money from investors through the sale of notes.
* James E. Dierker, now residing in Powell, Ohio, was Associate Director of Marketing and later Vice President of Client Development at NCFE.
* James K. Happ, of Palm Beach Gardens, Florida, was a Certified Public Accountant, Vice President of Servicer Operations and later Executive Vice President for Servicer Operations.
NCFE funded healthcare providers by purchasing their accounts receivable, then providing them with cash they could use to pay operating expenses right away. NCFE raised funds by selling asset-backed notes to institutional investors. Investors received regular interest payments and a lump-sum payment when the notes were retired.
The indictment alleges that the defendants sold notes to investors with an aggregate value of $4.4 billion between May, 1998 and May, 2001.
The indictment alleges that instead of investing the funds in the purchase of high quality accounts receivable as promised, the defendants diverted the funds to healthcare providers, many of whom they owned in whole or in part, creating shortfalls in account balances. They allegedly fabricated data in investor reports, double-counted money by moving it back and forth between funds, made other false statements, and loaded false data into the accounting system in order to conceal the shortfalls.
The indictment alleges that the defendants created a false and misleading picture of NCFE as a healthy, growing company in order to boost their own salaries and income.
The maximum penalty for each count of money laundering, money laundering conspiracy and wire fraud is 20 years imprisonment and a $500,000 fine. The conspiracy to violate statutes of the United States count and securities fraud counts carries a maximum penalty of five years imprisonment and a $250,000 fine.
All defendants, except for Happ, were initially indicted in May, 2006. United States District Judge Algenon L. Marbley will preside over the case which is scheduled for trial on November 5, 2007. The government does not anticipate that this superseding indictment will delay the trial.
“Large and small investors should have clear and accurate pictures of a company’s financial performance,” Lockhart said. “Today’s superseding indictment seeks to hold another individual accountable for his role in the case and streamlines the charges against the previously indicted defendants.”
Lockhart commended the cooperative investigation by the agents and inspectors of the FBI, U.S. Postal Inspection Service, IRS Criminal Investigation, and ICE. He further commended Assistant U.S. Attorneys Dale E. Williams, Jr., and Doug Squires, as well as Trial Attorneys Leo Wise and Jeffrey A. Neiman, U.S. Department of Justice, Criminal Division, Fraud Section, who are prosecuting the case.
An indictment is merely an accusation. All defendants are presumed innocent of the charges and it is the government’s burden to prove a defendant’s guilt beyond a reasonable doubt at trial.
CONTACT: Fred Alverson
614-469-5715
FAX : ( 614 ) 469-5503
Gregory G. Lockhart, United States Attorney for the Southern District of Ohio, J. Mark Batts, Acting Special Agent in Charge, Federal Bureau of Investigation, Cincinnati Field Division; Gerald A. O’Farrell, Assistant Inspector in Charge, U.S. Postal Inspection Service; Jose Gonzalez, Special Agent in Charge, Internal Revenue Service Criminal Investigation, and Brian M. Moskowitz, Special Agent-in-Charge of the U.S. Immigration and Customs Enforcement ( ICE ) Office of Investigations in Detroit announced the superseding indictment.
The 27-count indictment alleges conspiracy, securities fraud, wire fraud, money laundering, and money laundering conspiracy. The indictment also seeks $1.9 billion in forfeiture of property representing the proceeds of the conspiracy.
Named in the indictment are:
* Lance K. Poulsen, of Port Charlotte, Florida. Poulsen served as President, Chairman, Chief Executive Officer and an owner of NCFE.
* Donald H. Ayers, of Fort Myers, Florida, was the Vice Chairman, Chief Operating Officer, Director and an owner of NCFE.
* Rebecca S. Parrett, now in Carefree, Arizona, was the Vice Chairman, Secretary, Treasurer, Director and an owner of NCFE.
* Randolph H. Speer, now residing in Peachtree City, Georgia, was NCFE’s Chief Financial Officer.
* Roger S. Faulkenberry, now residing in Dublin, Ohio, was responsible for raising money from investors through the sale of notes.
* Jon A. Beacham, now residing in Grosse Pointe, Michigan, was also responsible for raising money from investors through the sale of notes.
* James E. Dierker, now residing in Powell, Ohio, was Associate Director of Marketing and later Vice President of Client Development at NCFE.
* James K. Happ, of Palm Beach Gardens, Florida, was a Certified Public Accountant, Vice President of Servicer Operations and later Executive Vice President for Servicer Operations.
NCFE funded healthcare providers by purchasing their accounts receivable, then providing them with cash they could use to pay operating expenses right away. NCFE raised funds by selling asset-backed notes to institutional investors. Investors received regular interest payments and a lump-sum payment when the notes were retired.
The indictment alleges that the defendants sold notes to investors with an aggregate value of $4.4 billion between May, 1998 and May, 2001.
The indictment alleges that instead of investing the funds in the purchase of high quality accounts receivable as promised, the defendants diverted the funds to healthcare providers, many of whom they owned in whole or in part, creating shortfalls in account balances. They allegedly fabricated data in investor reports, double-counted money by moving it back and forth between funds, made other false statements, and loaded false data into the accounting system in order to conceal the shortfalls.
The indictment alleges that the defendants created a false and misleading picture of NCFE as a healthy, growing company in order to boost their own salaries and income.
The maximum penalty for each count of money laundering, money laundering conspiracy and wire fraud is 20 years imprisonment and a $500,000 fine. The conspiracy to violate statutes of the United States count and securities fraud counts carries a maximum penalty of five years imprisonment and a $250,000 fine.
All defendants, except for Happ, were initially indicted in May, 2006. United States District Judge Algenon L. Marbley will preside over the case which is scheduled for trial on November 5, 2007. The government does not anticipate that this superseding indictment will delay the trial.
“Large and small investors should have clear and accurate pictures of a company’s financial performance,” Lockhart said. “Today’s superseding indictment seeks to hold another individual accountable for his role in the case and streamlines the charges against the previously indicted defendants.”
Lockhart commended the cooperative investigation by the agents and inspectors of the FBI, U.S. Postal Inspection Service, IRS Criminal Investigation, and ICE. He further commended Assistant U.S. Attorneys Dale E. Williams, Jr., and Doug Squires, as well as Trial Attorneys Leo Wise and Jeffrey A. Neiman, U.S. Department of Justice, Criminal Division, Fraud Section, who are prosecuting the case.
An indictment is merely an accusation. All defendants are presumed innocent of the charges and it is the government’s burden to prove a defendant’s guilt beyond a reasonable doubt at trial.
CONTACT: Fred Alverson
614-469-5715
FAX : ( 614 ) 469-5503
OK.....HERE WE GO Start to Connect the DOTS!
Former CEO of National Century: Man of mystery
By Edward Iwata USA TODAY
He was a modern-day Gatsby, a smooth talker and sharp dresser who floated across the room to greet the moneyed crowd.
National Century Financial Enterprises' offices in Dublin, Ohio, were raided by the FBI in November.
By Jay La Prete, AP
Before his downfall last month, Lance Poulsen, former CEO of National Century Financial Enterprises, was flying high. He ran a lucrative health care finance firm. He hosted charity fundraisers at his waterside villa in Port Charlotte, Fla. He hobnobbed with Republican politicians, including Florida Gov. Jeb Bush, and he sailed often to the Bahamas on his $2 million yacht, The Enterprise. (Background: Lawsuits claim massive money mismanagement)
"Lance was always very delightful," says Paula McQueen, a Florida businesswoman who has known Poulsen for several years. "Quite honestly, I liked him very much."
But in recent weeks, the mystery has deepened around Poulsen, 59. His financing of small hospitals, nursing homes and doctors' groups nationwide appears to have been a vast, fraudulent scheme, according to court filings and attorneys representing clients and investors.
Up to $2.5 billion in National Century money is unaccounted for, and an additional $400 million is missing from reserve funds used to back National Century bonds, according to company officials.
The Justice Department, the Securities and Exchange Commission and the Department of Health and Human Services, which investigates Medicare fraud, are looking into National Century's finances. Dozens of lawsuits around the country accuse Poulsen and National Century of defrauding investors and employees by skimming money from medical firms.
National Century, whose bonds carried Moody's highest credit rating less than two months ago, is operating under bankruptcy-court protection.
The company's rapid slide has revealed the financial strains in part of the nation's health care safety net. Unable to wait weeks or months for insurance companies to pay claims, 60 ailing companies relied on cash from National Century to run their medical offices and facilities. At least seven — serving thousands of mainly low-income patients from Los Angeles to Washington — have filed for bankruptcy protection since National Century crashed.
In Washington, Greater Southeast Community Hospital and Hadley Memorial Hospital — owned by Doctors Community Healthcare, a firm seeking bankruptcy protection — could not pay independent doctors on contract for several weeks. And Greater Southeast was forced to turn away emergency ambulances last month after the health care firms that provided contract nurses withdrew some nurses because of the cash squeeze.
Meanwhile, Poulsen and his wife, Barbara, have kept a low profile since mid-November, when FBI agents raided National Century's offices in Dublin, Ohio, and hauled away a truckload of computers and records. Poulsen's lawyer declined to make him available for an interview.
"Lance Poulsen is the most slippery character I've seen in my life," says Vicki Buba, an attorney at Stone Pregliasco Haynes Buba, which represents employees of a health care firm suing National Century in Louisville. "He and his people are getting away with murder."
Modest beginnings
The son of Danish immigrants, Poulsen grew up in Chicago in the 1950s, then earned business and marketing degrees at Roosevelt University in Chicago and the University of Iowa.
A decade ago, Poulsen eyed a potential gold mine in health care finance. As medical costs soared and insurance payments took months to process, small health care firms desperately needed cash to run their operations and pay their staff. So Poulsen co-founded National Century with hospital executive Donald Ayers and his wife, Rebecca Parrett, a medical-billing executive.
At investment conferences, Poulsen gave slick marketing presentations that touted clever financing and bond deals by National Century. Poulsen was very polished and aggressive, says one investment analyst.
Investors and health care professionals bought Poulsen's pitch. National Century lent millions of dollars to the health care outfits, which used the cash to run their hospitals and nursing homes. In turn, National Century took over the firms' insurance claims and payments owed by Medicare and other insurers.
Then National Century issued billions of dollars in bonds to Wall Street investors, using the proceeds to snap up more insurance claims from medical firms.
Little has been seen lately of former National Century CEO Lance Poulsen.
Poulsen quickly built a small empire. It grew into one of the nation's largest medical-finance outfits, providing billions of dollars in funding for clients in recent years. Last year, the privately held firm hauled in $40 million in profit on $300 million in revenue.
The Poulsens relished their newfound wealth. In the late 1990s, they moved to Port Charlotte, a posh seaside town in southwest Florida. In the genteel enclave of old money, the Poulsens stood out. Lance Poulsen roared down streets in a red Porsche 911. His 60-foot yacht was the largest pleasure boat in the marina. He boasted about jetting into town on one of his Raytheon Hawker corporate jets. The Poulsen's new, three-story mansion in Grassy Point Estates, a gated community on the harbor, features a 20-foot waterfall and pool, lush tropical landscaping and an underground garage.
Soon, the Poulsens were hosting lavish fundraisers, including a $150-a-person event for the American Cancer Society and a $500-a-plate affair for Gov. Bush.
The Poulsens lent Bush their company jet during his campaign and gave more than $40,000 last year to the Florida Republican Party, campaign records show.
Lance Poulsen's new friends seemed unaware of his spotted past. In 1984, he was jailed in Florida's Dade County for passing bad checks. The Florida attorney general's office dismissed his case after he agreed to pay back his victims. Also in the mid-1980s, Poulsen ran a Florida company called Dinsmore Tire Center that went bankrupt. In 1992, the IRS hit him with a lien for $49,000 in back taxes, which he paid two years later.
Neighbors did notice that Poulsen seemed obsessed with security. Even though sheriff's deputies and armed private guards patrolled the development, Poulsen protected his home with infrared alarms, motion detectors and other pricey devices.
Poulsen always looked wary, recalls one friend. It was as if someone were hunting him.
Lawsuits allege fraud
The warning signs started two or three years ago. In dozens of lawsuits around the country, health care firms doing business with National Century accused Poulsen of fraud, money skimming or conspiracy.
Typically, National Century strangled a medical firm's cash flow, according to the lawsuits and attorneys. Under the financing agreements, the insurance-claim payments from Medicare and other insurers went to bank accounts controlled by National Century. In some instances, the lawsuits allege, National Century failed to pay the health care firms all of the money due and siphoned the cash elsewhere.
In a case two years ago involving the defunct Boston Regional Medical Center in Stoneham, Mass., National Century allegedly shortchanged the hospital $12 million for its insurance claims while overcharging it $3 million in fees, according to court records.
Rather than transfer the money owed to the hospital, National Century withheld a few thousand dollars at a time, according to legal papers. When the hospital's accountants said nothing, National Century grew bolder and allegedly kept larger amounts of cash, from $100,000 to $500,000.
It was a classic embezzlement scam similar to "bust-out schemes" run by organized crime, alleges James Cottos, former director at FTI/Kahn Consulting, a forensic accounting firm hired by the hospital to investigate National Century.
"They would slowly bleed you to death," says Cottos, a former investigator for the Treasury Department and the Department of Health and Human Services.
Many of the medical firms became addicted to the steady cash from National Century and eagerly awaited their monthly checks. "It's like a pimp giving his girls cocaine and money," says David Leak, an anesthesiologist and medical director at Pain Control Consultants in Columbus, Ohio. "You get hooked on the good stuff and you can't leave."
Over a steak dinner, Leak was persuaded to sign on with National Century by two old friends: company co-founders Ayers, a former CEO of Grant Hospital, and Parrett, who ran a firm called Falcon Medical Billing, both in Columbus. Ayers and Parrett could not be reached for comment.
Running a small medical practice in a costly, up-and-down industry is a brutal business, so Leak jumped at the chance to get steady payments from National Century. It would keep his cash flow stable year-round, he thought.
But the deal turned nightmarish. Leak alleges that National Century forwarded only a small portion of the promised insurance-claim money to his clinic.
"It was a white-collar shell game," alleges Leak, who says National Century still owes him $200,000. He has sued for breach of contract, but the lawsuit has been stayed until the bankruptcy case is over.
Bond-rating agencies also grew suspicious. Moody's Investors Service and Fitch Ratings had long praised National Century's business and given its bonds their highest marks. But last year, an anonymous whistle-blower sent the agencies letters warning of possible financial chicanery at National Century.
Bond analysts met with Poulsen and National Century executives, who convinced them that National Century's accounting was fine. Moody's and Fitch gave National Century a clean bill of health.
The bond-rating firms should have looked deeper, some say. Beneath his friendly demeanor, Poulsen was litigious and quick-tempered, intimidating others into silence, according to business and legal sources.
Last year, Poulsen threatened legal action against a shareholder of PhyAmerica, a medical-services firm in Durham, N.C., that received funds from National Century, after the investor started asking skeptical questions about the financing.
The shareholder, Michael McGee, a former principal in investment firm The Appleton Group, fired back by suing Poulsen, accusing him of looting PhyAmerica of millions of dollars. The lawsuit was settled last year for $4 million. "I wasn't going to sit by and let this happen to me or other investors," McGee says.
National Century collapsed quickly. Talk spread in October that its $3.5 billion in bonds were close to default. The company's reserve funds to back the bonds held barely $200 million instead of the $600 million required by bond agreements.
Poulsen, in an Oct. 18 letter to health care firms, warned that one of National Century's cash-reserve funds was "deficient" and near "technical default."
In late October, several investment managers flew to Ohio to demand explanations from Poulsen. After making them wait two hours at National Century's offices, an irate Poulsen "physically ejected" the managers from the building, according to the affidavit of Daniel Ivascyn, a fund manager at Pacific Investment Management (Pimco), which invested in National Century bonds.
Bond analysts quickly slashed National Century bonds to junk status. Poulsen resigned as CEO, and National Century's board hired New York-based turnaround firm Alvarez & Marsal.
Poulsen's attorney, Albert Lucas of law firm Calfee Halter & Griswold, says Poulsen did nothing improper or illegal.
How financing worked
Here is how National Century Financial Enterprises arranged financing with health care firms:
National Century loaned millions of dollars to cash-hungry health care firms and hospitals. In turn, the health care firms gave National Century control of their insurance claims and medical bills.
The health care firms used the cash to run their businesses, and also paid fees to National Century.
National Century used the insurance claims as collateral to issue billions of dollars in bonds to Wall Street investors.
National Century used the proceeds from the bond sales to buy more insurance claims from medical firms.
Sources: USA TODAY research, National Century
A planned bond sale this past fall would have kept National Century afloat, Lucas says. But the bond issue never happened. Investors got spooked, Lucas says, after National Century's auditor, Deloitte & Touche, failed to finish its 2001 audit of the firm. National Century suffered another blow when a $125 million cash infusion from Credit Suisse First Boston fell through. "That led to the liquidity crisis," he says.
National Century and acting CEO David Coles of Alvarez & Marsal are trying to salvage the firm. They've launched an internal investigation and audit and are cooperating with federal investigators. National Century spokesman James Nickell says the company is working with banks to find new financing for the struggling hospitals and medical firms. Investors in $3 billion of defunct National Century bonds hope to recoup some of their losses in bankruptcy court.
Some wonder why the problems at National Century weren't flagged earlier by auditors, bond-rating agencies or other watchdogs.
"Where was everyone?" asks Charles Cooper, an attorney at Cooper & Elliott in Columbus who represents Leak, the anesthesiologist. "If a company is issuing billions of dollars in bonds, don't you check out the principals?"
Poulsen resigned recently as a trustee at Roosevelt University, which honored him in 2001 with an award for distinguished alumni. University officials won't say whether he was ousted or left on his own.
In Port Charlotte, the Poulsens have not appeared on the holiday social scene. Locals are withholding judgment until more facts emerge.
Poulsen's critics are much less forgiving. "They took a lot of people's money," Leak says. "A lot of folks are hurting."
By Edward Iwata USA TODAY
He was a modern-day Gatsby, a smooth talker and sharp dresser who floated across the room to greet the moneyed crowd.
National Century Financial Enterprises' offices in Dublin, Ohio, were raided by the FBI in November.
By Jay La Prete, AP
Before his downfall last month, Lance Poulsen, former CEO of National Century Financial Enterprises, was flying high. He ran a lucrative health care finance firm. He hosted charity fundraisers at his waterside villa in Port Charlotte, Fla. He hobnobbed with Republican politicians, including Florida Gov. Jeb Bush, and he sailed often to the Bahamas on his $2 million yacht, The Enterprise. (Background: Lawsuits claim massive money mismanagement)
"Lance was always very delightful," says Paula McQueen, a Florida businesswoman who has known Poulsen for several years. "Quite honestly, I liked him very much."
But in recent weeks, the mystery has deepened around Poulsen, 59. His financing of small hospitals, nursing homes and doctors' groups nationwide appears to have been a vast, fraudulent scheme, according to court filings and attorneys representing clients and investors.
Up to $2.5 billion in National Century money is unaccounted for, and an additional $400 million is missing from reserve funds used to back National Century bonds, according to company officials.
The Justice Department, the Securities and Exchange Commission and the Department of Health and Human Services, which investigates Medicare fraud, are looking into National Century's finances. Dozens of lawsuits around the country accuse Poulsen and National Century of defrauding investors and employees by skimming money from medical firms.
National Century, whose bonds carried Moody's highest credit rating less than two months ago, is operating under bankruptcy-court protection.
The company's rapid slide has revealed the financial strains in part of the nation's health care safety net. Unable to wait weeks or months for insurance companies to pay claims, 60 ailing companies relied on cash from National Century to run their medical offices and facilities. At least seven — serving thousands of mainly low-income patients from Los Angeles to Washington — have filed for bankruptcy protection since National Century crashed.
In Washington, Greater Southeast Community Hospital and Hadley Memorial Hospital — owned by Doctors Community Healthcare, a firm seeking bankruptcy protection — could not pay independent doctors on contract for several weeks. And Greater Southeast was forced to turn away emergency ambulances last month after the health care firms that provided contract nurses withdrew some nurses because of the cash squeeze.
Meanwhile, Poulsen and his wife, Barbara, have kept a low profile since mid-November, when FBI agents raided National Century's offices in Dublin, Ohio, and hauled away a truckload of computers and records. Poulsen's lawyer declined to make him available for an interview.
"Lance Poulsen is the most slippery character I've seen in my life," says Vicki Buba, an attorney at Stone Pregliasco Haynes Buba, which represents employees of a health care firm suing National Century in Louisville. "He and his people are getting away with murder."
Modest beginnings
The son of Danish immigrants, Poulsen grew up in Chicago in the 1950s, then earned business and marketing degrees at Roosevelt University in Chicago and the University of Iowa.
A decade ago, Poulsen eyed a potential gold mine in health care finance. As medical costs soared and insurance payments took months to process, small health care firms desperately needed cash to run their operations and pay their staff. So Poulsen co-founded National Century with hospital executive Donald Ayers and his wife, Rebecca Parrett, a medical-billing executive.
At investment conferences, Poulsen gave slick marketing presentations that touted clever financing and bond deals by National Century. Poulsen was very polished and aggressive, says one investment analyst.
Investors and health care professionals bought Poulsen's pitch. National Century lent millions of dollars to the health care outfits, which used the cash to run their hospitals and nursing homes. In turn, National Century took over the firms' insurance claims and payments owed by Medicare and other insurers.
Then National Century issued billions of dollars in bonds to Wall Street investors, using the proceeds to snap up more insurance claims from medical firms.
Little has been seen lately of former National Century CEO Lance Poulsen.
Poulsen quickly built a small empire. It grew into one of the nation's largest medical-finance outfits, providing billions of dollars in funding for clients in recent years. Last year, the privately held firm hauled in $40 million in profit on $300 million in revenue.
The Poulsens relished their newfound wealth. In the late 1990s, they moved to Port Charlotte, a posh seaside town in southwest Florida. In the genteel enclave of old money, the Poulsens stood out. Lance Poulsen roared down streets in a red Porsche 911. His 60-foot yacht was the largest pleasure boat in the marina. He boasted about jetting into town on one of his Raytheon Hawker corporate jets. The Poulsen's new, three-story mansion in Grassy Point Estates, a gated community on the harbor, features a 20-foot waterfall and pool, lush tropical landscaping and an underground garage.
Soon, the Poulsens were hosting lavish fundraisers, including a $150-a-person event for the American Cancer Society and a $500-a-plate affair for Gov. Bush.
The Poulsens lent Bush their company jet during his campaign and gave more than $40,000 last year to the Florida Republican Party, campaign records show.
Lance Poulsen's new friends seemed unaware of his spotted past. In 1984, he was jailed in Florida's Dade County for passing bad checks. The Florida attorney general's office dismissed his case after he agreed to pay back his victims. Also in the mid-1980s, Poulsen ran a Florida company called Dinsmore Tire Center that went bankrupt. In 1992, the IRS hit him with a lien for $49,000 in back taxes, which he paid two years later.
Neighbors did notice that Poulsen seemed obsessed with security. Even though sheriff's deputies and armed private guards patrolled the development, Poulsen protected his home with infrared alarms, motion detectors and other pricey devices.
Poulsen always looked wary, recalls one friend. It was as if someone were hunting him.
Lawsuits allege fraud
The warning signs started two or three years ago. In dozens of lawsuits around the country, health care firms doing business with National Century accused Poulsen of fraud, money skimming or conspiracy.
Typically, National Century strangled a medical firm's cash flow, according to the lawsuits and attorneys. Under the financing agreements, the insurance-claim payments from Medicare and other insurers went to bank accounts controlled by National Century. In some instances, the lawsuits allege, National Century failed to pay the health care firms all of the money due and siphoned the cash elsewhere.
In a case two years ago involving the defunct Boston Regional Medical Center in Stoneham, Mass., National Century allegedly shortchanged the hospital $12 million for its insurance claims while overcharging it $3 million in fees, according to court records.
Rather than transfer the money owed to the hospital, National Century withheld a few thousand dollars at a time, according to legal papers. When the hospital's accountants said nothing, National Century grew bolder and allegedly kept larger amounts of cash, from $100,000 to $500,000.
It was a classic embezzlement scam similar to "bust-out schemes" run by organized crime, alleges James Cottos, former director at FTI/Kahn Consulting, a forensic accounting firm hired by the hospital to investigate National Century.
"They would slowly bleed you to death," says Cottos, a former investigator for the Treasury Department and the Department of Health and Human Services.
Many of the medical firms became addicted to the steady cash from National Century and eagerly awaited their monthly checks. "It's like a pimp giving his girls cocaine and money," says David Leak, an anesthesiologist and medical director at Pain Control Consultants in Columbus, Ohio. "You get hooked on the good stuff and you can't leave."
Over a steak dinner, Leak was persuaded to sign on with National Century by two old friends: company co-founders Ayers, a former CEO of Grant Hospital, and Parrett, who ran a firm called Falcon Medical Billing, both in Columbus. Ayers and Parrett could not be reached for comment.
Running a small medical practice in a costly, up-and-down industry is a brutal business, so Leak jumped at the chance to get steady payments from National Century. It would keep his cash flow stable year-round, he thought.
But the deal turned nightmarish. Leak alleges that National Century forwarded only a small portion of the promised insurance-claim money to his clinic.
"It was a white-collar shell game," alleges Leak, who says National Century still owes him $200,000. He has sued for breach of contract, but the lawsuit has been stayed until the bankruptcy case is over.
Bond-rating agencies also grew suspicious. Moody's Investors Service and Fitch Ratings had long praised National Century's business and given its bonds their highest marks. But last year, an anonymous whistle-blower sent the agencies letters warning of possible financial chicanery at National Century.
Bond analysts met with Poulsen and National Century executives, who convinced them that National Century's accounting was fine. Moody's and Fitch gave National Century a clean bill of health.
The bond-rating firms should have looked deeper, some say. Beneath his friendly demeanor, Poulsen was litigious and quick-tempered, intimidating others into silence, according to business and legal sources.
Last year, Poulsen threatened legal action against a shareholder of PhyAmerica, a medical-services firm in Durham, N.C., that received funds from National Century, after the investor started asking skeptical questions about the financing.
The shareholder, Michael McGee, a former principal in investment firm The Appleton Group, fired back by suing Poulsen, accusing him of looting PhyAmerica of millions of dollars. The lawsuit was settled last year for $4 million. "I wasn't going to sit by and let this happen to me or other investors," McGee says.
National Century collapsed quickly. Talk spread in October that its $3.5 billion in bonds were close to default. The company's reserve funds to back the bonds held barely $200 million instead of the $600 million required by bond agreements.
Poulsen, in an Oct. 18 letter to health care firms, warned that one of National Century's cash-reserve funds was "deficient" and near "technical default."
In late October, several investment managers flew to Ohio to demand explanations from Poulsen. After making them wait two hours at National Century's offices, an irate Poulsen "physically ejected" the managers from the building, according to the affidavit of Daniel Ivascyn, a fund manager at Pacific Investment Management (Pimco), which invested in National Century bonds.
Bond analysts quickly slashed National Century bonds to junk status. Poulsen resigned as CEO, and National Century's board hired New York-based turnaround firm Alvarez & Marsal.
Poulsen's attorney, Albert Lucas of law firm Calfee Halter & Griswold, says Poulsen did nothing improper or illegal.
How financing worked
Here is how National Century Financial Enterprises arranged financing with health care firms:
National Century loaned millions of dollars to cash-hungry health care firms and hospitals. In turn, the health care firms gave National Century control of their insurance claims and medical bills.
The health care firms used the cash to run their businesses, and also paid fees to National Century.
National Century used the insurance claims as collateral to issue billions of dollars in bonds to Wall Street investors.
National Century used the proceeds from the bond sales to buy more insurance claims from medical firms.
Sources: USA TODAY research, National Century
A planned bond sale this past fall would have kept National Century afloat, Lucas says. But the bond issue never happened. Investors got spooked, Lucas says, after National Century's auditor, Deloitte & Touche, failed to finish its 2001 audit of the firm. National Century suffered another blow when a $125 million cash infusion from Credit Suisse First Boston fell through. "That led to the liquidity crisis," he says.
National Century and acting CEO David Coles of Alvarez & Marsal are trying to salvage the firm. They've launched an internal investigation and audit and are cooperating with federal investigators. National Century spokesman James Nickell says the company is working with banks to find new financing for the struggling hospitals and medical firms. Investors in $3 billion of defunct National Century bonds hope to recoup some of their losses in bankruptcy court.
Some wonder why the problems at National Century weren't flagged earlier by auditors, bond-rating agencies or other watchdogs.
"Where was everyone?" asks Charles Cooper, an attorney at Cooper & Elliott in Columbus who represents Leak, the anesthesiologist. "If a company is issuing billions of dollars in bonds, don't you check out the principals?"
Poulsen resigned recently as a trustee at Roosevelt University, which honored him in 2001 with an award for distinguished alumni. University officials won't say whether he was ousted or left on his own.
In Port Charlotte, the Poulsens have not appeared on the holiday social scene. Locals are withholding judgment until more facts emerge.
Poulsen's critics are much less forgiving. "They took a lot of people's money," Leak says. "A lot of folks are hurting."
Friday, July 13, 2007
Medicare/Medicaid in the USA.
FRAUD! The Medicare/Medicaid idea was great, but the greed and corruption was and is the true reason this system is failing. No one talks about this.
What they do talk about is the future of this system and how we will not be able to manage the upcoming baby boomer population, as the system is working to today that is. But once again. they will not discuss the real reason of this collapse in our health care system, FRAUD! There were so many loopholes for years on end within the Medicare/Medicaid system offering ample opportunity to financially drain the system into the ibis.
Once a readers digest investigative reporter wrote: “The government has given the open door to allow entities to blatantly defraud the system without any oversight or consequence.
back in the late 90's 60 Minutes did a report on the "PAC MAN" mentality of HCA.
Now Hillary and Barack want to improve and fine tune the insurance companies! Bring costs down. Have a variety of ideas that will save families $2400.00-2500.00 yr with their premiums. Is that discount off of the already astronomical costs that exist already? Wow, what a deal!
My God, just look at this pharmaceutical industry! Consider all their contributions to the political parties. Now, WHY IS THAT? WHAT COULD THEY POSSIBLY WANT? Thus, we have a pharmaceutical bill for seniors. We all know how well that works!
Just take a look at the ex-Senate Leader, Bill Frist, the doctor, when the pharmaceutical bill was passed for seniors. Ironic, this is the leader that was from the same family that revamped our Health Care System which is in such dire straits today. This is abominable!
Is anyone aware of the amount of dollars involved in this fraudulent system that has continued over decades within our health care system? While you are out on the campaign trail and are asked how you will pay for the plan that you propose might include the collection of overdue payments that are a result of fraud within the system. Who knows, that could pay for it all! Note: Many settled cases by the government have yet to collect one dime from the settlements.
What they do talk about is the future of this system and how we will not be able to manage the upcoming baby boomer population, as the system is working to today that is. But once again. they will not discuss the real reason of this collapse in our health care system, FRAUD! There were so many loopholes for years on end within the Medicare/Medicaid system offering ample opportunity to financially drain the system into the ibis.
Once a readers digest investigative reporter wrote: “The government has given the open door to allow entities to blatantly defraud the system without any oversight or consequence.
back in the late 90's 60 Minutes did a report on the "PAC MAN" mentality of HCA.
Now Hillary and Barack want to improve and fine tune the insurance companies! Bring costs down. Have a variety of ideas that will save families $2400.00-2500.00 yr with their premiums. Is that discount off of the already astronomical costs that exist already? Wow, what a deal!
My God, just look at this pharmaceutical industry! Consider all their contributions to the political parties. Now, WHY IS THAT? WHAT COULD THEY POSSIBLY WANT? Thus, we have a pharmaceutical bill for seniors. We all know how well that works!
Just take a look at the ex-Senate Leader, Bill Frist, the doctor, when the pharmaceutical bill was passed for seniors. Ironic, this is the leader that was from the same family that revamped our Health Care System which is in such dire straits today. This is abominable!
Is anyone aware of the amount of dollars involved in this fraudulent system that has continued over decades within our health care system? While you are out on the campaign trail and are asked how you will pay for the plan that you propose might include the collection of overdue payments that are a result of fraud within the system. Who knows, that could pay for it all! Note: Many settled cases by the government have yet to collect one dime from the settlements.
Michael Moore.....HELP
Is there anyone out there that will discuss the FRAUD that has CRIPPLED our health Care System in this country?
Is there anyone out there that can speak about the influence HCA (Frist Family & friends) has had on our Health Care system Nationwide?
I wonder if there will ever be a person that can connect the dots and explain to Americans how we are just too trusting in our government to do the right thing.
I really wish someone will connect the dots between Richard Rainwater, his wife, darla Moore, the Corporate Bankruptcy Pioneer and George W Bush.
Where is Michael Moore when you really need him?
Is there anyone out there that can speak about the influence HCA (Frist Family & friends) has had on our Health Care system Nationwide?
I wonder if there will ever be a person that can connect the dots and explain to Americans how we are just too trusting in our government to do the right thing.
I really wish someone will connect the dots between Richard Rainwater, his wife, darla Moore, the Corporate Bankruptcy Pioneer and George W Bush.
Where is Michael Moore when you really need him?
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