Seven former executives of National Century Financial Enterprises have been indicted for their role in a nearly $3 billion fraud at the failed health-care finance company. The bankruptcy of National Century, which securitized medical accounts receivable that it had purchased from medical providers, also forced 275 health-care providers to file for bankruptcy protection, according to a Securities and Exchange Commission (SEC) civil complaint filed last December against four of the executives. The 60-count indictment, brought by the U.S. Attorney’s Office for the Southern District of Ohio, includes charges of conspiracy, securities fraud, wire fraud, mail fraud, and money laundering. The individuals are accused of lying about how investors’ funds would be used, diverting the funds, hiding the shortfall by moving money back and forth between subsidiaries’ bank accounts, and falsifying reports and records to cover up the scheme. Here is how U.S. Attorney Gregory Lockhart described what happened:
An exhaustive investigation by the FBI, IRS, Postal Inspectors, and Immigration and Customs Enforcement agents found evidence that the company executives bilked investors by building a financial house of cards with deception, sleight-of-hand financing, and accounting misdeeds.
The former executives named in the indictment include the chief executive officer, a vice chairman, the chief operating officer, the director of securitizations, the chief financial officer, the vice-president in charge of client development, and the vice-president of securitizations. Some of these individuals also face SEC civil charges. Each of the money laundering and money laundering conspiracy counts carries a maximum sentence of 20 years in prison and a fine of $500,000. The fraud and other conspiracy counts each carry a maximum between 5 and 20 years and a fine of $250,000. Prosecutors are also seeking the forfeiture of about $2 billion in assets.
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