[JURIST] A federal grand jury in Ohio on Monday indicted [PDF text; press release] seven former executives of National Century Financial Enterprises [Forbes.com backgrounder] on charges of conspiracy, fraud, and promotion of money laundering. The seven former executives of the health care financing company are accused of conspiring to defraud investors of $3 billion by lying to investors about how their funds would be used, diverting the funds and then covering the shortfall with subsidiaries' bank accounts and fake reports. The money laundering and conspiracy charges each carry a maximum 20-year prison sentence and $500,000 fine, while the fraud charges carry maximum prison terms of five years or 20 years.
National Century, which collapsed in November 2002, bought medical accounts receivable from health care providers, then financed the purchases by selling securities to large institutional investors outside of Ohio. The former executives indicted include former CEO Lance Poulsen, former vice chairman Rebecca Parrett, former COO Donald Ayers, former director of securitizations Roger Faulkenberry, former CFO Randolph Speer, former VP for client development James Dierker, and former VP of securitizations Jon Beacham. The Securities and Exchange Commission (SEC) [official website; JURIST news archive] filed a civil injunction action [SEC press release] against National Century in December, alleging that Poulsen, Parrett and Ayers participated in a scheme to defraud investors in securities issued by its subsidiaries. Reuters has more.