Seven former executives of a defunct Ohio company that was once the nation's leading lender to health care providers have been indicted on charges they defrauded investors of more than $3 billion.
The indictment handed down by a federal grand jury in Columbus on Monday alleges that the executives at National Century Financial Enterprises lied to investors about how their money was being used, then conspired to conceal cash shortages by shuttling money among various subsidiaries.
The former officers are charged with 60 counts of conspiracy, securities fraud, wire fraud, mail fraud and money laundering.
The Dublin, Ohio-based company collapsed in 2002, and the FBI, Internal Revenue Service, U.S. Postal Inspection Service and immigration agents have been investigating since.
Investors from all over the world, including some large, unnamed financial companies, were bilked out of more than $3 billion from 1994 to 2002, said Dale Williams, the lead prosecutor for the U.S. Attorney's office in Columbus.
In addition, some health care companies filed for bankruptcy because of interrupted payments from National Century, and others have filed civil lawsuits against National Century. Some civil suits already have been settled and others have been consolidated at U.S. District Court in Columbus.
Until its collapse, National Century made loans to health care providers to bridge the gap between when they treated patients and when they received payment from private insurance companies, Medicare or Medicaid.
National Century founder Lance Poulsen, 62, of Port Charlotte, Fla., faces 47 federal counts. He appeared Monday in U.S. District Court in Fort Myers, Fla., and was released on bond.
"My client has violated no law and has intended since the beginning to fight any charges against him vigorously," said Poulsen's lawyer, Thomas Tyack. Poulsen already is fighting similar charges in a civil case brought by the Securities and Exchange Commission.
Three other former executives had helped the government in 2003 and 2004 by pleading guilty to participating in the scheme. Prosecutors are seeking $2 billion in forfeited property.
If convicted, the defendants could get up to 20 years in prison and a $500,000 fine for each money laundering and money laundering conspiracy charge, up to 20 years in prison for certain wire and mail fraud charges and up to five years in prison and a $250,000 fine for each of the other charges.
Kathy Patrick, a lawyer for a group including the state of Arizona and a London bank that invested more than half of the $3 billion, called it "the biggest case you've never heard of."