Health Care Execs Draw Prison Terms for $2B Fraud Scheme

Four top executives of bankrupt health care financing company National Century Financial Enterprises have been sentenced to lengthy prison terms for their part in a $2 billion securities fraud scheme.

Federal marshals are seeking a fifth exec who jumped bail and disappeared before the sentencing in Ohio federal court.

Authorities identified her as NCFE co-owner and vice chairman Rebecca S. Parrett. She formerly lived in Carefree, Ariz.

The other four executives were sentenced in the U.S. District Court for the Southern District of Ohio to between five and 15 years in prison and ordered to make more than $2 billion in restitution.

A sixth defendant, former NCFE co-owner and CEO Lance K. Poulsen, 65, of Port Charlotte, Fla., was sentenced to 10 years in prison on a related obstruction-of-justice charge.

According to court records, Poulsen's securities fraud trial was severed from that of the other executives last year when he and his friend Karl A. Demmler, 57, a bar owner from Columbus, Ohio, were charged with witness tampering related to the NCFE securities fraud prosecution.

Both were convicted in March. A sentencing date for Demmler has not been set.

Prosecutors said Poulsen faces trial Oct. 1 on charges related to the securities fraud conspiracy, including counts of wire fraud and money laundering.

Before going bankrupt six years ago Dublin, Ohio-based NCFE was the nation's largest health care financing company. In re Nat'l Century Fin. Enters., No. 02-BK-65235, voluntary petition filed (Bankr. S.D. Ohio Nov. 18, 2002).

NCFE was in the business of purchasing accounts receivable from health care providers. It paid cash for the accounts receivable, and the health care companies used the money for operating and other expenses. NCFE was paid a fee for the service.

However, NCFE made most of its money in the securitization of the purchased accounts receivable and their sale to institutional investors as interest-paying asset-backed bonds and notes.

From May 1998 to May 2002 NCFE sold $4.4 billion in such asset-backed securities to pension funds and other institutional investors.

An indictment filed in Columbus federal court in 2006 charged NCFE's top execs with siphoning off nearly $2 billion of that investor money for other uses, including payments and loans to health care companies owned by Poulsen, Parrett, and NCFE co-owner and vice chairman Donald H. Ayers, 72, of Fort Myers, Fla.

Ayers and Parrett were tried and convicted on securities fraud and related charges in February along with CFO Randolph H. Speer, 57, of Peachtree City, Ga.; Roger S. Faulkenberry, 47, of Dublin, Ohio, the company's senior fundraiser; and James E. Dierker, 40, of Powell, Ohio, NCFE's vice president of client development.

Prosecutors said Ayers drew the stiffest sentence: 15 years in prison for conspiracy, securities fraud and money laundering.

Speer received 12 years' incarceration for conspiracy, securities fraud, wire fraud and money laundering; Faulkenberry got 10 years in prison for conspiracy, securities fraud, wire fraud and money laundering; and Dierker was sentenced to five years for conspiracy and money laundering.

Prosecutors said Parrett faces up to 75 years in prison when she is apprehended and sentenced.

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