NCFE trial starts on Monday ....but who or where is the 'BIG DADDY' that is M I A ? You know the BRAINSTORM of the scheme!

I believe you are missing the Much BIGGER picture here.

Look back into 1999, 2000 and dig into a little research to find out what health care company brainstormed this fraudulant scheme that once combined with "NCFE" is LARGER than Enron!

Need a hint? Who, other than Lance , is not going to trial this Monday with the rest of the gang? And where did this missing executive come from prior to his arrival at "NCFE"?


Trials in huge fraud case to begin
Sunday, February 3, 2008 3:32 AM
By Jodi Andes

THE COLUMBUS DISPATCH

National Century co-founder and former chief executive Lance K. Poulsen's lifestyle afforded him the use of a 60-foot yacht.

By the numbers $4.4 billion invested in National Century in its last four years
$1.9 billion lost by investors 10 million-plus documents compiled by prosecutors preparing for three fraud trials 45 prosecution witnesses 5 defendants who could go to prison for life if convicted of all charges As fraud cases go, the National Century Financial Enterprises case ranks up there with Enron and WorldCom, prosecutors say.

Investors in the Dublin-based company lost more than $1.9 billion after the financing giant filed for bankruptcy in 2002. And at least 275 health-care companies collapsed, putting thousands out of work and affecting thousands of patients.

National Century's collapse never gained much attention outside business circles, largely because it was a privately held company. But some, such as large pension funds and the state of Arizona, lost millions.

"I always say it's the largest, most significant case you've never heard of," said Kathy Patrick, an Arizona attorney representing 30 clients who lost a total of $1.6 billion.

By comparison, the scandals that destroyed publicly traded Enron and WorldCom hit thousands of stockholders. The Enron scandal wiped out 5,600 jobs and $2.1 billion in pensions and destroyed $60 billion in market value. The $11 billion WorldCom accounting fraud resulted in investor losses estimated at $180 billion, and it put more than 20,000 people out of work and destroyed their retirement funds.

Eleven people have been charged in connection with the National Century collapse. Four already have pleaded guilty and agreed to testify against the others.

The rest will defend themselves in four trials that are expected to span most of the year. The first starts Monday, and the last is scheduled to begin on Oct. 1.

Former CEO and co-founder Lance K. Poulsen is to be tried twice -- on March 7, with a co-defendant, on a charge of witness tampering, and again on Aug. 4, on charges of fraud, conspiracy and money laundering.

The trial that starts on Monday is expected to last at least two months. Facing charges ranging from conspiracy to money laundering are the other two co-founders, Rebecca S. Parrett and Donald H. Ayers, as well as former executives Randolph H. Speer, Roger S. Faulkenberry and James E. Dierker. If convicted on all charges, all but Dierker could be sentenced to life in prison.

At 39, Dierker is the youngest defendant. He could be sentenced to 25 years in prison if convicted.

Those familiar with the case say it is one to watch because of its immediate and continuing effect on the national economy.

A company is born
Ayers, Parrett and Poulsen founded National Century in 1991 to offer financing to small hospitals, clinics, nursing homes and other health-care providers.

National Century agreed to buy the providers' uncollected debt owed by patients, or accounts receivable, and give the providers cash to cover expenses. The smaller companies didn't have to wait for insurance reimbursement, and National Century kept a fee or percentage of what it collected.

To get cash to give the smaller companies, National Century sold bonds to investors -- including some big pension funds, which were among those hit hardest by National Century's collapse.

The pension fund for New York City police, firefighters and other workers began investing in National Century in 2000. The company's bonds were attractive because of their life span -- usually three years -- and high bond rating, said New York lawyer Steve Fineman.

Fitch Investor Services and Standard & Poor's gave National Century the highest rating -- AAA.

"It showed it was a conservative investment," Fineman said.

But within two years, and only a year after the Sept. 11 terrorist attack, the New York City workers' fund lost $89 million. The hit was not big enough to cause workers to lose their pensions, but big enough that the fund still is trying to recoup five years later, he said.

New York City workers were not alone.

A consortium of Arizona investors, including the state government, was hit hardest and has sued National Century executives for $1.6 billion. Millions came from the state's investment pool, money that funds such things as roads and schools and supplements the expenses of everyday government, said Kathy Patrick, who represents the consortium.

After the money was lost, public projects were delayed and some workers were laid off, Patrick said.

The cost of the National Century collapse hasn't yet been measured, but it's safe to assume that consumers are feeling the effects, said W.C. Benton, a health-care business professor at Ohio State University's Fisher College of Business

"The fact that the doctors go out of business means fewer clinics," he said. "Prices increase because of fewer places of service."

National Century financed a few small hospitals, and at least one in Texas filed for bankruptcy, but no hospital in Ohio was affected, said Tiffany Himmelreich, a spokeswoman for the Ohio Hospital Association.

Services proved popular
Early on, National Century carved out an attractive business niche.

Few if any companies were providing such a service at the time, Benton said. And the three founders had the experience to make it work.

Poulsen had a background in marketing and financing. Ayers was a former president of Grant Medical Center. Parrett, now divorced from Ayers, had experience handling receivable accounts at Grant. Obtaining the necessary capital wasn't a problem. National Century raised $4.4 billion from investors between 1998 and 2002 to lend to health-care providers.

The company's headquarters were at 6125 Memorial Dr. in Dublin. National Century grew to have 327 employees in the suburb and three other cities.

From the outside, its loans appeared very safe, Patrick said.

For every dollar loaned out, the company promised to keep 17 cents in reserve. Health-care providers were told they would receive 80 or 90 cents on the dollar of the debt assumed for collection by National Century, federal documents show.

Getting less than what they were owed in exchange for money in hand quickly was appealing to physicians for several reasons, Benton said.

They wouldn't have to wait months for Medicaid reimbursement or for patients to pay their bills. Nor would they have to bother with paper-intensive billing, a side of the business most doctors dislike, he said.

"It was a great idea to keep from having to have some billing center in your office," Benton said.

National Century became a reliable -- and sometimes the sole -- stream of income for health-care providers as the company grew to become one of the nation's largest health-care financers, Benton said.

That's why so many health-care providers collapsed in the wake of National Century's bankruptcy.

"When the cash is cut off, you can't pay your suppliers or your employees," Benton said.

Business practices questioned
By 2000, allegations of wrongdoing began to surface.

Assistant U.S. attorneys say that the company's collapse resulted from criminal decisions, not a failed business plan.

Greed set in, they say.

According to federal indictments:

Company executives loaned money to companies in which they were principal stakeholders "to pay operating expenses of these health-care providers which was to benefit Poulsen, Ayers and Parrett."

Executives used the money to support lavish lifestyles, which involved such things as Poulsen's 60-foot yacht and Parrett's 4,725-square-foot Arizona home with a five-car garage.

In some cases, National Century agreed to take over providers' debts without formally buying the accounts, which amounted to the company having millions in unsecured loans. In 2001 and 2002, National Century advanced $700 million in loans to companies without purchasing the accounts receivable.

As reserves weakened, investors and Securities Exchange Commission officials were given false financial reports that said National Century's two subsidiaries, NPF VI and NPF XII, were healthy. But money was being shifted between the two to make it appear they had adequate money in reserve, the indictment says.

The company declared bankruptcy in 2002 and shut down shortly after.

Company executives have maintained their innocence. Attorneys and U.S. District Judge Algenon L. Marbley have prepared for a long, tedious legal fight.

One of the challenges will be to make topics such as "securitization" easy for jurors to understand, said Greg Peterson, Parrett's attorney. He is concerned that complex business practices will be overly simplified and misrepresented.

"Oversimplifying things is very dangerous," Peterson said. "These are very dry issues. It's a tall order for a juror to sit there and pay attention."

On the other side, victims fear that if National Century executives emerge unscathed, that could provide an arena for fraud in an investment area that has long been considered safe, Patrick said.

"These are the types of investments that are held in mutual funds and pension funds across the country," she said. "It's important that the investments be true because pensions rely on them.

"This is a really pivotal trial."

Dispatch staff reporter Suzanne Hoholik and researchers Linda Deitch and Amy Disch contributed to this story.

Financial Fraud? Look deeper......where is Mr. Happ?

Maybe we need to 'investigate' a little deeper into what really occurred here?
Besides Lance Poulsen missing, Mr. James Happ is alos missing. One must really analyze who James Happ was and why he was placed at NCFE.

More to follow.......but in the meantime, we can read this!

By ANDREW WELSH-HUGGINS
Associated Press Writer
COLUMBUS, Ohio -- Six years after the collapse of the country's biggest health care finance company, a trial is nearing for five executives accused of a $1.9 billion fraud that helped bring the company down.

The case involves one of the largest alleged white-collar crimes after Enron or WorldCom, yet it is largely unknown to the public.

"I tell people all the time, this is the most important case that people have never heard of," said Kathy Patrick, whose Houston firm represents a group of investors that lost a total of $1.6 billion when National Century Financial Enterprises collapsed in 2002.

Two former owners of National Century and three former executives go on trial Monday in federal court in Columbus. The company was based in suburban Dublin.

Federal prosecutors say the officials conspired to defraud investors by diverting money from investors' funds for improper uses, fabricating data in investor reports, and moving money back and forth between accounts to conceal investor fund shortfalls.

The government expects to call 45 witnesses during the trial, which is expected to last six to eight weeks.

Missing from the trial will be National Century's former president and chief executive, Lance Poulsen, a chief target of the government's allegations.

Before his own trial on the fraud charges in August, Poulsen is scheduled for a March trial on charges of witness tampering.

U.S. Attorney Gregory Lockhart said Poulsen, of Port Charlotte, Fla., had a Columbus resident offer a government witness cash in exchange for her not giving damaging testimony against Poulsen. He has pleaded not guilty and is being held in a Ross County jail.

Poulsen is already fighting similar fraud charges in a civil case brought by the Securities and Exchange Commission.

Messages were left for Poulsen's attorney seeking comment.

The five executives going on trial Monday have pleaded not guilty to all charges and maintain their innocence.

Several other National Century executives charged in the scheme have pleaded guilty, and at least four may testify in the trial.

National Century had been the nation's largest source of financing to health care providers. Doctors, hospitals and other providers received money from the company rather than waiting for insurance payments, usually getting 80 or 90 cents on the dollar. National Century was then to collect and keep the full amount of the payments owed by insurance companies.

Providers, by going through National Century, received money owed them earlier than if they waited for full payment from insurance companies.

National Century raised the money to fund its business by selling bonds to investors, who received interest payments followed by a lump-sum payment.

The government alleges National Century executives routinely overpaid some health care providers, many of them entities the executives had a financial interest in. National Century told investors it was making the proper payments, according to the government.

During 2001 and 2002 alone, the government says, company executives provided more than $700 million in investor funds to health care providers.

These advances amounted to high-risk, unsecured loans that were hidden from investors, the government said.

"National Century's business became increasingly dependent upon keeping these certain health care provider clients in business, because the money owed to National Century far exceeded the possible collections from the accounts receivable purchased by National Century," the government said in a Jan. 22 court filing.

National Century's investors say they participated in the program because the investment risks were deemed low. They included the state of Arizona, banks, insurance companies and local governments such as cities and counties.

"These are investors who do not expect or take the risk associated with credit defaults," Patrick said. "These investors were told this was money market equivalent, safe, secure investments, and it evaporated."

Investors represented by Patrick have sued Credit Suisse First Boston over the $1.6 billion they say was lost in the National Century collapse.

Credit Suisse marketed $3 billion of National Century's asset-backed securities. The company declined comment.

Although the focus has been on money lost by investors, people shouldn't discount the blow to doctors and other medical practitioners that relied on National Century to keep their practices running, said W.C. Benton, an Ohio State University business professor who has followed the case.

Some health care companies filed for bankruptcy because of interrupted payments from National Century, and others have filed civil lawsuits against the company.

"It will be a major, major bump in the road in terms of financing health care," Benton said. "A lot of these small practices don't have extra cash. It's going to stop some of the growth in that area."

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?