NCFE's Poulsen Convicted of Fraud

A federal jury has convicted the so-called mastermind behind a scheme to deceive investors who bought A-rated bonds backed by health care receivables.

Jurors Friday found Lance K. Poulsen, former owner and chief executive of National Century Financial Enterprises of Dublin, Ohio, guilty of 12 charges including conspiracy, money laundering, and securities and wire fraud. Jurors took less than five hours to convict Poulsen, 65, of the charges that cost investors more than $2 billion and led to the collapse of 275 companies, said Jodi Andes, a Columbus Dispatch reporter who covered the four week trial in U.S. District Court in Columbus.

NCFE bought account receivables from healthcare providers using money it obtained from selling asset-backed notes to institutional investors, including pension funds, insurance companies and churches. But the evidence showed that over a seven year period, NCFE misused the money and made unsecured loans to health care providers and companies it owned in whole or part before the Federal Bureau of Investigations raided its offices in November 2002.

“Poulsen and others made millions of dollars in unsecured loans to companies they owned,” U.S. Attorney Lockhart said in a press release. “Their actions were designed to hide a financial house of cards from investors, eventually costing investors $2 billion.”

Poulsen’s attorney, Pete Anderson was not available for comment. However, Andes said Paulsen’s attorney requested sentencing as quickly as possible. Poulsen, who is already serving 10 years in jail for a conviction on witness tampering charges related to the case ("NCFE CEO Sentenced to 10 years for Bribery, Obstruction of Justice," August 12), could spend the rest of his life in prison, given that the maximum penalty for each count of conspiracy to launder money and conceal money laundering is 20 years.

Andes told insideARM that the evidence showed, “a lot of people did question things at various times.” However, testimony showed how NCFE employees worked the system to defraud investors. For example, she said testimony showed NCFE provided auditors with select files to review and often knew about upcoming audits.

“There were small things NCFE employees did that were allowed by the rating agencies and banks that helped perpetuate the fraud, such as the feeding of the files,” Andes said. She said testimony revealed it was an unscheduled audit in which NCFE could not provide altered books that helped uncover the deception.

Andes said prosecutors next will go after Poulsen’s assets, including a home in Port Charlotte, Fla., a 60-foot yacht and savings. Poulsen is the sixth NCFE executive to be convicted in connection with the fraud that led to NCFE’s demise. One other executive, Rebecca S. Parrett, is still at large after failing to show for a court date in Arizona.