Former National Century execs guilty of fraud

Prosecutors likened health care company’s $1.9 billion shceme to Enron

updated 9:18 p.m. ET March 13, 2008

COLUMBUS, Ohio - Five former executives of a health care company were convicted Thursday in a $1.9 billion fraud scheme that prosecutors likened to large white-collar crime cases like Enron or WorldCom.

The executives worked for National Century Financial Enterprises, described as the nation's largest health care financing company before its 2002 bankruptcy.

The five — some of the company's highest ranking executives — were convicted of multiple counts of conspiracy, wire and securities fraud, and money laundering.

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The Justice Department said the defendants could each face several dozen years in prison, with exact amounts varying based on the individual counts they were convicted of. But actual sentences are usually much lower than the maximum penalties. In court, U.S. District Judge Algenon Marbley described a statutory guideline of 20 years.

The defendants and their attorneys listened without emotion as Marbley read the verdicts from a 27-count indictment one by one. Some of the defendants' family members appeared stunned and wept in the courtroom after the jury left.

Convicted of all charges were Donald Ayers, the company's former chief operating officer; James Dierker, the company's former vice president of client development; Roger Faulkenberry, a former executive vice president who raised money from investors; Rebecca Parrett, the company's former vice chairman; and Randy Speer, National Century's former chief financial officer.

The judge, over the objections of prosecutors, allowed the defendants to remain free while they await sentencing but required them to wear electronic monitoring devices. Sentencing was expected in two to three months.

National Century offered financing to small hospitals, nursing homes and other health care providers by purchasing their accounts receivable, usually for 80 or 90 cents on the dollar, so they wouldn't have to wait for insurance payments. National Century then collected the full amount of the payments.

The company, based in suburban Dublin, raised the money to fund its business by selling bonds to investors.

Prosecutors argued that the company's executives authorized millions in unsecured loans to those health care providers, then misled investors about the loans.

"I was shocked — I don't have any other description for it," said Frederick Benton, who represented Speer, "particularly given the speed at which they came back with a verdict of that nature."

The jury, which started deliberating Tuesday, had to sift through hundreds of documents and recall hours of testimony over five weeks, some of it lasting hours and dwelling on highly complex financial issues.

CONTINUED: "Everyone's hurt"

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