Former CEO accused of trying to bribe witness

Former CEO accused of trying to bribe witness
Friday, October 19, 2007 3:40 AM
By Tracy Turner

THE COLUMBUS DISPATCH

Lance K. Poulsen
Lance K. Poulsen spent last night in jail as charges against the former leader of the defunct National Century Financial Enterprises continued to mount.

Poulsen was arrested in Tampa, Fla., and charged with witness tampering, federal conspiracy and obstruction of justice, said

J. Mark Batts, acting special agent in charge of the FBI's Cincinnati division.

Karl A. Demmler was arrested on the same charges in Columbus, the FBI said.

Demmler, the former owner of the Bogey Inn in Dublin, was used by Poulsen to "frequently contact a witness for the government … to offer her cash in exchange for her not giving damaging testimony against Poulsen in his federal fraud trial," the FBI said.

Poulsen was president and chief executive of National Century, a former Dublin health-care financing company that is accused of engineering the biggest case of fraud by a private company in U.S. history, costing investors $1.9 billion.

After National Century went bankrupt in 2002, about 275 health-care companies also failed because of financing problems related to the collapse.

Poulsen is among seven National Century executives indicted earlier and accused of conspiring to defraud investors by diverting funds, falsifying data in investors' reports and moving money around to conceal shortfalls. Poulsen is to stand trial in February.

In the new indictments, Poulsen and Demmler are accused of offering $500,000 to a female witness in Poulsen's trial. The witness was to be given $5,000 to start, with monthly payments thereafter, the indictments said.

Demmler is described in court documents as "a longtime acquaintance" of Poulsen's and the previous owner of a bar frequented by National Century executives.

Demmler arranged for the witness to give him 10 percent of the money that Poulsen was to pay her for her testimony, the criminal complaint said.

The witness is described as a former National Century executive who pleaded guilty to participating in the conspiracy and was ordered to pay restitution for her part in the fall of the company.

For the money, Poulsen and Demmler expected the witness to "say she does not recall" when questioned and "when shown a document with handwriting on it, she should say it does not look like her handwriting or it looks forged," the indictments said.

Demmler is scheduled to appear at a detention hearing today in Columbus, while Poulsen, who lives in Port Charlotte, Fla., will have one in Tampa, where he is being held, said Doug Squires, assistant district attorney with U.S. District Court in Columbus.

Squires said the government will ask that Poulsen be sent to Columbus to face charges and remain in custody. Squires called him a flight risk and a danger to the community.

If convicted of the new charges, Poulsen could get up to 10 years in prison and a $250,000 fine. If he is convicted of the previous charges, he could get life in prison, the FBI said.

Earlier indictments said company executives received about $29.6 million in bonuses and wages between 1996 and 2002, while providing investors with a "false and misleading picture" that National Century was a "healthy, growing company."

At least four former National Century officials have pleaded guilty:

• Jon A. Beacham, director of securitization, to conspiracy and security fraud.

• Sherry Gibson, executive vice president for compliance, to conspiracy to commit securities fraud.

• John Allen Snoble, chief financial officer, vice president and controller, to conspiracy to launder money.

• Brian J. Stucke, director of compliance, to conspiracy to commit securities fraud.


tturner@dispatch.com