A federal jury has found two top finance executives and three others guilty on all counts of conspiracy, fraud, and money laundering at National Century Financial Enterprises.
The verdicts ended a six-week trial after less than two days of deliberation. A 27-count indictment had laid out the defendants’ scheme to deceive investors about the financial health of the NCFE, which was one of the largest health-care finance companies in the United States until it filed for bankruptcy in November 2002. The company securitized medical accounts receivable purchased from medical providers.
The guilty parties are Randolph Speer, the NCFE’s chief financial officer; Rebecca Parrett, vice chairman and treasurer; Donald Ayers, vice chairman and chief operating officer; Roger Faulkenberry, a senior executive responsible for raising money from investors; and James Dierker, associate director of marketing and vice president of client development. They face maximum prison terms ranging from 55 years to 140 years.
“These convictions send a clear message to Corporate America that executives will be brought to justice for lying to investors and misrepresenting the actions taken in their normal course of business,” said Deputy Attorney General Mark Filip, chairman of the President’s Corporate Fraud Task Force.
Added Assistant Attorney General Alice Fisher: “By holding accountable those who break the law, today’s convictions help restore some of the faith and trust the public loses every time corporate executives defraud their investors. The jury’s verdict demonstrates that the public will not stand by while company executives commit billion-dollar frauds, leaving the honest investors to bear the losses they create.”
The five now-convicted individuals as well as two others were indicted in May 2006 for their roles in a nearly $3 billion fraud at National Century. The company’s bankruptcy forced 275 health-care providers to file for bankruptcy as well, according to a Securities and Exchange Commission civil complaint filed in December 2005 against four of the executives.
The indictment accused the defendants of lying about how investors’ funds would be used, diverting the funds, hiding the shortfall by moving money back and forth between subsidiaries’ bank accounts, and falsifying reports and records to cover up the scheme.
In July 2007, a federal grand jury returned a superseding indictment charging eight former executives of National, including the five who were convicted last week. In addition to the criminal charges, it sought $1.9 billion in forfeiture of property representing the proceeds of the conspiracy.
In addition to the five executives who were convicted, the former executives who were indicted were CEO Lance Poulsen, vice president of securitizations Jon Beacham, and James Happ, who was executive vice president for service operations and a certified public accountant.
Beacham pleaded guilty last summer to one count of conspiracy to commit securities fraud and wire fraud and one count of securities fraud, and agreed to forfeit $330,000. Poulsen will go on trial separately on fraud charges in August. In addition, he is scheduled to go on trial Monday on charges of witness tampering.