After Six Years, NCFE?s Top Executive Faces Federal Jury on Fraud Charges

After six years a federal jury has finally began to hear evidence against the top executive of a health care financing company that collapsed after the Federal Bureau of Investigations raided its Dublin-Ohio offices.

Lance K. Poulsen went on trial earlier this month in U.S. District Court in Columbus, Ohio for his role in the downfall of National Century Financial Enterprises. Prosecutors say Poulsen was the mastermind of a scheme to deceive investors about the health of the medical accounts receivables factoring company.  He is accused of falsifying financial statements, misusing investor funds and money laundering.

When NCFE filed for bankruptcy in 2002, investors lost nearly $2 billion and about 275 health care providers who sold NCFE their third party medical receivables at a discount eventually filed for bankruptcy protection or went out of business.

At the time, NCFE was considered a financing giant to hundreds of health care providers who turned to the company for financial backing by selling their medical receivables at a discount.  The relationship meant providers didn’t have to wait weeks or months for private and government insurers like Medicare and Medicaid to pay the medical claims. NCFE, in turn, made most of its money selling bonds to investors that were backed by the medical receivables.

At the time, medical receivables factoring was still a relatively young industry.  NCFE, which billed itself as the nation’s largest healthcare financing company, had been in business just 11 years. 

In March, Poulsen and his friend Karl A. Demmler were convicted of trying to bribe a federal witness in his fraud case. Poulsen was sentenced in August to 10 years in prison and ordered to pay $17,500 in fines for the crime ("NCFE CEO Sentenced to 10 years for Bribery, Obstruction of Justice," Aug. 12), but Demmler’s sentencing has been delayed pending a psychiatric evaluation.

Five other top executives also have been convicted and four have been sentenced for the part their role in NCFE’s demise.  A fifth defendant, Rebecca S. Parrett, jumped bail before she was sentenced and remains at large.