National Century Financial Enterprises Executives – GUILTY – in $3 Billion Securities Fraud Scheme!

It is true – every choice has a consequence! That statement holds true in every choice you make in life. Just like gravity, you can’t avoid the consequences of choices that you make. Now, don’t misread that statement – consequences don’t alway mean “bad” – they are just consequences. Your choices can create – Negative Consequences or Positive Results. By your choices you decide.

The Columbus Dispatch reported that after a day and a half of deliberation, the jury of eight women and four men came back with a determination of “guilty” for every one of the 40 charges against two of the Dublin company’s founders and three of its former executives.

 

donald-ayers.jpg

In the case of Donald H. Ayers, age 71, of Fort Meyers, Florida – Rebecca S. Parrett, age 59, of Carefree, Arizona – Randolph H. Speer, age 58, of Peachtree City, Georgia – Roger S. Faulkenberry, age 46, of Dublin, Ohio – and James E. Dierker, age 40, or Powell, Ohio – the choices they made as officers of National Century Financial Enterprises have yielded what will be a certain unpleasant consequence – likely time in federal prison.

Based on charges of conspiracy, fraud and money laundering, the jury returned the guilty verdict on all charges contained in a 27-count superseding indictment stemming from a scheme to deceive investors about the financial health of NCFE. The company, which was based in Dublin, Ohio, was one of the largest healthcare finance companies in the United States until it filed for bankruptcy in November 2002.

“This case is one of the largest corporate fraud investigations involving a privately held company headquartered in small town America,” said Assistant Director Kenneth W. Kaiser of the FBI Criminal Investigative Division. “The FBI continues to leverage its corporate fraud expertise gained through large-scale investigations such as Enron and WorldCom, to ensure that corporations represent their true health. From Dublin, Ohio, to Houston, Texas to New York, New York, the message is clear that the FBI will not stand by as corporate executives manipulate their financial statements and conceal illegal activities from criminal and regulatory authorities.”

According the the news release from the US Attorney’s office:

The government presented evidence that the defendants engaged in a scheme to deceive investors and rating agencies about the financial health of NCFE and how investor monies would be used. Between May 1998 and May 2001, NCFE sold notes to investors with an aggregate value of $4.4 billion, which evidence presented at trial showed were worth approximately six cents on the dollar at the time of NCFE’s bankruptcy in November 2002.

NCFE presented a business model to investors and rating agencies that called for NCFE to purchase high-quality accounts receivable from healthcare providers using money NCFE obtained through the sale of asset-backed notes to institutional investors. The evidence at trial showed that NCFE advanced money to health care providers without receipt of the requisite accounts receivable, oftentimes to healthcare providers that were owned in whole or in part by the defendants. The evidence further showed that the defendants lied to investors and rating agencies in order to cover up this fraud.

Small hospitals, nursing homes and other health care providers sold their accounts receivable to the company, usually getting 80 or 90 cents on the dollar, rather than waiting for insurance payments. National Century then collected the full amount of the payments.

The evidence at trial showed that NCFE concealed from investors the shortfalls produced by this fraud by moving money back and forth between accounts, fabricating data in investor reports, incorporating false information into the accounting system, and making other false statements to investors and rating agencies. Moreover, the defendants’ compensation was tied to the amount of money they advanced to healthcare providers and those providers’ outstanding balance owed to NCFE. The government presented evidence at trial that showed that the defendants knew that the business model NCFE presented to the investing public differed drastically from the way NCFE did business within its own walls and that NCFE was making up the information contained in monthly investor reports to make it appear as though NCFE was in compliance with its own governing documents.

“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. “These are the latest successes in our efforts to improve the integrity of our financial markets.”

“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,” said Assistant Attorney General Alice S. Fisher.

Facing millions of dollars in fines and up to 140 years in prison, the corporate officers found guilty here will have time to reflect on the choices they made and the consequences that follow.

White Collar Crime and Business Ethics Speaker – Today, I speak to groups nationwide about Choices and Consequences. Do your employees make the best choices for your company—or for themselves? Are you ready for some straight talk about success, choices, and ethics from a business executive who lost it all…and gained more than he could ever imagine?

In an unusually vulnerable style, I explore the decisions we make through the veil of honesty, integrity, and ethics. Your audience will be touched by this personal story and poignant lessons. Having been where the guilty executives above are going, I know first hand the pain caused by poor choices and practical ways to avoid making poor choices.

For information about my presentations, visit my website – www.chuckgallagher.com

Your comments on this blog are welcome!

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53 Responses to National Century Financial Enterprises Executives – GUILTY – in $3 Billion Securities Fraud Scheme!

  1. Does anyone have any background on the folks involved? Or has anyone reading been defrauded by National Century Financial.

    Your comments would be welcome!

  2. Lisa Beile says:

    I have a client that was defrauded and is interested in being included in the class action lawsuit, but has not been notified yet. Do you have any news regarding the class action suit?

    I’d appreciate any help you can provide.

  3. kimberly says:

    “Does anyone have any background on the folks involved? Or has anyone reading been defrauded by National Century Financial……”

    i think the poor employees involved are just playing the fall guys for the big crooks in the business. it is very sad and they dont realize that they have taken these employees lives and money away

    • forty13 says:

      I do and can tell you that not everyone convicted was in the wrong – there are inocent people sitting in jail because of this!!

      • SK says:

        Ever person sitting in prison right now is guilty. Family members may not want to believe it, but it is true.

  4. Layne says:

    I was one of Becky’s assistants and I can tell you the right people were found guilty. Even as an assistant with no corporate financial background I could tell you that their books were more than just a little “funny”. I would ask the managers to explain why certain clients had multiple ledgers and how the system worked and was brushed off each time. Even the low-level managers knew what was going on in the remote Arizona office. She certainly knew she was wrongdoing because she had us all shredding paperwork toward the end.

    I’m very happy with the court decision and I hope they catch Becky soon. She’s a terrible human being that deserves to pay for her decisions.

  5. kimberly says:

    yes i agree about Becky. i do know for a fact that 2 of the ones that where found guilty are not guilty. unfortunatly the “big” guys are taking the little ones with them. just because they have a big title doesnt mean that they contributed to the big scam.

    the government really needs to look at the real sources here. it saddens me

  6. Unfortunate employee says:

    As a long time employee that worked there, what has happened here is a real shame. There are employees still not able to find work after seven years and this has destroyed their lives. All these people were not guilty but I truly hope the ones that were get what they deserve in the end for recking so many people’s lives and bringing down so many healthcare providers.

    Here is also a challenge for Chuck: Why have we not heard any charges against Barbara Poulsen (Lance’s wife)? She was chief financial officer for years and anyone working there will tell you that she strongly controlled the entire accounting area, but yet there is not a single charge against her? How is that possible????

    Also, if anyone knows where Becky Parrett is, that would be Bobby her son. The FBI needs to lean on him and eventually he’ll give her up.

  7. Digusted says:

    Well, if you continued to follow-up on the case, you would see that the judge let them off with merely a slap on the wrist when compared to the many companies and lives these people destroyed with their greed and unethical practices.

    Ayers received 15 years, Speer got 12, Faulkenberry got off with 10 and Dierker received a mere 5 years! None of them received the minimum the government requested (which was 20 for each).

    The message the Judge on this case sends is simple and clear: Yes, there are consequences for your actions, but it is well worth the risk you take because in the end the consequences will be nothing compared to the crime committed nor will the sentencing be appropriate. Heck,public records show that Dierker was making over $100 an hour as a consultant with Limited Brands — that if AFTER being found guilty by a jury of his peers. A criminal making that kind of money with an ankle bracelet on working from home just doesn’t seem to be justice in my book.

    With parole and good behavior, these men will, in reality, only serve 1-5 years of their sentence and will back out in the world to “rip off” another group of unsuspecting innocents. Not such a bad consequence for destroying lives and ruining companies after all.

  8. kimberly says:

    as me being a family memeber of one of the gentlemen that got sentanced i would tell you guys that there are a lot of things in this situation that are not clear to the public. Not all of these guys where involved….they are there unfortuatly to take the fall for the “big” guys.

  9. kimberly says:

    and for the record…non of these people will be able to work with any kind of money again

  10. Kelly Griffith says:

    I worked for NCFE for 5 years. I have also been having trouble getting employment because of this fiasco. I am very bitter over this and how it has effected me, my family and my x-coworkers. None of us deserved this blacklisting. In my opinion, we all knew something shady was going on there but none of us had all of the pieces to the puzzle to figure it all out. Only the execs knew along with the owners what they were doing. NCFE was a great concept and if they wouldn’t have been so greedy it would still be making money for them as well as helping struggling medical facilities. It truly is a shame. I feel that the sentences given were pretty mild. Lance definitely deserves the maximum sentence. This is not the first time he drove a business into the ground (he did it with a tire company in Florida years ago). As for Becky, she is so stupid to have ran. Now that guarantees a bigger sentence for her. Their egotistical greed and belief that they were immune to getting caught has backfired in their faces. If anyone knows where Becky is please contact law enforcement. She is trying to play the victim when she knows perfectly what she did was wrong. I worked under her evil wrath and disrespect for her employees for years. She totally earned every second of any sentence she’ll get. Lance and her should rot in prison if it was up to me. Too many lives were destroyed over this.

  11. Elaine says:

    I am a former employee and believe that ALL of the convicted knew what was going on. I’m okay with Dierker getting a lower sentence because he probably wasn’t as involved, but I know that Faulkenberry worked closely with Sherry Gibson on defrauding the investor reports and Speer was brought in specifically to do shady financial dealings and his past CFO performances made everyone in Accounting nervous and Ayers was in it from the beginning so there’s no way he didn’t know. Lance is just arrogant to think he could get away with it – I’m glad he got sentenced another 10 years for witness tampering, idiot. I think disappearing is the first smart thing Becky ever did. She knows she wouldn’t last in prison.

  12. kimberly says:

    i will let you know right now that not “everyone” knew what was going on.
    Speer was brought in to help the company get reestablished. unfortually he was pulled under the bus. These books that everyone is talking about are out there, unfortually Speer has not been shown any of these…..he has asked the judge many times to see them and they refuse.

    There is a simular case going on here in LA and it is just crazy. Unfortually there are too many nieve people in the world and dont see the whole picture here.

    There are guys that got what they deserve and i belive that karma will come back to them full force. Poulson, Faulkenberry and Gibson are the people to blame in this horrible situation.

  13. Susan says:

    While the top two were up to their eyeballs in this I can tell you that some of these executives were just following what they were told to do. And I would like to know who on this page hasn’t ever done that for an employer!

  14. kimberly says:

    exactly Susan…. Speer has yet to see the books. It is aweful what these people did to their employees. the only person that i know for a fact that is guilty is Poulson. Oviously the girl is guilty because she ran. She made this case hard on many families that where involved. She is a coward. Poulson is a crook, lier and a cheat. He has ruined many lives.

  15. fearvsgreed says:

    I went to this trial a lot and listened to all the facts presented by both side. I for sure was amazed at the detailed rebuttals made by the defense to counter each and every claim the Gov’t had against these guys. What was ironic to me, Lance was nailed for witness tampering prior to the trial, therefore not on trial with the other 5 executives. The Gov’t played a very strategic card by grouping them together as all “guilty” felons. There best witness was Sherry Gibson, she and Beals were very convincing that all of them new of the conspiracy. What didn’t seem clear was the Gov’t attack or evidence thereafter. I believe the jury if tried individually would have given them all a free card since evidence other than Gibson and Beal were sketchy. As we all know Happ is a free man who was tried alone w/o all the atmosphere of the fabulous 5 in the courtroom. Were they guilty? The jury said yes, but I must admit there were only enough evidence in my opinion to really w/o doubt and that would be Lance and Sherry. IMO.

  16. kimberly says:

    I whole heartedly belive the same “fearvsgreed”

  17. dara says:

    I worked for NCFE out of college. Becky (Rebecca) was always very encouraging, respectful, and an extremely giving person. She gave her time and raised funds to animal shelters, children’s homes, charities, her church, etc. I always enjoyed being around her, and as a young person out of college, I had great admiration for Becky. Lance, not so much. Although they had not gotten along for years, she was very sad prior to and during the divorce. I always thought she could do better. In my opinion, and from my experience, Becky is and was a beautiful person inside and out. Lance is the crook, he just had that feeling about him. Some say Becky may be dead, I hope not, I hope she finds a beautiful place to live out her life – not in prison.

  18. kimbelry says:

    i just wish she could come back and tell the story so the innocent can be free……

  19. Paul T Holtschulte says:

    I would finally like to take a moment and wish all the people formally of NCFE a hard felt win. We lost our jobs and they got rich and they lost to prison.
    I am sure thier families are well provided.
    I have been out of work more than 4 years after the fall of NCFE and I strongly feel because I was a facility manager I was somehow involved with what the owners did. I have had comments made that there must not be many honest people at that company!!! Tears come to my eyes as I remember the many staff I worked with daily that have since suffered in finding work.
    I would like an e-mail from former staff regarding this issue and also would like e-mail adresses for our executives in prison. I think we should all send an e-mail-ogram to Don and Lance and others, and Rebecca,if she is ever caught

  20. kimbelry says:

    family’s arent well provided…we are broke my dear… The Gov’t took everything

  21. kimbelry says:

    at least we are. Father is Randy Speer. Paulson has stabbed everyone in the back. Paulson is a snake.

  22. Jerri says:

    I (female) worked for NCFE for a while. I remember Sherry Gibson holding me upside down by my ankles. This was in the early years of the company. I created foxpro programs and “installed” and “trained” people in Utah and California. I thought things were a little “shady” then. I got out ASAP.

  23. kimbelry says:

    my father got out asap also…they still tracked him down

  24. jason duke says:

    I worked in the Dublin office right out of college from 1997-1998. I’ll raise a glass in selfish glee when Becky is caught.

    To Kimberly, I lament the situation you find yourself in, but I can’t entertain the notion that anyone found guilty was in fact innocent. As a family member, you may have a more robust knowledge of the inner workings of the fraud than I do. As a former employee, I know it was obvious to me during my stay that something wasn’t right, so I left after putting in a year’s worth of work (I worked under Sherry/Brian/Jessica and worked closely with VonHolten).

    Best of wishes to those harmed.

  25. kimberly says:

    all i have to say is that this is way more complacated then anyone will ever know. The Gov’t is manipulating case like you wouldnt belive.

    The judge told my father, staight out, at the sentancing. “I see that you where not aware of the full criminal action going on in this company, but i do need to make an example out of you.”

    I was stunned!

  26. Elizabeth says:

    As the daughter of Don Ayers, i have recently beed exposed to the media coverage of my father’s case as of a few minutes ago. I’m appalled at what has to be said about him. Although i cannot say whether he was guilty or innocent, i have a hard time believing that he was capable of accomplishing the full extent of the crimes he was accused of. I’m going to agree with Kimberly as the government HAS manipulated this case to an extreme level. Our family (my mother and i) are basically being pushed out of our own front door and forced to move thanks to the federal government. Everything my family ever worked for is being taken away from us right under our noses and there’s nothing we can do about it. As for my father’s sentence being a “slap on the wrist”? Look at it this way: My father is now 73 years old. He’s already having health problems caused by his knees and yet he’s not allowed to have an aspirin to relieve the pain unless a doctor says so. Let me tell you how a doctor’s visit goes in a medium security federal prison: You fill out a form and send it in. The form can sit in a pile for up to 6 months before you’re even seen. Then you go in for the check up from the doctor. You fill out another form and wait for a follow up appointment. Chances are it will be at least another 3 months until the doctor sees you again. My dad’s been in prison for a little over 2 years now. He’s not going to last too much longer. A slap on the wrist? I think not. Furthermore upon review of other media coverage, i plan on writing judge Marbley to express my feeling about what he had to say to my father after sentencing. He was NOT brought to justice, he was backed into a corner by THE U.S. FEDERAL GOVERNMENT! Who would really win a case against them? Who is going to look like the bad guy in this? The singled out taxpayer? Or the Government that keeps us so well protected?

    • David Hardin says:

      Elizabeth, I had the pleasure of getting to know your father. He is a remarkable fellow. You are very correct in the healthcare system he must endure. Unfortunately, I know this first hand. Also, you are correct in doubting his conviction and the Governments malicious persecution. I, however, was sufficiently punished considering all of the circumstances. This is not the case often even though it is a federal system and should be more collective. Above all though, Don Ayers should not be in prison. It is an injustice of society to be removed from such a wholesome member.

  27. Kimberly says:

    Elizabeth

    You dont even know how refeshing it is to hear what you are saying. It sends chills through my body. I feel your pain as you are in the same situation as we are. i am sure you feel like he has been stolen away from you, at least that i how i feel. Like you, it has almost been 2 years since my father has been gone.

    As for the Gov’t practically moving us out of house and home, same here. It is unbleiveable how they can take everything away from you in a blink of an eye.

    This can very well happen to anyone in this current Society we live in. All I have to say is that everyone should be very knowledgeable when it comes to your rights and freedom.

    Elizabeth, I really enjoying reading your post.
    I hope you are staying positive.

  28. Basil says:

    Kimberly & Elizabeth (or anyone else),

    I’m in the middle of writing a book about NCFE & MED Diversified (where I was a shareholder). I would be very interested in hearing your POV’s about the case.

    I previously contacted Sherry Gibson’s attorney – with the same offer for her – and she declined to speak with me.

    What I’m writing is a search for the truth – not a hatchet job. If interested, please contact me at dommel@chesco.com

    Thanks…

  29. kimberly says:

    I will have to consult the attorney.

    I find it interesting that Sherry Gibson” attorney said that he client declined to speak to you. From what i was told she was still “missing”.

    • Basil says:

      Kimberly,

      I contacted Terry Sherman (attorney) about 3 months ago. I asked him to relay a message to Sherry Gibson…that if she wanted to tell her side of the story to me – for my book – to get in touch by 3/31. He claimed he would definitely pass along the message. Not sure whether she “declined” to speak to me…or never got the message…or something else.

      Bottom line is that there has been no contact. As a shareholder of MED Diversified, I was fed a line that your dad and Sherry Gibson were most culpable. Not saying that’s the case…just saying that’s what I was told by MED officials.

      Not sure why, but some higher-ups at MED seemed sympathetic to Becky.

      I got scalped in the MED/NCFE stock scam. MED was the only one of 275 NCFE-related companies that was public their entire lifespan. I’m way passed being angry or passing blame. In fact, I’m mad at myself for being suckered into the MED stock scam – which was a whole other fraud ran in conjunction with NCFE. MED was a “technology” company with no technology (vaporware)…and as I later found out – the insider trading scam there was ridiculous.

      I’m amazed that Barb Poulsen walked away clean from this. I’m also very curious how Parrett’s story will end.

      If we ever end up talking, there may be a way to help your Dad…and Elizabeth’s dad…reduce their time.

      I – nor any MED shareholder has any claim against any NCFE insiders. They were dismissed from the MED class action. (Not sure why Poulsen, Parrett, JP Morgan, etc. escaped liability there.)

      Like I said, I have one mission…to get the story out. You’re welcome to help shed light on the debacle. I’ve had no contact with any NCFE insiders, but I would welcome it…especially from the Don Ayers camp.

  30. kimberly says:

    so funny..my father was contracted throught them….

  31. kimberly says:

    i messed up on the previous post there…
    my father was contracted through the company, wasnt offically on the payrol.

    With the appeals in process i doubt that any information will come out.

  32. Basil says:

    Kimberly,

    Your dad was contracted through MED Diversified (a.k.a. e-MedSoft.com)? Lance and NCFE PR’d a $500 Million contract with MED in March 2000. MED and NCFE claimed they were developing a “high tech portal” that was going to revolutionize the industry. Total revenues generated by 2002 – when both NCFE and MED went BK…exactly $0.

    Lance and the MED pranksters engineered some pretty shady PR’s from 1999-2002. One of them was giving Robert Parrett from Rejuveon a gravy job – at MED – at some ridiculous compensation like $100K a year. There were many false MED/NCFE PR’s…and sham dealings.

    If you’re dad ever wants to talk…I’m all ears. Good luck…

  33. sunrize604 says:

    Kimberly,

    I was very sad to learn about your families situation. What happened within that company was outrageous, however where your father is concerned the governments argument made little sense. I wish your family the best in the appeal. To be collateral damage as I believe some are is an unthinkable miscarriage of justice. Just as unthinkable as the guilty running free…it makes no sense. It seems to me that the actions of the attorneys, officials and judges that perpetrated this farce of a trial are guilty of criminal behavior. I wish you the best, Sincerely, Anita

  34. kimberly says:

    Thanks Anita… you are very sweet
    God bless

  35. Glad Im Gone says:

    Kimberly,

    Obviously your Dad was Randy. He went WAY BACK with Lance and the gang for many, many, years, pretty much inception. So trust me, he knew exactly who they all were. They were waiting for Barbara to get out so he could move in and make the “magic” happen. He was no dummy and knew exactly what was going on there. Greed got them all. He might deny, deny, deny….but he wasn’t innocent. Besides, I’m sure he had plenty of money stashed away by the end. His first edition book collection alone could probably cover his legal bills and more. Great way to stash money in plain sight without anyone knowing it was right in front of them.

  36. kimberly says:

    SORRY “Glad im gone” you are wrong….
    book collection…. you must not be up to date… Did you hear that most of the counts where droped?

    money stashed? Feds took everything…. Plus, how does a book collection cover 85 Billion dollars in legal fees? shoot, they have been looking for it for a decade. My guess it that Barbara has it. Barbara hated him because he had to go in and clean up her mess. Feds took everything…. Plus, how does a book collection cover 85 Billion dollars in legal fees?

    you do not know these people, you worked with them but dint “know” them…I am sure you had no idea how the company was ran.

    just remember, the Gov’t can build a hell-of-a-case against ANYONE.

  37. kimberly says:

    SORRY “Glad im gone” you are wrong….
    book collection…. you must not be up to date… Did you hear that most of the counts where droped?

    money stashed? Feds took everything…. Plus, how does a book collection cover 85 Billion dollars in legal fees? shoot, they have been looking for it for a decade. My guess it that Barbara has it. Barbara hated him because he had to go in and clean up her mess. Feds took everything…. Plus, how does a book collection cover 85 Billion dollars in legal fees?

    you do not know these people, you worked with them but dint “know” them…I am sure you had no idea how the company was ran.

    just remember, the Gov’t can build a hell-of-a-case against ANYONE.

  38. kimberly says:

    what the heck… site just timed out … oh well…

  39. Joe says:

    Just read about Gary Green’s arrest.
    I remember how shady he was from the beginning. I also attended a lot of the trial and have followed things closely. (I was in the “industry” but certainly not ever with NCF)
    How did Green get away with saying he wrecked his motorcyle the day Rebecca bolted and he had amnesia? Remembered nothing about the entire day.

    I do not have a criminal mind, and cannot figure out how he would make these “cash drops” mentioned in the paper today. Wouldn’t the FBI “monitor” his funds and see 10k withdrawals. I guess it could have all been done in green cash. Hmmmm. Very interesting.
    He must really be stupid. (looks like a freaking thug in his photo.)
    If my wife left and said she was never coming back, I wouldn’t have sent her a dime! I would have saved it and lived great.

  40. Coming Soon…

    The Biggest Scam You’ve Never Heard Of (You’ll laugh…You’ll cry…You’ll clutch your wallet in fear.)

    The story of 3 enormous frauds – NCFE, MED and Signalife – told by 1 Federal Witness.

    http://www.johngregorydommel.com

  41. Chuck…I’d love to connect with you sometime about my NCFE book project. I tried sending you an email through LinkedIn…where we’re connected.

    Greg

  42. David Hardin says:

    The Government even wrongly convicted a retired member of the board. Donald Ayers should never had been sent to prison! If anyone knows anything about the federal judicial system is they can convict an orange for not tasting like it should. There is no other judicial system in the world with such an enormous conviction rate. Free Donald Ayers (76yo) now so he may enjoy the remainder of his, hopefully, long life.

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