updated 3/13/2008 9:18:19 PM ET 2008-03-14T01:18:19

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.

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.

Faulkenberry's lawyer, Javier Armengau, said he had prepared his client for the possibility of a guilty verdict but was still shocked by the result. He said he'd presented ample evidence that other defendants had hidden fraud from Faulkenberry.

"I don't know what more a jury could look at to say he was literally kept out of the loop — which he was," Armengau said.

Both lawyers said they would appeal.

The government's lead prosecutor said the defendants lied and covered up wrongdoing for years.

"Any case that involves fraud is important to the United States," said Assistant U.S. Attorney Doug Squires. "This case happened to involve billions of dollars in fraud."

He added: "Everyone's hurt when an investor is lied to in this country."

Next, the government will ask Marbley to hold the five responsible for the $1.9 billion lost by investors. Marbley scheduled hearings for that request next month.

Prosecutors compared National Century to Enron Corp., an energy trading company, and WorldCom Inc., a telecommunications company, which were both engulfed in corporate fraud scandals that cost investors billions and brought down both public companies.

But attorneys for the five defendants said prosecutors took the company's activities out of context by showing jurors only a tiny slice of National Century's operations.

The government said the unsecured loans caused shortfalls that the executives covered up by moving money between accounts. The government alleged the executives fabricated data and lied to investors about the shortfalls and loaded false information on a company computer system.

"If they did nothing wrong, then why did they have to lie and cheat and cover it up month after month, year after year?" federal trial attorney Kathleen McGovern said to jurors.

The government's star witness, former executive vice president Sherry Gibson, testified last month that the company kept two sets of books, one for public consumption filled with false information, the other that showed the firm's actual shortfalls. Gibson is one of four former National Century executives who previously pleaded guilty to fraud charges and have cooperated with the government.

Over a day and a half of closing arguments, defense attorneys attacked the government's case on the grounds that the evidence was thin and the witnesses unreliable.

"The deeper we look at this, the more flimsy the government's case becomes," Leonard Yelsky, who represented Dierker, told jurors.

Missing from the trial has been National Century's former president and chief executive, Lance Poulsen, a chief target of the government's allegations.

Before his own trial on the fraud charges in August, Poulsen is scheduled for a trial Monday before Marbley on charges of witness tampering.

Defense attorneys argued that the FBI's 2002 raid on the company caused National Century's bankruptcy because it wasn't allowed to close its books properly. Prosecutors dismissed the notion, saying the shortfalls would have emerged eventually.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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