Bigger than ENRON

THE EXPERT! Rick Scott's Medicaid Overhaul to Benefit…Rick Scott?

2011-07-24T06:36:00.000-07:00

http://t.co/fRCqqvi via Motherjones

Fri Mar. 25, 2011 12:01 AM PDT
Republican governor Rick Scott's push to privatize Medicaid in Florida is highly controversial—not least because the health care business Scott handed over to his wife when he took office could reap a major profit if the legislation becomes law.

Scott and Florida Republicans are currently trying to enact a sweeping Medicaid reform bill that would give HMOs and other private health care companies unprecedented control over the government health care program for the poor. Among the companies that stand to benefit from the bill is Solantic, a chain of urgent-care clinics aimed at providing emergency services to walk-in customers. The Florida governor founded Solantic in 2001, only a few years after he resigned as the CEO of hospital giant Columbia/HCA amid a massive Medicare fraud scandal. In January, according to the Palm Beach Post, he transferred his $62 million stake in Solantic to his wife, Ann Scott, a homemaker involved in various charitable organizations.

Florida Democrats and independent legal experts say this handover hardly absolves Scott of a major conflict of interest. As part of a federally approved pilot program that began in 2005, certain Medicaid patients in Florida were allowed to start using their Medicaid dollars at private clinics like Solantic. The Medicaid bill that Scott is now pushing would expand the pilot privatization program to the entire state of Florida, offering Solantic a huge new business opportunity.

"This is a conflict of interest that raises a serious ethical issue," says Marc Rodwin, a medical ethics professor at Suffolk University Law School in Boston. "The public should be thinking and worrying about this."

connect-Healthcare Fraud-Financial Fraud- SEC Fraud- Bankruptcy Fraud to healthcare?

2009-06-29T15:07:00.000-07:00

Mr. Market-Driven Healthcare- Then we have the epitome of fraud waste and abuse-

2009-The Wall Street Journal reported that Richard Scott, "the former chief executive of HCA Inc," had formed the non-profit organization Conservatives for Patients' Rights as part of a "lobbying campaign to derail or modify" President Obama's health care proposals,….

Columbia/HCA is a partnership of financier Richard Rainwater of Ft. Worth and lawyer Richard Scott.

Scott was terminated by Darla Moore, the wife of Richard Rainwater and according to Fortune Magazine, the “Toughest Babe in the Business”.

Rainwater also owned a large stake in Magellan Health Care which controls Charter Medical. Magellan, run by Darla Moore, is the largest network of psychiatric hospitals in the country.

They are becoming more and more involved in obtaining government money for services formerly not covered as health care, according to Fortune Magazine.

Did you catch that? They (Richard Rainwater / Darla Moore) are becoming more and more involved in obtaining government money for services formerly not covered as health care, according to Fortune Magazine.

Market-Driven Healthcare-Really? ‘Government money’?

Remember July 26, 1997, Columbia/HCA Healthcare Corp. - home-care practices of the nation's largest for-profit health care company

1997- TOO BIG TO FAIL- OUR HEALTHCARE SYSTEM-LARGEST IN THE COUNTRY!

On Sept 8, 1998 Standard and Poors downgraded the bonds of Charter/HCA to negative bases on
poor earnings.

THURSDAY, JUNE 26, 2003; WWW.USDOJ.GOV;
WASHINGTON, D.C.

HCA Inc. (formerly known as Columbia/HCA and HCA - The Healthcare Company)

LARGEST HEALTH CARE FRAUD CASE IN U.S. HISTORY SETTLED.
Settlement- No prison time-why?

Show me the PUBLIC OPTION here:
THURSDAY, JUNE 26, 2003; WWW.USDOJ.GOV;
WASHINGTON, D.C.

HCA Inc. (formerly known as Columbia/HCA and HCA - The Healthcare Company)

LARGEST HEALTH CARE FRAUD CASE IN U.S. HISTORY SETTLED.
Settlement- No prison time-why?

In 1997 Columbia decided to sell its home health-care business, the Balanced Budget Act of 1997 really hurt their profitable ‘home health’ sector.

As part of Richard Scott's severance package from Columbia he was paid $5.13 million and given a five year consulting contract at $950,000 per year

1997+5 years = 2002

In 2002 FBI raided the offices of National Century Financial Enterprises in Dublin, Ohio

“This case is one of the largest corporate fraud investigations involving a privately held company headquartered in small town America,” said Assistant Director Kenneth W. Kaiser of the FBI Criminal Investigative Division.

Guess where those home health care units were found?

Yes- "...largest corporate fraud investigations involving a privately held company headquartered in small town America,”

Why the need for ‘healthcare financial service’ i.e. (NCFE) National Century Financial Enterprises?

Home health - which was struggling under the Balanced Budget Act of 1997; about 1,400 agencies closed nationwide in 1998.

Can any activist connect-Healthcare Fraud-Financial Fraud- SEC Fraud- Bankruptcy Fraud to healthcare?

The connections need to be made during this REFORM Debate that will consume the summer and early fall.

The activists must show the American People that much more than ‘healthcare industry’ is connected to our country’s current system – which is a totally failed fraudulent system we – Americans- have access to.

The fraud and its benefits to a small group are more than harmful to the entire healthcare system for the country. Just look at what fraud occurred stemming from healthcare fraud-only to arrive into the financial collapse in 2008.

Why is the connection ignored?

Balanced Budget Act of 1997

2009-06-29T15:06:00.000-07:00

All related to the Balanced Budget Act of 1997, who remembers that?

A recent op-ed in the Wapo:

Chairman of Conservatives for Patients' Rights - Richard Scott:

Meaningful health care reform is needed but only achievable if it is rooted in principles that have proven to work. Any plan that does not will collapse on its own with no one group responsible. And whether it was in his remarks to the American Medical Association or in meetings with congressional leaders, President Obama -- so far -- has embraced principles that do not work.

There is no need for a "public option" to compete with private insurance plans. It will simply run insurance companies out of business and create a government-run health care monopoly. The AMA understands this, which is why it has expressed opposition to versions of a public option.

If the president wants to diminish opposition to his plans, he should focus on increasing competition by, for example, allowing consumers to purchase health insurance across state lines, from anywhere in the country, which Americans do right now when purchasing life insurance.
Well isn’t that something? “There is no need for a "public option" to compete with private insurance plans.”

Leo Wise- PROSECUTOR DID NOT DO HIS JOB

2009-06-11T08:19:00.000-07:00

I want to know what Leo Wise's role is in the Heatlhcare Reform of CBO's analysis?

Will it be like this?

November 2002, FBI raided offices in Dublin Ohio at National Century Financial Enterprise.

“This case is one of the largest corporate fraud investigations involving a privately held company headquartered in small town America,” said Assistant Director Kenneth W. Kaiser of the FBI Criminal Investigative Division.

'Ladies and gentlemen, this is a case of staggering fraud,' Leo Wise said. 'It is one of the largest frauds the FBI has ever investigated.

All of Columbia Homecare Group units were at National Century Financial Enterprises, the Largest fraud case the FBI has ever investigated

Remember – Columbia/HCA is a partnership of financier Richard Rainwater of Ft. Worth and lawyer Richard Scott.
Richard rainwater was GW Bush’s partner with the Texas Rangers.

Twelve executives were already found guilty.

ONE month before GW Bush leaves office- December 2008 –

The last person to stand trial was James K Happ, the former CFO of Columbia Homecare Group.

James K Happ, 48, is charged with conspiracy, money-laundering conspiracy and three counts of
wire fraud. Also today, a former friend of Happ's testified that, while working at National Century, Happ boasted that he never could be charged with any fraud because he didn't sign anything.

December 2008 - the largest fraud case the FBI has ever investigated-Only one acquittal-

James K Happ - the ex-CFO of Columbia Homecare Group

Jurors stated; "PROSECUTOR DID NOT DO HIS JOB"

Coincidence? Or just rampant fraud beginning with Healthcare fraud but continuing the fraud within the SEC, Bankruptcy Courts and Financial Fraud- all for the sake of profits to the rich and powerful?

Rick Scott- Conservatives for Patients Rights

2009-05-28T06:01:00.000-07:00

Thursday, May 28, 2009
HCA International- Conservatives for Patients Rights
Conservatives for Patients' Rights commercial with the Doctor in England?

2008--- HCA International

Welcome to London's leading private hospitals- HCA International

Why we are London's No. 1 private hospital group- HCA International

� More than 3,000 top London and UK specialists in private practice- HCA International

No. 1 private hospital?- HCA International

This is what STUPID AMERICA gets:

LARGEST HEALTH CARE FRAUD CASE IN U.S. HISTORY SETTLED; HCA INVESTIGATION
Note: Hospital Corporation of America (HCA) was acquired by Columbia in 1994.

1997- As part of Richard Scott's severance package from Columbia he was paid $5.13 million and given a five year consulting contract at $950,000 per year.

1997+5 years consulting =2002

In 2002 FBI raided the offices of National Century Financial Enterprises in Dublin, Ohio.

National Century Financial Enterprises

Guess where ALL of Rick Scott’s Columbia homecare units were? National Century Financial Enterprises.

Largest fraud case the FBI has ever investigated-one acquittal- James K Happ, the ex-CFO of Columbia Homecare Group, Inc.

Jurors stated; "PROSECUTOR DID NOT DO HIS JOB"�hmm

Leo Wise , now at the ethics CBO ---jurors stated 'PROSECUTOR DID NOT DO HIS JOB'

"Ladies and gentlemen, this is a case of staggering fraud," 'It is one of the largest frauds the FBI has ever investigated. (Leo Wise )

The ONLY acquittal; James K Happ--the CFO of Columbia Homecare Group.
Leo Wise , (now at the ethics CBO) stated "Ladies and gentlemen, this is a case of staggering fraud," 'It is one of the largest frauds the FBI has ever investigated.

Then- low and behold: December 18, 2008 The ONLY acquittal; James K Happ!...belief that federal prosecutors had not done their job, the juror said.

Columbia/HCA is a partnership of financier Richard Rainwater of Ft. Worth and lawyer Richard Scott. Scott was recently terminated by Darla Moore, the wife of Richard Rainwater.

Richard Rainwater, ex-partner of GW Bush with the Rangers

Leo Wise, now at the ethics CBO ---jurors stated 'PROSECUTOR DID NOT DO HIS JOB'

In 2002 FBI raided the offices of National Century Financial Enterprises in Dublin, Ohio

"This case is one of the largest corporate fraud investigations involving a privately held company headquartered in small town America," said Assistant Director Kenneth W. Kaiser of the FBI Criminal Investigative Division.

Richard Scott -- sometimes called "the Bill Gates of health care" -- quit as chairman of Columbia/HCA Healthcare Corp. amid a massive federal investigation into the Medicare billing, physician recruiting and home-care practices of the nation's largest for-profit health care company.

Columbia/HCA is a partnership of financier Richard Rainwater of Ft. Worth and lawyer Richard Scott. Scott was recently terminated by Darla Moore, the wife of Richard Rainwater.

Rainwater also owned a large stake in Magellan Health Care which controls Charter Medical. Magellan, run by Darla Moore, is the largest network of psychiatric hospitals in the country. They are becoming more and more involved in obtaining government money for services formerly not covered as health care, according to Fortune Magazine.

1997 - Columbia/HCA Healthcare Corp. - the nation's largest for-profit health care company

Bigger than Enron...what about the Tennessee Largest Bankruptcy

2009-05-04T16:19:00.000-07:00

Tennessee's Largest Bankruptcy in 1999 held most of NCFE so called purchases.

What about the bankruptcy fraud for the case filed July 29, 1999 in Memphis Bankruptcy Court? All the NCFE Debtor in Posession finance tool used to hide Columbia Homecare Group?

The court room full of lawyers cried FRAUD- the judge forbade the 'F' word in her court.

National Century victims awaiting repayment
Sunday, May 3, 2009 3:22 AM
By John Futty

THE COLUMBUS DISPATCH
When National Century Financial Enterprises collapsed into fraud-fueled bankruptcy, few investors were hit as hard as those in Arizona.

More than 100 of the state's agencies and communities were in an investment pool that held notes worth $131 million in the Dublin-based health-care finance company. Chandler, Ariz., a suburb of Phoenix, took the largest individual hit, losing $13 million.

"There was shock, there was disbelief," said Nachie Marquez, a spokeswoman for the city. "It's taxpayer funds. You put your trust in an investment pool and you think it's safe."

The Arizona investors were among hundreds of institutional victims across the U.S. whose losses totaled $2.38 billion -- the largest known fraud case in the country involving a private company.

The government is "aggressively working" to recover the money from the founders and executives of National Century. They were ordered to pay restitution after they were convicted in federal court in Columbus of conspiracy, securities fraud, mail fraud and money laundering, said Assistant U.S. Attorney Doug Squires.

Last week, U.S. District Judge Algenon L. Marbley issued an order requiring National Century co-founder Lance K. Poulsen, considered the architect of the scheme, and his co-conspirators to forfeit $1.7 billion in assets, the amount prosecutors say represents the proceeds of the conspiracy.

But attorneys for the victims say they are more likely to recover the most significant amounts through lawsuits filed against financial institutions that allegedly are liable for the fraud.

"While we appreciate the government's efforts to squeeze money out of the individual criminal defendants," the financial institutions named in the civil litigation "are able to pay much more than any of these folks have," said Scott Humphries of Houston-based Gibbs & Bruns. The law firm represents investors who lost a total of $1.6 billion.

Investors filed a flurry of lawsuits against National Century, its executives and its financial advisers after the company filed for bankruptcy in 2002. The suits, involving hundreds of plaintiffs in five states, were combined in 2003 and assigned to one federal judge in Columbus.

JPMorgan Chase, a trustee for National Century funds, agreed to pay $425 million to settle its portion of the lawsuit in February 2006, according to an annual report it filed with the Securities and Exchange Commission.

The plaintiffs said JPMorgan Chase was negligent in allowing National Century to make fraudulent transfers among its accounts and for not detecting or revealing the illegal activity to investors.

Settlement money and insurance coverage helped the city of Chandler recoup some of its losses, Marquez said.

"We've recovered about 40 cents on the dollar for our clients," Humphries said.

Civil litigation continues against Credit Suisse, the investment bank that issued National Century's bonds.

Meanwhile, the U.S. attorney's office has collected $2.3 million so far from the criminal defendants, said Fred Alverson, an office spokesman.

The total includes $396,178 that federal agents seized in March from the bank account of Rebecca S. Parrett, a National Century executive who has been a fugitive since shortly after her conviction in March 2008.

The money recovered from the defendants was delivered to the federal clerk's office but has not been distributed to any victims, Alverson said.

National Century purchased the accounts receivable from hospitals, clinics and nursing homes using money obtained by selling asset-backed notes to institutional investors.

Evidence in the criminal trials showed that the company executives diverted money to support their lavish lifestyles and made unsecured loans to the health-care providers, leading to the company's collapse.

The bankruptcy process had begun in 2002 when the FBI obtained a warrant to search the company's Dublin headquarters. Agents collected more than 2,000 boxes of documents and computer files that formed the basis for an investigation involving the FBI, the Internal Revenue Service, U.S. postal inspectors and Immigration and Customs Enforcement.

Institutional investors, which included police and firefighter pension funds, churches, labor unions, cities and counties, and insurance companies, were led to believe the company's bonds were among the safest investments available.

The business model presented to investors was solid but never followed by the company, Squires said.

"(Company executives) did not dip their toes in the pool of fraud, they jumped in from Day One," he said. "From the first investor report, it was fraudulent."

The assets of the conspirators were researched by the federal probation office, but the information is not public record. Defense attorneys have said their clients' assets largely were exhausted while fighting the criminal charges.

Squires said the U.S. attorney's office will attempt to get "every available penny" from those convicted by seizing bank accounts, pensions, 401(k)s and property.

jfutty@dispatch.com

--------------------------------------------------------------------------------
On the Web • Watch a video of Assistant U.S. Attorney Doug Squires at Dispatch.com/video. For complete coverage of the National Century case, visit Dispatch.com/metro.

2009-04-28T14:11:00.000-07:00

PAUL B. FARRELL
20 reasons new megabubble pops in 2011

Greed blinded us to subprime meltdown, it'll blind us next time too
By Paul B. Farrell, MarketWatch

Last update: 7:31 p.m. EDT June 2, 2008ARROYO GRANDE, Calif. (MarketWatch) -- You think I'm drinking that famous Beltway Kool-Aid, maybe because I'm predicting another meltdown coming in 2011? Well, you're being served from the same punch bowl, my friends.

Wall Street, Washington and the Fed are all praying the credit crisis is under control. Unfortunately, all their happy-talking is just a lot of hype, to hide their next bubble.

World markets are headed into another meltdown by the end of the first term of the next president ... and you won't even hear it coming under all the happy-talk.

Cycles happen. Bubbles blow, pop, meltdowns happen. Significantly, they're getting bigger and more frequent. Think 1987, 2000, 2007 -- the next in 2011. All the happy-talk from Washington and Wall Street gurus can't start the bull before it's time.

Nor will a lot of non-happy-talker warnings make a bubble burst early.
For example, two years ago I analyzed the 2000-2002 bear phase of "The Cycle." We reported on 16 reasons why all the happy-talk failed to restart the bull market during that 30-month recession, while investors slowly lost $8 trillion.

Now you'll see how all the warnings of a housing bubble and a coming meltdown also had no effect on the 2004-2007 bull phase of "The Cycle."

Why? Because bull/bear, bubble/bust, expansion/recession cycles have a natural pattern that ebbs and flows on their own time, making fools of all gurus predictions. And all the happy-talk and not-so-happy-talk in the world has no effect: Happy-talk won't restart a bull. Nor can not-so-happy-talk warnings puncture a bubble. Cycles have lives of their own, they mature and die unpredictable, age and pop when they feel like it.

Another will happen, soon. A busted bubble and a new meltdown coming by the end of the next presidential term. Why then? Because the last few occurred with increasing frequency, separated by thirteen years then seven, and the next will come within four years. These trends are obvious from studying the works of masters like former Commerce Department chief economist Ed Dewey's classics, including his Cycles, the Mysterious Forces that Trigger Events.

Here's my list of warnings from 20 not-so-happy-talkers. Notice how they were as unable to pop the 2004-2007 bubble before its time, as the happy-talkers were unable to restart a bull during the 2000-2002 recession:

2000: Fed governor warns Greenspan. Former Federal Reserve governor Ed Gramlich served 1997-2005. He was warning Alan Greenspan as early as 2000 about the coming subprime crisis. See his book "Subprime Mortgages: America's Latest Boom & Bust."
2004: Nixon's secretary of commerce. In "Running on Empty," Peter Peterson says: "This administration and the Republican Congress have presided over the biggest, most reckless deterioration of America's finances in history" creating a "bankrupt nation."

June 2005: The Economist. Cover story two years before collapse: "The worldwide rise in house prices is the biggest bubble in history. ... Rising property prices helped to prop up the world economy after the stock market bubble burst in 2000." Values increased 75% worldwide in five short years. "Never before have real house prices risen so fast, for so long, in so many countries ... This is the biggest bubble in history."

January 2006: Fortune. Interview with Richard Rainwater. "This is the first scenario I've seen where I question the survivability of mankind." He's 112th on the Forbes 400, worth $2.3 billion: "Most people invest and then sit around worrying what the next blowup will be. I do the opposite. I wait for the blowup, then invest." He waited with a half-billion-dollar war chest.

February 2006: Faber's Market Newsletter. "Correction Time is Here!" was Faber's headline: "If we combine the overbought condition of the stock market, investors' sentiment high optimism, equity mutual funds' low cash positions, and also heavy foreign buying, we have all the ingredients for a stock market correction in the US getting underway very shortly."

March 2006: Forbes. Economist Gary Shilling wrote: "The current housing weakness will develop into a full-scale rout ... It's clearly a bubble and is nationwide ... The house-price collapse will induce a painful recession that will send U.S. stocks into a tailspin ... China will suffer a hard landing ... and weakness in the U.S. and China will spread worldwide."

March 2006: "Sell Now." Former Goldman Sachs investment banker John Talbott's book: "Sell Now! The End of the Housing Bubble." His statistics covered America's top 130 metropolitan areas. The top 40 were facing an average 47.2% decline.

March 2006: Pimco Investment Outlook. In the quarterly newsletter, "The Gang That Couldn't Shoot Straight," Pimco's boss Bill Gross took a big swipe at a presidential economic report: "It's not so much that the report was a compilation of untruths or even half-truths. It's just that it failed to tell the truth," and hid the fact that Washington's "borrowed from the future to pay for today's party."

March 2006: Buffett in Fortune. Remember Warren Buffett's famous farmer story: "Our country has been behaving like an extraordinarily rich family that possesses an immense farm. In order to consume 4% more than they produce -- that's the trade deficit -- we have, day by day, been both selling pieces of the farm and increasing the mortgage on what we still own."

May 2006: Harper's magazine. Michael Hudson wrote an article, "Guide to the Coming Real Estate Collapse," analyzing 20 trends: "Taken together, these factors will further shrink the 'real' economy, drive down those already declining real wages, and push our debt-ridden economy into Japan-style stagflation or worse."

August 2006: Wall Street Journal. Countrywide's CEO Angelo Mozilo: "I've never seen a 'soft-landing' in 53 years, so we have a ways to go before this levels out. I have to prepare the company for the worst that can happen." He did little. A year later, he was in full denial mode.

November 2006: Fortune. Cover story asks: "Can the Economy Survive the Housing Bust?" They said "the correlation between current builder confidence and future stock market returns over the past 10 years is downright unnerving." The NAHB confidence index is a leading indicator because the stock market inevitably follows in lockstep a year later. The index had "plummeted 54%."

November 2006: The Economist. In a cover story: "The Dark Side of Debt," Timothy Geithner, president of the Federal Reserve Bank of New York, said in a Hong Kong speech: "The same factors that have reduced the probability of future systemic events, however, may amplify the damage caused by, and complicate the management of, very severe financial shocks. The changes that have reduced the vulnerability of the system to smaller shocks may increase the severity of the larger ones." Geithner later negotiated the Bear Sterns collapse.

January 2007: Los Angeles Times. Schwab "averaged 242,300 trades a day the first nine months of 2006. That was up 29% from the same period a year earlier, and a click above its 242,000 peak in 2000"and the last collapse.

April 2007. GMO Quarterly Newsletter. GMO manages $145 billion. CEO Jeremy Grantham wrote: "The First Truly Global Bubble: From Indian antiquities to modern Chinese art; from land in Panama to Mayfair; from forestry, infrastructure, and the junkiest bonds to mundane blue chips; it's bubble time. ... Everyone, everywhere is reinforcing one another. ... The bursting of the bubble will be across all countries and all assets ... no similar global event has occurred before."

June 2007: Shilling's Insight Newsletter. "Just as the U.S. housing bubble is bursting, speculation elsewhere will come to a violent end if history is any guide. ... Richard Bookstaber, who designed various derivative-laden strategies over the years, now fears that financial derivatives and hedge funds, focal points of today's huge leverage, will trigger a financial meltdown."

June 2007: Pop! Then it happened! And Dan Gross had a well-timed book: "Pop! Why Bubbles are Great for the Economy." He says bubbles work miracles, so just let them pop, Pop, POP!

July 2007: Fortune. As the contagion spread, Treasury Secretary and former Goldman Sachs CEO Henry Paulson tells Fortune "this is far and away the strongest global economy I've seen in my business lifetime." He's repeated the same remark often since. Earlier, he and Fed Chairman Ben Bernanke said the subprime crisis was "contained." Clueless, Bernanke assembled hedge fund managers, asking them to explain the global derivatives market.

August 2007. Wall Street Journal. Former SEC Chairman Arthur Levitt wrote on the Journal's Op-Ed page: "In terms of market meltdowns and the degree of pain inflicted on the financial system, the subprime mortgage crisis has the potential to rival just about anything in recent financial history, from the savings and loan crisis of the late 1980s to the post-Enron turndown in the beginning of this decade."

August 2007: 60 Minutes. While Paulson and Bernanke were claiming the subprime crisis was "contained," the chief architect of the subprime-housing meltdown, Alan Greenspan, was on tour, making millions, hustling his new book, "The Age of Turbulence."

On 60 Minutes he made a totally incredulous denial that he "really didn't get it until very late." He "didn't get it?" Yes, and to this day Greenspan rigidly maintains his blind faith in the free-market myth.

His latest argument: Bubbles are a function of innovation, like the dot-coms and subprime derivatives. Regulators should trust the free markets, never micromanage innovation.

But what blinded Greenspan? His ideology? A brain quirk? Genetics? The president's reelection? It doesn't matter why: Whatever it was, it's bad news for America. Why? Because if the leader of America's monetary system for 18 years "doesn't get" that he was also the chief architect of the biggest economic blunder in American history since the 1929 Crash, can we ever trust any future leaders?

Scary, isn't it! How can we have faith in the next guy? Are our leaders the problem? Or is the system broken? Is capitalism itself at risk when the best and brightest are "blinded," unable to see disasters until it's too late?

But that is our "system," and in this system our leaders inevitably morph into bulls, ideologically blinded by their power. And like real bulls, all they see is red. So eventually ... they must run onto a sword, and self-destruct!

Morgan Stanley Real Estate Acquires Crescent Real Estate Equities

2009-04-28T14:09:00.000-07:00

Morgan Stanley Real Estate Acquires Crescent Real Estate Equities (CEI) for $22.80/Sh
May 22, 2007 5:04 PM EDT

Crescent Real Estate Equities Company (NYSE: CEI) entered into a definitive agreement pursuant to which funds managed by Morgan Stanley Real Estate will acquire Crescent in an all cash transaction for $22.80 per share and the assumption of liabilities for total consideration of approximately $6.5 billion. Shares of Crescent Real Estate Equities closed at $21.62 today.

Toxic Corporate Real Estate

2009-04-28T14:06:00.000-07:00

This occurred in 2007?

Morgan Stanley Real Estate announced today that it has completed the previously announced acquisition of Crescent Real Estate Equities Company (CEI) for $6.5 billion.

All of Crescent’s outstanding shares of common stock have been converted to the right to receive $22.80 per share in cash without interest and less any applicable withholding for each share of common stock.

“We are excited to acquire the unique portfolio of properties that Crescent put together,” said Michael Franco, Managing Director, Morgan Stanley Real Estate. “We believe that the depth and breadth of our real estate investing platform will enable us to maximize the value of the diverse holdings of office, destination resorts and resort residential.”

With the acquisition of Crescent, Morgan Stanley Real Estate adds to its portfolio 54premier office buildings totaling 23 million square feet located in select markets across the United States with major concentrations in Dallas, Houston, Denver, Miami, and Las Vegas. In addition, it gains investments in resort residential developments in locations such as Scottsdale, AZ; Vail Valley, CO; and Lake Tahoe, CA and in the wellness lifestyle leader, Canyon Ranch®.

Morgan Stanley acted as financial advisor to Morgan Stanley Real Estate with Goodwin Procter LLP and Jones Day acting as legal counsel. Greenhill & Co., LLC acted as the financial advisor to Crescent with Pillsbury Winthrop Shaw Pittman LLP acting as legal counsel.

Morgan Stanley Real Estate is comprised of three major global businesses: Investing, Banking and Lending. Since 1991, Morgan Stanley Real Estate has acquired $121.5 billion of real estate assets worldwide and currently manages $55.6 billion in real estate assets on behalf of its clients. A complete range of market-leading investment banking services for real estate clients include advice on strategy, mergers, acquisitions and restructurings, as well as underwriting public and private debt and equity financings. As a global leader in real estate lending, Morgan Stanley has offered approximately $156.0 billion of CMBS through the capital markets since 1997, including $35.5 billion in 2006. For more information about Morgan Stanley Real Estate, please visit www.morganstanley.com/realestate.

Morgan Stanley (MS) is a leading global financial services firm providing a wide range of investment banking, securities, investment management and wealth management services. The Firm's employees serve clients worldwide including corporations, governments, institutions and individuals from more than 600 offices in 32 countries. For further information about Morgan Stanley, please visit

www.morganstanley.com.

Contacts:

For Morgan Stanley Real Estate

Media Relations:
Alyson D’Ambrisi, 212-762-7006

Rainwater's 'Single Worst Investment' Toxic Real Estate

2009-04-28T14:02:00.000-07:00

Renowned investor Richard Rainwater saw 70% of the value drain out of his $100 million investment in Thornburg Mortgage

by Christopher Palmeri

Sometimes even billionaires make bone-headed moves. Richard Rainwater, the legendary Fort Worth investor, has seen a 70% decline in just two months on some $100 million he put into troubled home lender Thornburg Mortgage (TMA). Rainwater calls it the "the single worst investment of my career."

The 65-year-old-financier, with a fortune estimated at $3 billion by Forbes magazine, told BusinessWeek.com he was watching TV last year when he saw Thornburg's chief executive, Larry Goldstone, speaking about the mortgage crisis. "He seemed like a bright guy," Rainwater recalls. Rainwater says he then checked with some of his investment industry sources who said they considered Thornburg a "capable group."

Buying into the Jumbo MarketIn January Rainwater plunked down about $100 million to buy roughly 5 million shares of the Santa Fe (N.M.) company's preferred stock. Rainwater bought shares both in a public offering that Thornburg had arranged and on the open market. He says his average cost was 21.45 a share. The preferred stock trades today at 6.25 per share; Thornburg common shares closed Mar. 13 at 2.26, down from 28 in May.

Filings with the Securities & Exchange Commission show that Rainwater and his wife, Darla Moore, own preferred stock convertible into 9.3 million shares of Thornburg's common stock, about 6% of the company's shares outstanding. By the time Rainwater invested, Thornburg was already in trouble. That was reflected in the fact that Thornburg was offering a dividend on the preferred shares of 10%. The company declined to comment on the issue.

Founded in 1993 by the current chairman, Garrett Thornburg, the company specializes in making "jumbo" single-family home loans to what it calls "superprime" customers. Those are individuals with credit scores of 744 or higher. Some 97% of its investments are in loans rated AA or higher by ratings agencies. Thornburg says just 0.4% of its loans are delinquent, compared to an industry average of more than 4%.

Rainwater says it was the high-end nature of Thornburg's business that attracted him to the company. "Housing values are suffering everywhere," he says. "But at the high end things are holding up better." On its Web site Thornburg is offering mortgage rates as low as 7.9%.

Crumbling Credit Markets
Last summer Thornburg averted greater financial difficulties by selling $20 billion of its assets. In recent weeks, though, its problems have escalated as lenders began requiring the company to put up more capital to back its mortgage investments. The company says it is presently negotiating with creditors who want $600 million in additional financing.

The problem, says Keefe, Bruyette & Woods (KBW) analyst Bose George, is that Thornburg has been funding its business with short-term loans. That worked when capital was easy to find. "They have one of the best balance sheets on the asset side," George says. "The problem is in the market—it's hard to borrow money." George says he sees the market shifting away from independent lenders such as Countrywide Financial (CFC) and Thornburg. In the future, "mortgage lending is going to be done by banks," he says. "Nonbanks have turned out to be extremely vulnerable to this kind of downturn."

Win Some, Lose Some
Rainwater is famous for scooping up assets in troubled companies. As a chief adviser to Fort Worth's billionaire Bass brothers in the 1980s, he directed the family to invest in then-floundering Walt Disney (DIS). That company went on to great success under Chief Executive Michael Eisner. In the 1990s, Rainwater plunged into oil and gas companies then struggling with low commodities prices. He invested in the Hunt brothers' bankrupt Penrod Drilling, since merged into Ensco International (ESV), and T. Boone Pickens' Mesa Petroleum, now a part of Pioneer Natural Resources (PXD). "Oil I understand," Rainwater says. "Interest rates…?"

Last August Rainwater sold Crescent Real Estate Equities to Morgan Stanley (MS) for $6.5 billion. Crescent was a big owner of office buildings. Rainwater sold at what now looks to have been the peak of the recent commercial real estate cycle. "It just seemed like the right time to do it," he says, with the prices paid for office property working out to yield just 4% to 5% for buyers.

Rainwater says his portfolio is still up for the year thanks to his energy holdings, which include blue chip oil and gas companies such as Chevron (CVX) and ConocoPhillips (COP).

Nonetheless, he says, the losses so far on Thornburg "still don't feel good."

Palmeri is a senior correspondent in BusinessWeek's Los Angeles bureau

Here come the Real Estate Toxic Mortgages...

2009-04-28T14:00:00.000-07:00

Crescent Real Estate Equities Co. (NYSE: CEI) has finally found a buyer, and one that seems to like its mixed-use approach. Morgan Stanley Real Estate has agreed to acquire the Fort Worth, Texas-based REIT for a deal that totals $6.5 billion, including the assumption of debt.

Crescent, a mixed-use REIT owned by Texas billionaire Richard Rainwater, was in the midst of morphing itself into a pure-play office REIT. After evaluating its strategic options, the company came to the conclusion that it could "take advantage of the void left by rabid industry consolidation" as a remade office REIT. More likely, it was positioning itself better for an outright sale.

The Crescent deal just underscores the notion that the private equity boom is still in full swing. According to a New York Times article citing data from Thomson Financial, there have been $281 billion worth of private equity deals in the U.S. so far this year -- that's triple the amount compared to the same period last year, which ended up breaking all sorts of records.

There seems to be plenty of momentum left for REIT take-private deals, too. Year to date, 12 REITs have gone private for a total of $16.2 billion. But, there's still a ways to go to catch up to the lofty levels of 2006, when 23 deals totaling $64.3 billion, including the mammoth EOP buyout, took place, according to SNL Financial data listed in an article by The Wall Street Journal.

Greenhill & Co. LLC served as Crescent's financial advisor and Pillsbury Winthrop Shaw Pittman LLP provided legal

Prior to the deal with Morgan Stanley, Crescent had set into motion a series of deals, including the $550 million sale of its six hotels plus the 343,664-square-foot Austin Centre office building for $75.5 million to Walton Street Capital LLC in March. It also struck a deal recently to sell a portfolio of Dallas-area office assets to a venture between Trimarchi Management and UBS for about $420 million, according to published reports. Crescent also sold the historic Exchange Building in Seattle for $80.6 million to a joint venture between GE Asset Management and The Ashforth Co.

The REIT was preparing to shop its resort and residential development business through JP Morgan and was still evaluating plans for Canyon Ranch, a wellness lifestyle company owned in partnership with Mel Zuckerman and Jerry Cohen.

It's not clear what Morgan Stanley will do with the various pieces of Crescent going forward. The financial services firm considers Crescent's "unique" platform complimentary to its own wide range of business lines.

Morgan Stanley has certainly cast a wide net for real estate acquisitions, gobbling up properties and real estate companies in all sectors of the industry, and has been a major force in the take-private deals that have fueled the hot investment sales market over the past two years.
Last year, it acquired Town and Country Trust, an apartment REIT, through a venture with Onex Real Estate and Sawyer Realty Holdings LLC, in a deal valued at $1.5 billion. Also in 2006, it paid $1.9 billion to acquire Glenborough Realty Trust, a San Mateo, CA-based office REIT. It recently acquired CNL Hotels & Resorts for about $6.6 billion, including the sale of a portion of the properties to Ashford Hospitality Trust.

The financial firm has also reached into its deep pockets for a plethora of property acquisitions lately. It recently paid about $2.43 billion to buy a portfolio of former EOP assets in San Francisco from Blackstone. It also acquired a 28-story office tower at 2 Park Ave. in Manhattan for $519 million. On the retail side, Morgan Stanley recently formed a joint venture with Inland Western Retail Real Estate Trust Inc. to acquire and manage retail properties in target markets across the U.S. with a goal of building a billion-dollar portfolio.

The Crescent deal just underscores the notion that the private equity boom is still in full swing. According to a New York Times article citing data from Thomson Financial, there have been $281 billion worth of private equity deals in the U.S. so far this year -- that's triple the amount compared to the same period last year, which ended up breaking all sorts of records.

There seems to be plenty of momentum left for REIT take-private deals, too. Year to date, 12 REITs have gone private for a total of $16.2 billion. But, there's still a ways to go to catch up to the lofty levels of 2006, when 23 deals totaling $64.3 billion, including the mammoth EOP buyout, took place, according to SNL Financial data listed in an article by The Wall Street Journal.

Greenhill & Co. LLC served as Crescent's financial advisor and Pillsbury Winthrop Shaw Pittman LLP provided legal counsel. Morgan Stanley acted as financial advisor to Morgan Stanley Real Estate with Goodwin Procter LLP and Jones Day providing legal counsel.

Morgan Stanley Real Estate - Corporate Real Estate Toxic Mortgages

2009-04-28T13:44:00.000-07:00

January 2006: Fortune. Interview with Richard Rainwater. "This is the first scenario I've seen where I question the survivability of mankind." He's 112th on the Forbes 400, worth $2.3 billion: "Most people invest and then sit around worrying what the next blowup will be. I do the opposite. I wait for the blowup, then invest." He waited with a half-billion-dollar war chest.

One year later- look at the deal Morgan closed on May 22, 2007

Morgan Stanley Real Estate Acquires Crescent Real Estate Equities (CEI) for $22.80/Sh
Crescent Real Estate Equities Company (NYSE: CEI) entered into a definitive agreement pursuant to which funds managed by Morgan Stanley Real Estate will acquire Crescent in an all cash transaction for $22.80 per share and the assumption of liabilities for total consideration of approximately $6.5 billion. Shares of Crescent Real Estate Equities closed at $21.62 today.

Crescent Real Estate Equities Co. (NYSE: CEI) has finally found a buyer, and one that seems to like its mixed-use approach. Morgan Stanley Real Estate has agreed to acquire the Fort Worth, Texas-based REIT for a deal that totals $6.5 billion, including the assumption of debt.

Crescent, a mixed-use REIT owned by Texas billionaire Richard Rainwater, was in the midst of morphing itself into a pure-play office REIT. After evaluating its strategic options, the company came to the conclusion that it could "take advantage of the void left by rabid industry consolidation" as a remade office REIT. More likely, it was positioning itself better for an outright sale.

The Crescent deal just underscores the notion that the private equity boom is still in full swing. According to a New York Times article citing data from Thomson Financial, there have been $281 billion worth of private equity deals in the U.S. so far this year -- that's triple the amount compared to the same period last year, which ended up breaking all sorts of records.

There seems to be plenty of momentum left for REIT take-private deals, too. Year to date, 12 REITs have gone private for a total of $16.2 billion. But, there's still a ways to go to catch up to the lofty levels of 2006, when 23 deals totaling $64.3 billion, including the mammoth EOP buyout, took place, according to SNL Financial data listed in an article by The Wall Street Journal.

Greenhill & Co. LLC served as Crescent's financial advisor and Pillsbury Winthrop Shaw Pittman LLP provided legal

Goldman Sachs and Morgan Stanley decided—while fearing for their own existence—to transform themselves into bank holding companies in September (bringing with it the ability to access the Federal Reserve's discount window), they essentially brought to an end the era of the standalone investment bank.

Bank of America said it couldn't even close its Merrill Lynch acquisition without substantial extra government help, and is likely to get billions of dollars in federal guarantees.

Rick Scott, Bigger then Enron

2009-04-28T13:41:00.000-07:00

New Commercial for Richard Scott

Conservatives for Patients' Rights

Remember who Richard is:

The Epitome of Fraud- Waste-Abuse:

2009 - WSJ reported that Richard Scott, "the former CEO of HCA Inc," had formed the non-profit organization-

Conservatives for Patients' Rights

as part of a "lobbying campaign to derail or modify" health care reform.

non-profit? What a joke.

Not this thief: THURSDAY, JUNE 26, 2003; WWW.USDOJ.GOV;
HCA Inc. (formerly known as Columbia/HCA and HCA - The Healthcare Company)
LARGEST HEALTH CARE FRAUD CASE IN U.S. HISTORY SETTLED; HCA INVESTIGATION NETS RECORD TOTAL OF $1.7 BILLION
Note: Hospital Corporation of America (HCA) was acquired by Columbia in 1994.

He features a doctor from England. I wonder why?

HCA International
242 Marylebone Road London, NW1 6JL
News & Events Careers Sitemap Legal

2008-

Welcome to London's leading private hospitals
Text size: A A
With six world-class hospitals and four outpatient medical centres in London, we are the private hospitals of choice for the successful treatment of serious and complex medical conditions. We also achieve some of the highest patient outcome and survival rates in the UK and our hospitals are virtually MRSA-free*

"Tea Baggers" take note- Bigger than Enron

2009-04-21T17:36:00.000-07:00

TruthDig
By Robert Scheer
April 15, 2009

Robert Scheer is the editor of Truthdig, where this article originally appeared. His latest book is The Pornography of Power: How Defense Hawks Hijacked 9/11 and Weakened

One wonders if Phil Gramm has been made just a tad nervous by the news on Tuesday that one of UBS's super-wealthy private clients has pleaded guilty to tax evasion. That's the second case in two weeks involving the bank at which the former senator is a vice chairman, and 100 other clients are under investigation for possible bank-assisted tax fraud.

Gramm, the Republican former chair of the Senate Finance Committee, where he authored much of the deregulatory legislation at the heart of the current banking meltdown, has for the six years since he left office helped lead a foreign-owned bank specializing in tax dodges for the wealthy. These schemes by the Swiss-based UBS not only force the rest of us taxpayers to pay more to make up the government revenue shortfall but are blatantly illegal. In February, UBS admitted to having committed fraud and conspiracy and agreed to pay a fine of $780 million. Republican "Tea Baggers" take note: Offshore tax havens do not equal populist revolt.

In the UBS "deferred prosecution agreement" with the Justice Department, the bank agreed to turn over the names of its secret account holders to avoid a criminal indictment. The complicity of top executives in this far-ranging scheme to use foreign tax havens to cheat the US treasury of billions in uncollected taxes was noted at the time in a Justice Department statement: "Swiss bankers routinely traveled to the United States to market Swiss bank secrecy to United States clients interested in attempting to evade United States income taxes."

What did Gramm think all of those Swiss bankers from his firm were doing over here? Was he totally clueless? The Justice Department statement suggests otherwise: "UBS executives knew that UBS's cross-border business violated the law. They refused to stop this activity, however, and in fact instructed their bankers to grow the business. The reason was money--the business was too profitable to give up. This was not a mere compliance oversight, but rather a knowing crime motivated by greed and disrespect of the law."

Is it conceivable that this "knowing crime," so widespread within the UBS enterprise, was unknown to Vice Chairman Gramm--even though it primarily involved US tax evasion, and he had been hired by the company because of his expertise in American law, some of which he helped to write? As Gramm said when he was hired in 2002 by UBS, the position "will provide me with the opportunity to practice what I have always preached. I have been involved in every major financial debate since I've been in the Congress."

How could Gramm, who prides himself on expertise in these matters, have been unaware of the damage that the Swiss bankers who worked for him were doing to American taxpayers saddled with making up the shortfall in government revenue? As the Justice Department said: "In 2004 alone, Swiss bankers allegedly traveled to the United States approximately 3,800 times to discuss their clients' Swiss bank accounts.

The information further alleges that UBS managers and employees used encrypted laptops and other counter-surveillance techniques to help prevent the detection of their marketing efforts and the identities and offshore assets of their U.S. clients."

But then again, if you are Phil Gramm or his wife, Wendy, you might expect to get away with a great deal in the way of financial machinations. After all, neither has ever been held legally responsible for the Enron debacle, in which the Gramms played a major part.

As a top government regulator, Wendy Gramm changed the rules to make Enron's chicanery possible, and as the chairman of the Senate Finance Committee, Phil codified those rule changes into federal law. While Enron execs like Chairman Ken Lay (a major Gramm campaign contributor) were indicted, the charmed couple that created the loopholes Lay and others jumped through escaped legal responsibility.

After leaving the government, Wendy Gramm joined Enron's board, where she headed the audit committee that managed to avoid auditing the company's disgraceful accounting procedures--just as her husband has apparently looked the other way during his stint in the private sector with UBS.

Sure, Phil Gramm lost his position as the co-chairman of John McCain's presidential campaign when he blamed the recession not on the banking deregulation he championed but rather the people of the United States, which he described as a "nation of whiners." But that was a sideshow compared with the serious charges now swirling around UBS, charges that may finally prove to be Gramm's undoing.
http://www.thenation.com/doc/20090427/scheer?rel=emailNation

Leo J. Wise, Staff Director & Chief Counsel

2009-04-19T08:45:00.000-07:00

OFFICE OF CONGRESSIONAL ETHICS
UNITED STATES HOUSE OF REPRESENTATIVES
WASHINGTON, D. C. 20515
FOR IMMEDIATE RELEASE Contact: Leo Wise
April 15, 2009 oce@mail.house.gov

PRESS ADVISORY:
OFFICE OF CONGRESSIONAL ETHICS RELEASES FIRST QUARTER REPORT
The Office of Congressional Ethics, established by the House of Representatives, is an independent, non-partisan entity charged with receiving and reviewing allegations of misconduct concerning House Members and staff and, when appropriate, referring matters to the Committee on Standards of Official Conduct (commonly referred to as the Ethics Committee).
Consistent with the desire of the House for more transparency in these matters, the OCE released today a report of its activities for the first quarter, January to March, of 2009.

# # #

Leo J. Wise, Staff Director & Chief Counsel
1017 Longworth House Office Building
(202) 225-9739
(202) 226-0997 fax

David Skaggs, Chair Porter Goss, Co-Chair
Yvonne Burke Jay Eagen
Karan English William Frenzel
Allison Hayward Abner Mikva

In 1997, as part of Richard Scott's severance package from Columbia he was paid $5.13 million and given a five year consulting contract at $950,000 per year

1997 + 5 = 2002

Remember- 1997 Columbia just decided to sell its home health-care business.

In 2002 FBI raided the offices of National Century Financial Enterprises in Dublin, Ohio

“This case is one of the largest corporate fraud investigations involving a privately held company headquartered in small town America,” said Assistant Director Kenneth W. Kaiser of the FBI Criminal Investigative Division.

Guess where those home health care units were found?

Yes- "...largest corporate fraud investigations involving a privately held company headquartered in small town America,”

Why the need for ‘healthcare financial service’ i.e. (NCFE) National Century Financial Enterprises?

Home health - which was struggling under the Balanced Budget Act of 1997; about 1,400 agencies closed nationwide in 1998.

On Sept 8, 1998 Standard and Poors downgraded the bonds of Charter/HCA to negative bases on
poor earnings. Looks like Rainwater and his Crescent Cos' have finally stumbled. One source within the company said it would be a long while before any new high-ticket acquisitions would take place. A previous deal with Prudential is in danger of being jettisoned.

Part Four- Richard (aka Rick) Scott/Conservatives for Patients' Rights

A 2009 article from - The Wall Street Journal reported that Richard Scott, "the former chief executive of HCA Inc," had formed the non-profit organization Conservatives for Patients' Rights as part of a "lobbying campaign to derail or modify" President Obama's health care proposals, but failed to note that Scott resigned from HCA in 1997 amid a federal investigation into the company's Medicare billing, physician recruiting, and home-care practices. HCA eventually pleaded guilty to fraud charges and paid approximately $1.7 billion in fines and penalties.

THURSDAY, JUNE 26, 2003; WWW.USDOJ.GOV;
WASHINGTON, D.C.

HCA Inc. (formerly known as Columbia/HCA and HCA - The Healthcare Company)

LARGEST HEALTH CARE FRAUD CASE IN U.S. HISTORY SETTLED; HCA INVESTIGATION NETS RECORD TOTAL OF $1.7 BILLION

Note: Hospital Corporation of America (HCA) was acquired by Columbia in 1994.

Enron and National Century Financial Enterprises, one of the largest corporate fraud investigations involving a privately held company headquartered in small town America.

On 3-9-2006 10-K SEC Filing, filed by J P MORGAN CHASE & CO: Enron litigation. JPMorgan Chase and certain of its officers and directors are involved in a number of lawsuits arising out of its banking relationships with Enron Corp.; the three current or former Firm employees are sued in their roles as former members of NCFE's board of directors

Friday, March 14, 2008 3:16 AM
Guilty, guilty, guilty, guilty...

5 National Century executives face prison time for fraud

BY JODI ANDES AND KEVIN MAYHOOD
THE COLUMBUS DISPATCH

It seemed the jury had little doubt about the guilt of the former National Century executives accused of the nation's biggest private fraud.

After a day and a half of deliberation, the jury of eight women and four men came back with a determination of "guilty" for every one of the 40 charges against two of the Dublin company's founders and three of its former executives.

March 26, 2008; By Jodi Andes; THE COLUMBUS DISPATCH

Nine other executives have been convicted or pleaded guilty in National Century's collapse.

Only Poulsen and executive James Happ still await trial.

FOR IMMEDIATE RELEASE--Friday, October 31, 2008--WWW.USDOJ.GOV

Former National Century Financial Enterprises CEO Convicted of Conspiracy, Fraud and Money Laundering

Fraud Cost Investors More Than $2 Billion

November 2008 - Only executive James Happ still await trial.

December 18, 2008 - The ONE AND ONLY acquittal; James K Happ!

By Jodi Andes THE COLUMBUS DISPATCH

Prosecutors' case fell short; juror says National Century fraud case produces 1st acquittal

The "not guilty" verdicts that came in federal court yesterday were not so much a vindication of the last National Century Financial Enterprises executive to stand trial, a juror said.

Instead, they were more a belief that:

‘federal prosecutors had not done their job ‘

the juror said after he and his fellow jurors acquitted James K. Happ of five counts after 12 hours of deliberation.

"He very well may have been guilty. A lot of us thought he was," said the juror

December 18, 2008 - the ONE AND ONLY acquittal- James K Happ

Who is James K Happ?

SEC Form September 9, 2003 Annual Meeting of Stockholders, Med Diversified Inc.:

Previously, Mr. Happ served for three years as executive vice president of NCFE, during which time he restructured the servicer department to improve operational performance and accelerated the utilization of technology to increase operational efficiency.

Mr. Happ also served as chief financial officer of the Dallas-based Columbia Homecare Group, Inc.,

CFO of Dallas-based Columbia Homecare Group, Inc.?

James K Happ … In this role, he directed the company through the challenging reimbursement climate, known as the interim payment system, and participated in the divestiture of all of Columbia/HCA's home care operations

Richard Rainwater and Darla Moore in 1997, as part of Richard Scott's severance package from Columbia was paid $5.13 million and given a five year consulting contract at $950,000 per year

BUCKEYE, LLC ---

2009-04-15T09:57:00.000-07:00

Detail by Entity Name

Florida Limited Liability Company

BUCKEYE, LLC

Filing Information

Document Number L08000084792

FEI/EIN Number NONE

Date Filed 09/05/2008
State FL
Status ACTIVE

Principal Address
5290 SEMINOLE BLVD
SUITE A
SAINT PETERSBURG FL 33708 US

Mailing Address
5290 SEMINOLE BLVD
SUITE A
SAINT PETERSBURG FL 33708 US

Registered Agent Name & Address
YINGLING, GREGORY
5290 SEMIONLE BLVD
SUITE A
SAINT PETERSBURG FL 33708 US

Manager/Member Detail
Name & Address

Title MGRM
YINGLING, GREGORY
5290 SEMINOLE BLVD STE A
SAINT PETERSBURG FL 33708 US

Title MGR
ALEPA, CHRISTOPHER J
63 WESTDALE DRIVE
HILLSDALE NJ 07642 US

Annual Reports
No Annual Reports Filed
Document Images

U.S. Seeks to Drop Case Against Former Sen. Stevens

2009-04-01T09:48:00.000-07:00

Prosecutors did not do their job!

Well I hope the AG looks at his case-jurors said the prosecutor did not do their job in December 2008...

2002-The largest private financial fraud case in our country's history began to uncover itself back in 2002, and no one heard of it. Wonder why?

JPMorgan, Citi, Goldman, Merrill, Morgan were all involved in this scheme, for years and were found guilty of contributing to the largest financial fraud case in our history; the largest financial fraud case that just ended Dec 2008 and no one paid attention. Credit Suisse LLC is pending with litigation with its involvement in this case.

The last trial for this case, even after the CEO stood trial was James K Happ. The ONE AND ONLY acquittal James K Happ!

December 18, 2008 - THE COLUMBUS DISPATCH By Jodi Andes --Prosecutors' case fell short, juror says, instead, they were more a belief that federal prosecutors had not done their job…

The SEC places Happ at CFO of Columbia Homecare prior to arriving at NCFE. The years Happ was at NCFE were what the trial was focused on.

Guess what James K Happ did as CFO at Columbia? He used NCFE to finance HCA’s losing asset-homecare into a dumping ground, Medshares Inc in Memphis financed by NCFE. All the while Medshares was under multiple investigations for Medicare Medicaid fraud. Yet no one has heard of this case.

He was the ex-CFO of HCA-Columbia Homecare Group prior to arriving at NCFE and the only one not guilty.

Who is behind this fraud, really? Who are they covering up for?

Fraud-Fraud-Fraud Not a word about prosecutor not doing his job with the ex-CFO of Columbia Homecare Group ....

2009-03-31T10:08:00.000-07:00

Where was James K Happ?

Notice not one word- He wasa the last person to stand trial and the only acquittal.
Jurors said prosecutor did nto do his job.

NEWS RELEASE
GREGORY G. LOCKHART
UNITED STATES ATTORNEY
SOUTHERN DISTRICT OF OHIO

FOR IMMEDIATE RELEASE
TUESDAY, MARCH 27, 2009
http://www.usdoj.gov/usao/ohs

CONTACT: Fred Alverson
614 469-571

FORMER NATIONAL CENTURY FINANCIAL ENTERPRISES CEO SENTENCED TO 30 YEARS IN PRISON, CO-OWNER SENTENCED TO 25 YEARS IN PRISON FOR CONSPIRACY, FRAUD AND MONEY LAUNDERING
Defendants Ordered to Pay Restitution of $2.3 Billion and Forfeit $1.7 Billion

WASHINGTON—Two former National Century Financial Enterprises (NCFE) executives were sentenced today for their roles in a scheme to deceive investors about the financial health of NCFE, Acting Assistant Attorney General Rita M. Glavin and U.S. Attorney Gregory G. Lockhart of the Southern District of Ohio announced. NCFE, formerly based in Dublin, Ohio, was one of the largest healthcare finance companies in the United States until it filed for bankruptcy in November 2002.

Lance K. Poulsen, 65, former president, owner and chief executive officer of NCFE was sentenced to 30 years in prison and three years of supervised release following the prison term. A federal jury convicted Poulsen on Oct. 31, 2008, of conspiracy, securities fraud, wire fraud and money laundering. Poulsen was also found guilty by a federal jury on March 26, 2008, of conspiring to interfere with a witness who was preparing to testify in the fraud trial against Poulsen and other NCFE executives. He is currently serving a 10-year prison sentence for that conviction. The court ordered Poulsen’s 30-year sentence to be served concurrently with the 10-year sentence for witness tampering.

Rebecca S. Parrett, 60, former vice chairman, secretary, treasurer, director and owner of NCFE was sentenced to 25 years in prison and three years of supervised release following the prison term. A federal jury convicted Parrett on March 13, 2008, of conspiracy, securities fraud, wire fraud and money laundering. Parrett fled after the conviction and remains at large.

U.S. District Court Judge Algenon Marbley also ordered Poulsen and Parrett to forfeit $1.7 billion of property representing the proceeds of the conspiracy and to pay restitution of $2.3 billion, jointly and severally with other defendants.

“Corporate executives who violate the law, as well as investors’ trust, can and will be held accountable for their illegal actions,” said Acting Assistant Attorney General Rita M. Glavin. “The Department of Justice will continue to seek appropriate punishment, including jail time, for individuals who participate in financial frauds to the detriment of the investing public.”

“Evidence showed that Poulsen knew the business model NCFE presented to the investing public differed drastically from the way NCFE did business within its own walls,” U.S. Attorney Lockhart said. “Their actions were designed to hide a financial house of cards from investors, eventually costing investors $2 billion.”

“When corporate officers elect to betray the public’s trust for personal gain, the very core of how and why our corporate system operates is immediately and negatively impacted,” Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation Division Jose A. Gonzalez said. “As signified by today’s NCFE sentences, the IRS gives priority to investigations involving the alleged breach of the public trust by corporate officials at any level.”

FBI Cincinnati Special Agent in Charge Keith L. Bennett noted the significant sentences imposed on both Poulsen and Parrett. “This should serve as a warning to those who might be tempted to manipulate the complexities of our financial systems to defraud others. The FBI stands ready to root out those who would do so, bring them to the judicial system and ensure they lose both their ill-gotten wealth and their freedom.”

Witnesses testified at both trials that Poulsen, Parrett and other NCFE executives engaged in a scheme from 1995 until the collapse of the company to deceive investors and rating agencies about the financial health of NCFE and how investors’ money would be used. NCFE bought accounts receivable from healthcare providers using money NCFE obtained through the sale of asset-backed notes to institutional investors, including pension funds, insurance companies and churches.

Evidence at both trials showed that NCFE misused investors’ money and made unsecured loans to health care providers, including those owned in whole or in part by Poulsen, Parrett and another owner of NCFE, Donald H. Ayers. Former employees testified that Poulsen, Parrett and other NCFE executives covered up the fraud by lying to investors and rating agencies. The government presented evidence that Poulsen and others created investor reports containing fabricated data and moved money back and forth between programs in order to make it appear that NCFE was in compliance with its own governing documents. Evidence showed that Poulsen and Parrett knew the business model NCFE presented to the investing public differed significantly from the way NCFE actually conducted business.

Four other NCFE executives have been convicted in connection with the fraud. Donald H. Ayers, an NCFE vice chairman, chief operating officer, director and an owner of the company, was found guilty on charges of conspiracy, securities fraud and money laundering and was sentenced to 15 years in prison. Randolph H. Speer, NCFE’s chief financial officer, was found guilty on charges of conspiracy, securities fraud, wire fraud and money laundering and was sentenced to 12 years in prison. Roger S. Faulkenberry, vice president for client development, was found guilty on charges of conspiracy, securities fraud, wire fraud and money laundering and was sentenced to 10 years in prison. James E. Dierker, chief credit officer, was found guilty on charges of conspiracy and money laundering and was sentenced to five years in prison. In addition, four other former NCFE executives have pleaded guilty in connection with this fraud.

The cases were prosecuted by the U.S. Attorney’s Office for the Southern District of Ohio and the Criminal Division’s Fraud Section and investigated by FBI Special Agents Matt Daly, Ingrid Schmidt and Tad Morris; IRS Special Agents Greg Ruwe and Mark Bailey, U.S. Postal Inspector Dave Mooney; and Immigration and Customs Enforcement Agent Celeste Koszut. Assistant U.S. Attorney Douglas Squires of the Southern District of Ohio, Assistant Chief Kathleen McGovern and Senior Trial Attorney Wes R. Porter of the Criminal Division’s Fraud Section prosecuted Parrett, Ayers, Speer, Faulkenberry and Dierker. Assistant U.S. Attorney Douglas Squires of the Southern District of Ohio, Assistant Chief Kathleen McGovern, Trial Attorneys N. Nathan Dimock, and former Trial Attorney Leo Wise of the Criminal Division’s Fraud Section prosecuted Poulsen. Fraud Section Paralegal Specialists Crystal Curry and Sarah Marberg assisted with these cases.

NEWS RELEASE-Prosecutor did not do his job with the ex-CFO of Columbia Homecare Group-Richard Rainwater Richard Scott

2009-03-31T10:06:00.000-07:00

NEWS RELEASE
GREGORY G. LOCKHART
UNITED STATES ATTORNEY
SOUTHERN DISTRICT OF OHIO

FOR IMMEDIATE RELEASE
TUESDAY, MARCH 27, 2009
http://www.usdoj.gov/usao/ohs

CONTACT: Fred Alverson
614 469-571

FORMER NATIONAL CENTURY FINANCIAL ENTERPRISES CEO SENTENCED TO 30 YEARS IN PRISON, CO-OWNER SENTENCED TO 25 YEARS IN PRISON FOR CONSPIRACY, FRAUD AND MONEY LAUNDERING
Defendants Ordered to Pay Restitution of $2.3 Billion and Forfeit $1.7 Billion

WASHINGTON—Two former National Century Financial Enterprises (NCFE) executives were sentenced today for their roles in a scheme to deceive investors about the financial health of NCFE, Acting Assistant Attorney General Rita M. Glavin and U.S. Attorney Gregory G. Lockhart of the Southern District of Ohio announced. NCFE, formerly based in Dublin, Ohio, was one of the largest healthcare finance companies in the United States until it filed for bankruptcy in November 2002.

Lance K. Poulsen, 65, former president, owner and chief executive officer of NCFE was sentenced to 30 years in prison and three years of supervised release following the prison term. A federal jury convicted Poulsen on Oct. 31, 2008, of conspiracy, securities fraud, wire fraud and money laundering. Poulsen was also found guilty by a federal jury on March 26, 2008, of conspiring to interfere with a witness who was preparing to testify in the fraud trial against Poulsen and other NCFE executives. He is currently serving a 10-year prison sentence for that conviction. The court ordered Poulsen’s 30-year sentence to be served concurrently with the 10-year sentence for witness tampering.

Rebecca S. Parrett, 60, former vice chairman, secretary, treasurer, director and owner of NCFE was sentenced to 25 years in prison and three years of supervised release following the prison term. A federal jury convicted Parrett on March 13, 2008, of conspiracy, securities fraud, wire fraud and money laundering. Parrett fled after the conviction and remains at large.

U.S. District Court Judge Algenon Marbley also ordered Poulsen and Parrett to forfeit $1.7 billion of property representing the proceeds of the conspiracy and to pay restitution of $2.3 billion, jointly and severally with other defendants.

“Corporate executives who violate the law, as well as investors’ trust, can and will be held accountable for their illegal actions,” said Acting Assistant Attorney General Rita M. Glavin. “The Department of Justice will continue to seek appropriate punishment, including jail time, for individuals who participate in financial frauds to the detriment of the investing public.”

“Evidence showed that Poulsen knew the business model NCFE presented to the investing public differed drastically from the way NCFE did business within its own walls,” U.S. Attorney Lockhart said. “Their actions were designed to hide a financial house of cards from investors, eventually costing investors $2 billion.”

“When corporate officers elect to betray the public’s trust for personal gain, the very core of how and why our corporate system operates is immediately and negatively impacted,” Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation Division Jose A. Gonzalez said. “As signified by today’s NCFE sentences, the IRS gives priority to investigations involving the alleged breach of the public trust by corporate officials at any level.”

FBI Cincinnati Special Agent in Charge Keith L. Bennett noted the significant sentences imposed on both Poulsen and Parrett. “This should serve as a warning to those who might be tempted to manipulate the complexities of our financial systems to defraud others. The FBI stands ready to root out those who would do so, bring them to the judicial system and ensure they lose both their ill-gotten wealth and their freedom.”

Witnesses testified at both trials that Poulsen, Parrett and other NCFE executives engaged in a scheme from 1995 until the collapse of the company to deceive investors and rating agencies about the financial health of NCFE and how investors’ money would be used. NCFE bought accounts receivable from healthcare providers using money NCFE obtained through the sale of asset-backed notes to institutional investors, including pension funds, insurance companies and churches.

Evidence at both trials showed that NCFE misused investors’ money and made unsecured loans to health care providers, including those owned in whole or in part by Poulsen, Parrett and another owner of NCFE, Donald H. Ayers. Former employees testified that Poulsen, Parrett and other NCFE executives covered up the fraud by lying to investors and rating agencies. The government presented evidence that Poulsen and others created investor reports containing fabricated data and moved money back and forth between programs in order to make it appear that NCFE was in compliance with its own governing documents. Evidence showed that Poulsen and Parrett knew the business model NCFE presented to the investing public differed significantly from the way NCFE actually conducted business.

Four other NCFE executives have been convicted in connection with the fraud. Donald H. Ayers, an NCFE vice chairman, chief operating officer, director and an owner of the company, was found guilty on charges of conspiracy, securities fraud and money laundering and was sentenced to 15 years in prison. Randolph H. Speer, NCFE’s chief financial officer, was found guilty on charges of conspiracy, securities fraud, wire fraud and money laundering and was sentenced to 12 years in prison. Roger S. Faulkenberry, vice president for client development, was found guilty on charges of conspiracy, securities fraud, wire fraud and money laundering and was sentenced to 10 years in prison. James E. Dierker, chief credit officer, was found guilty on charges of conspiracy and money laundering and was sentenced to five years in prison. In addition, four other former NCFE executives have pleaded guilty in connection with this fraud.

The cases were prosecuted by the U.S. Attorney’s Office for the Southern District of Ohio and the Criminal Division’s Fraud Section and investigated by FBI Special Agents Matt Daly, Ingrid Schmidt and Tad Morris; IRS Special Agents Greg Ruwe and Mark Bailey, U.S. Postal Inspector Dave Mooney; and Immigration and Customs Enforcement Agent Celeste Koszut. Assistant U.S. Attorney Douglas Squires of the Southern District of Ohio, Assistant Chief Kathleen McGovern and Senior Trial Attorney Wes R. Porter of the Criminal Division’s Fraud Section prosecuted Parrett, Ayers, Speer, Faulkenberry and Dierker. Assistant U.S. Attorney Douglas Squires of the Southern District of Ohio, Assistant Chief Kathleen McGovern, Trial Attorneys N. Nathan Dimock, and former Trial Attorney Leo Wise of the Criminal Division’s Fraud Section prosecuted Poulsen. Fraud Section Paralegal Specialists Crystal Curry and Sarah Marberg assisted with these cases.

Press Releases | Cincinnati

Executive Gets 30 Years in $2.9 Billion Fraud - One acquittal, the ex-CFO of Columbia Homecare Group

2009-03-30T16:38:00.000-07:00

Executive Gets 30 Years in $2.9 Billion Fraud
By ZACHERY KOUWE
Published: March 27, 2009
NYT

Nearly seven years after National Century Financial Enterprises collapsed in a $2.9 billion fraud, its founder, Lance K. Poulsen, was sentenced to 30 years in prison on Friday in one of the harshest white-collar punishments in history.

Mr. Poulsen was convicted in October of leading a vast fraud as chief executive of National Century, a company based in Dublin, Ohio, that provided financing for hundreds of clinics, hospitals and other health care providers.

The company’s fall in 2002 contributed to the bankruptcies of 275 health care facilities and cost Credit Suisse and the Pacific Investment Management Company, the nation’s biggest bond fund investor, more than $540 million.

“Mr. Poulsen is an architect of a fraud of such magnitude that it would make sophisticated financial analysts shudder,” Judge Algenon Marbley said in Federal District Court in Ohio. “It is considered the largest fraud at a private company in the United States. Mr. Poulsen perpetrated this fraud over a seven-year period and went to enormous lengths to conceal it.”

Mr. Poulsen, 65, is already serving a 10-year sentence for trying to bribe the main witness against him in the case. His sentence will run concurrently with the sentence for witness tampering.

Mr. Marbley’s decision signals that federal judges could begin imposing harsher sentences for white-collar crime in response to the rise in public outrage over corporate fraud after the discovery of Bernard L. Madoff’s multibillion-dollar Ponzi scheme. The sentence for Mr. Poulsen exceeds the 25 years given to Bernard J. Ebbers, the former chief executive of WorldCom, and the 24 years given to Jeffrey K. Skilling, the former Enron chief.

Mr. Marbley also handed out a 25-year sentence to Rebecca Parrett, a former National Century executive who became a fugitive after she was convicted last year.

Mr. Poulsen and Ms. Parrett were also ordered to pay $2.38 billion in restitution.

Before it filed for bankruptcy in 2002, National Century provided loans to a variety of health care companies that were backed by payments expected to be made by insurance companies and government programs like Medicaid and Medicare. Mr. Poulsen then packaged the loans into bonds and sold them to institutional investors and Wall Street firms.

In many cases, the company deliberately lent more to the facilities, many of which were owned by Mr. Poulsen, than their receivables were worth. The scheme finally came apart in the spring of 2002 when investors began to question the value of the loans, which forced National Century into a liquidity crisis.

Bigger than Enron

2009-03-30T16:35:00.000-07:00

First off get it straight-FBI RAIDED the offices on Dublin Ohio in 2002-then it filed for bankruptcy, after the fraud was beginning to uncover, but the trial left out the root-the one acquittal, the ex-CFO of Columbia Homecare Group, James K Happ.

Nearly seven years after National Century Financial Enterprises collapsed in a $2.9 billion fraud, its founder, Lance K. Poulsen, was sentenced to 30 years in prison on Friday in one of the harshest white-collar punishments in history, The New York Times’s Zachery Kouwe reported.

Mr. Poulsen was convicted in October of leading a vast fraud as chief executive of National Century, a company based in Dublin, Ohio, that provided financing for hundreds of clinics, hospitals and other health care providers.

The company’s fall in 2002 contributed to the bankruptcies of 275 health care facilities and cost Credit Suisse and the Pacific Investment Management Company, the nation’s biggest bond fund investor, more than $540 million.

“Mr. Poulsen is an architect of a fraud of such magnitude that it would make sophisticated financial analysts shudder,” Judge Algenon Marbley said in Federal District Court in Ohio. “It is considered the largest fraud at a private company in the United States. Mr. Poulsen perpetrated this fraud over a seven-year period and went to enormous lengths to conceal it.”

Mr. Poulsen, 65, is already serving a 10-year sentence for trying to bribe the main witness against him in the case. His sentence will run concurrently with the sentence for witness tampering.

Mr. Marbley’s decision signals that federal judges could begin imposing harsher sentences for white-collar crime in response to the rise in public outrage over corporate fraud after the discovery of Bernard L. Madoff’s multibillion-dollar Ponzi scheme. The sentence for Mr. Poulsen exceeds the 25 years given to Bernard J. Ebbers, the former chief executive of WorldCom, and the 24 years given to Jeffrey K. Skilling, the former Enron chief.

Mr. Marbley also handed out a 25-year sentence to Rebecca Parrett, a former National Century executive who became a fugitive after she was convicted last year.

Mr. Poulsen and Ms. Parrett were also ordered to pay $2.38 billion in restitution.

Before it filed for bankruptcy in 2002, National Century provided loans to a variety of health care companies that were backed by payments expected to be made by insurance companies and government programs like Medicaid and Medicare. Mr. Poulsen then packaged the loans into bonds and sold them to institutional investors and Wall Street firms.

In many cases, the company deliberately lent more to the facilities, many of which were owned by Mr. Poulsen, than their receivables were worth. The scheme finally came apart in the spring of 2002 when investors began to question the value of the loans, which forced National Century into a liquidity crisis.

Go to Article from The New York Times

Bigger than Enron-CNBC

2009-03-26T12:46:00.000-07:00

CNBC's editorial staff seemed to have awakened from its eight-year slumber just in time to realize that it was Democrats who wrecked the economy. Indeed, according to CNBC's money guru and his radical "wealth destruction" rhetoric, stocks had been hammered, on perhaps an unprecedented level, since Obama took office.

Except, of course, that they hadn't. At least not compared to the stock drops suffered under President Bush. For instance, in the less than six weeks between September 19, 2008, and October 27, 2008, the Dow lost 3,055 points. And between October 10, 2007, and November 20, 2008, the Dow lost a staggering 6,526 points on Bush's watch. By contrast, between January 21 and March 3, when Cramer lobbed his false claim against Obama, the Dow had lost 1,223 points.
Did an extraordinary amount of wealth get destroyed via the stock markets during Bush's tenure? Absolutely. Yet CNBC's Cramer only appeared on Today to blame Obama by name for comparatively modest Dow declines. (And speaking of wealth destruction, if you followed Cramer's "buy" and "sell" stock tips between May 2008 and December 2008, you would have lost 35 percent on your investment.)

And on and on the attacks came from Cramer. As Media Matters previously noted, Cramer this year repeatedly characterized Obama and congressional Democrats as Russian communists, claiming Obama is "taking cues from Lenin" and using terms such as "Bolshevik," "Marx," "comrades," "Soviet," "Winter Palace," and "Politburo" to describe Democrats.

And it hasn't just been Cramer. CNBC's Maria Bartiromo falsely suggested that Obama has proposed taxing small-business revenue. CNBC news anchor Melissa Francis announced she wouldn't vote for Obama's stimulus package. Host Joe Kernen mocked Obama as having been "hijacked by those -- the crazy -- by [Nancy] Pelosi, by [Harry] Reid" and described Obama's budget as "far left." During the same segment, reporter Carl Quintanilla said of Obama's budget, "There is some social engineering going on." Kernen also falsely claimed that Obama had promised to eliminate earmarks.

CNBC host Erin Burnett announced there were "interesting" and "serious" ideas in an op-ed Rush Limbaugh wrote for The Wall Street Journal about how he'd fix the economy. (His remedy: slash capital gains taxes. No, really.) In the op-ed, Limbaugh suggested that if the government did nothing, this recession would pretty much fix itself. That's the column Burnett heralded as "interesting" and "serious."

And now we've suddenly got a showcase CNBC host reportedly eyeing public office in Connecticut as a Republican while bashing away at the new Democratic administration each night, and even criticizing -- on-air -- the Connecticut pol the host wants to unseat.

And did we mention the idiotic Santelli episode? In terms of newsroom standards, it's like Fox News run amok over at CNBC.

And that, Jeff Zucker, is the real problem.

Comprehensive regulatory reform is critical to these efforts

2009-03-26T12:40:00.000-07:00

March 26, 2009 10:00 AM EDT

Below is Treasury Secretary Tim Geithner's Written Testimony to the House Financial Services Committee Hearing on financial regulatory reform:

Thank you Chairman Frank, Ranking Member Bachus, and other members of the Committee. I appreciate the opportunity to testify about the critical topic of financial regulatory reform.

Over the past 18 months, we have faced the most severe global financial crisis in generations. Some of the world’s largest financial institutions have failed. Equity and real estate prices have fallen sharply, eroding the value of our savings. The supply of credit has tightened dramatically. Confidence in the overall financial system, in the protections it is supposed to afford for investors and consumers, has eroded. These financial pressures have intensified the recession now underway around the world.

And as in any financial crisis, the damage falls on Main Street. It affects the vulnerable. It affects those who were conservative and responsible, not just those who took too much risk.

Our system is wrapped today in extraordinary complexity, but beneath all that, financial systems serve an essential and basic function. Financial institutions and markets transform the earnings and savings of American workers into the loans that finance a home, a new car or a college education. They exist to allocate savings and investment to their most productive uses.

Our financial system does this better than any other financial system in the world, but our system failed in basic fundamental ways. The system proved too unstable and fragile, subject to significant crises every few years, periodic booms in real estate markets and in credit, followed by busts and contraction. Innovation and complexity overwhelmed the checks and balances in the system. Compensation practices rewarded short-term profits over long-term return. We saw huge gains in increased access to credit for large parts of the American economy, but those gains were overshadowed by pervasive failures in consumer protection, leaving many Americans with obligations they did not understand and could not sustain. The huge apparent returns to financial activity attracted fraud on a dramatic scale. Large amounts of leverage and risk were created both within and outside the regulated part of the financial system.

These failures have caused a great loss of confidence in the basic fabric of our financial system, a system that over time has been a tremendous asset for the American economy.

To address this will require comprehensive reform. Not modest repairs at the margin, but new rules of the game. The new rules must be simpler and more effectively enforced and produce a more stable system, that protects consumers and investors, that rewards innovation and that is able to adapt and evolve with changes in the financial market.

On February 25, after meeting with the banking and financial services leadership from Congress, President Obama directed his economic team to develop recommendations for financial regulatory reform and to begin the process of working with the Congress on new legislation. The Treasury Department has been working with the President’s Working Group on Financial Markets (PWG) to develop a comprehensive plan of reform. This effort has been and will be guided by principles the President set forth earlier this year and in his speech as a candidate at Cooper Union in March 2008.

Financial institutions and markets that are critical to the functioning of the financial system and that could pose serious risks to the stability of the financial system need to be subject to strong oversight by the government. Our financial system and the major centralized markets must be strong and resilient enough to withstand very severe shocks and the failure of one or more large institutions. We need much stronger standards for openness, transparency, and plain, common sense language throughout the financial system. And we need strong and uniform supervision for all financial products marketed to consumers and investors, and tough enforcement of the rules to ensure full accountability for those who violate the public trust.

Financial products and institutions should be regulated for the economic function they provide and the risks they present, not the legal form they take. We can’t allow institutions to cherry pick among competing regulators, and shift risk to where it faces the lowest standards and constraints.

And we need to recognize that risk does not respect national borders. We need to prevent national competition to reduce standards and encourage a race to higher standards. Markets are global and high standards at home need to be complemented by strong international standards enforced more evenly and fairly. These are global markets and challenges. Building on these principles, we want to work with Congress to put in place fundamental reforms that create a stronger, more stable system, with much stronger protections for consumers and investors, and a more streamlined, consolidated, and simple oversight framework.

I want to begin that process today by focusing on proposals that are essential to creating a more stable system, with stronger tools to prevent and manage future crises. In this context, my objective is to concentrate on the substance of the reform agenda, rather than the complex and sensitive questions of who should be responsible for what.

Over the next few weeks we will outline proposals in the areas of consumer and investor protection and for reform of regulatory oversight arrangements.

We start with systemic risk, not just because of its obvious importance to our future economic performance, but also because these issues require more cooperation globally, and they will be at the center of the agenda at the upcoming Leaders’ Summit of the G-20 in London on April 2.

These proposals reflect a range of complex and consequential policy choices. They will require careful work and drafting. It is important that we get this right. We recognize there will be many alternative models put forth to achieve the objective we all share of creating a more stable system. And we look forward to working with the Federal Reserve, with the agencies that make up the President’s Working Group on Financial Markets, and with the Congress on a package of reforms that we can all support.

The Crisis and Its Fundamental Causes

The current crisis had many causes.

Two decades of sustained economic growth bred widespread complacency among financial intermediaries and investors, lowering borrowing costs and weakening lending standards.

A global boom in savings resulted in large flows of capital into the United States and other markets, pushing down long-term interest rates and pushing up asset prices. The rising market hid Ponzi schemes and other flagrant abuses that should have been detected and eliminated.

In that environment, institutions and investors looked for higher returns by taking on greater exposure to the risk of infrequent but severe losses.

A long period of home price appreciation encouraged borrowers, lenders, and investors to make choices that could only succeed if home prices continued to appreciate. We had a system under which firms encouraged people to take unwise risks on complicated products, with ruinous results for them and for our financial system.

Market discipline failed to constrain dangerous levels of risk-taking throughout the financial system. New financial products were created to meet demand from investors, and the complexity outmatched the risk-management capabilities of even the most sophisticated financial institutions. Financial activity migrated outside the banking system, relying on the assumption that liquidity would always be available.

Regulated institutions held too little capital relative to the risks to which they were exposed. And the combined effects of the requirements for capital, reserves and liquidity amplified rather than dampened financial cycles. This worked to intensify the boom and magnify the bust.

Supervision and regulation failed to prevent these problems. There were failures where regulation was extensive and failures where it was absent.

Regulators were aware that a large share of loans made by banks and other lenders were being originated for distribution to investors through securitizations, but they did not identify the risks caused by explosive growth in complex products based on these products.

Investment banks, large insurance companies, finance companies, and the GSEs were subject to only limited oversight on a consolidated basis, despite the fact that many of those companies owned federally insured depository institutions or had other access to explicit or implicit forms of support from the government. Federal law allowed many institutions to choose among regulatory regimes for consolidated supervision and, not surprisingly, they avoided the stronger regulatory authority applicable to bank holding companies. Those companies and others were highly leveraged or used short-term borrowing to buy long-term assets, yet lacked strong federal prudential regulation and routine access to central bank liquidity.

And while supervision and regulation failed to constrain the build up of leverage and risk, the United States came into this crisis without adequate tools to manage it effectively. Until the Housing and Economic Recovery Act and the Emergency Economic Stabilization Act were passed in the summer and fall of 2008, the executive branch had effectively no ability to provide the capital or guarantees necessary to contain the damage caused by the crisis.

And as I discussed before this committee on Tuesday, U.S. law left regulators without good options for managing failures of systemically important non-bank financial institutions.

Regulation of a financial system as complex and dynamic as our system is inherently difficult and challenging. But that difficulty has been compounded by a U.S. regulatory structure that is unnecessarily complex and fragmented. The complexity has sometimes resulted in a failure to assign clear responsibility for achievement of some public policy objectives, notably for financial stability.

Toward a More Stable and Resilient Financial System

Our comprehensive framework for regulatory reform will cover four broad areas: systemic risk, consumer and investor protection, eliminating gaps in our regulatory structure; and international coordination.

In the coming weeks, I will present detailed frameworks for each of these areas. Today, I will discuss in greater detail the need to create tools to identify and mitigate systemic risk, including tools to protect the financial system from the failure of systemically important financial institutions.

Second, weaknesses in our consumer and investor protections harm individuals, undermine trust in our financial system, and can contribute to systemic crises that shake the very foundations of our financial system. The choice of what home mortgage to get or how to save for retirement are some of the most important financial decisions that households make. It is crucial that when households make choices we have clear rules of the road that prevent manipulation and abuse. We must restore integrity to our financial system and strengthen these protections. Consumer and investor protection is a critical component of the President’s regulatory reform plan. We are developing a strong, comprehensive plan for consumer and investor regulation to simplify financial decisions for households and to protect people from unfair and deceptive practices.

We must end the practice of allowing banks and other financial companies to choose their regulator simply by changing their charters; regulators must choose who to regulate. Moreover, our regulatory system must be comprehensive and eliminate gaps in coverage. Our regulatory structure must assign clear regulatory authority, resources, and accountability for each of the key regulatory functions. We must not let turf wars or concerns about the shape of organizational charts prevent us from establishing a substantive system of regulation that meets the needs of the American people.

To match the increasing global markets, we must ensure that global standards for financial regulation are consistent with the high standards we will be implementing in the United States.

The Financial Stability Forum (FSF) has played an essential role in the effort, working with the world’s standard - setting bodies to study the underlying causes of the crises and address these weaknesses. Much progress is being made to enhance sound regulation, strengthen transparency, and reinforce international collaboration.

We have begun to work with international colleagues to reform and strengthen the FSF so that it can play a more effective role alongside the original Bretton Woods institutions in strengthening the financial system. We have already gotten agreement to expand the membership to include all G-20 countries, giving it a stronger mandate for promoting more robust standards consistent with the principles above, and working with the IMF and the World Bank to monitor the implementation of those standards.

In addition, we will launch a new, initiative to address prudential supervision, tax havens, and money laundering issues in weakly regulated jurisdictions. President Obama will underscore in London on April 2 at the Leaders’ Summit the imperative of raising standards across the globe and encouraging a race to the top rather than a race to the bottom.

Reducing Systemic Risk

The crisis of the past 18 months has exposed critical gaps and weaknesses in our regulatory system. As risks built up, internal risk management systems, rating agencies and regulators simply did not understand or address critical behaviors until they had already resulted in catastrophic losses.

This crisis has made clear that certain large, interconnected firms and markets need to be under a more consistent, and more conservative regulatory regime. These standards cannot simply address the soundness of individual institutions, but must also ensure the stability of the system itself. We need to strengthen our system of prudential supervision across the financial sector. We must require that firms build up capital during good economic times so that they have a more robust protection against losses in down times – and can continue to lend to America’s households and businesses big and small. We need to examine our accounting rules to see whether, consistent with investor protection, we can require firms to build up loan loss reserves that look forward and account for losses in downturns.

In addition, regulators must issue standards for executive compensation practices across all financial firms. These guidelines should encourage prudent risk-taking, incent a focus on long-term performance of the firm rather than short-term profits, and should not otherwise create incentives that overwhelm risk management frameworks.

The key elements of our plan to address systemic risk are:

First, we need to establish a single entity with responsibility for systemic stability over the major institutions and critical payment and settlement systems and activities.

Second, we need to establish and enforce substantially more conservative capital requirements for institutions that pose potential risk to the stability of the financial system, that are designed to dampen rather than amplify financial cycles.

Third, we should require that leveraged private investment funds with assets under management over a certain threshold register with the SEC to provide greater capacity for protecting investors and market integrity.

Fourth, we should establish a comprehensive framework of oversight, protections and disclosure for the OTC derivatives market, moving the standardized parts of those markets to central clearinghouse, and encouraging further use of exchange-traded instruments.

Fifth, the SEC should develop strong requirements for money market funds to reduce the risk of rapid withdrawals of funds that could pose greater risks to market functioning.

And sixth, we need to establish a stronger resolution mechanism that gives the government tools to protect the financial system and the broader economy from the potential failure of large complex financial institutions.

Systemically Important Financial Firms and Markets

To ensure appropriate focus and accountability for financial stability we need to establish a single entity with responsibility for consolidated supervision of systemically important firms and for systemically important payment and settlement systems and activities.

We can no longer allow major financial institutions to choose among consolidated supervision regimes and regulators or to avoid consolidated supervision entirely. That means we must create higher standards for all systemically important financial firms regardless of whether they own a depository institution, to account for the risk that the distress or failure of such a firm could impose on the financial system and the economy. We will work with Congress to enact legislation that defines the characteristics of covered firms, sets objectives and principles for their oversight, and assigns responsibility for regulating these firms.

In identifying systemically important firms, we believe that the characteristics to be considered should include: the financial system’s interdependence with the firm, the firm’s size, leverage (including off-balance sheet exposures), and degree of reliance on short-term funding, and the firm’s the importance of the firm as a source of credit for households, businesses, and governments and as a source of liquidity for the financial system.

In general, the design and degree of conservatism of the prudential requirements applicable to such firms should take into account the inherent inability of regulators to predict future outcomes.

Capital requirements for these firms must be sufficiently robust to be effective farther into the tails of potential outcomes than capital requirements for other financial firms. And they must be less pro-cyclical, requiring firms to build up substantial capital buffers in good economic times so that they can avoid deleveraging in cyclical downturns.

The single systemic regulator will also need to impose liquidity, counterparty, and credit risk management requirements that are more stringent than for other financial firms. For instance, supervisors should apply more demanding liquidity constraints; and require that these firms are able to aggregate counterparty risk exposures on an enterprise basis within a matter of hours.

The regulator of these entities will also need a prompt, corrective action regime that would allow the regulator to force protective actions as regulatory capital levels decline, similar to that of the FDIC with respect to its covered agencies.

Payment and Settlement Activities

Weaknesses in the settlement systems for key funding and risk transfer markets, notably overnight and short-term lending markets (such as those for tri-party repurchase agreements) and OTC derivatives, have been highlighted as a key mechanism that could spread financial distress between institutions and across borders. While some progress was made in the markets for CDS and other OTC derivatives while I was at the New York Fed, federal authority over such arrangements is incomplete and fragmented, and we have been forced to rely heavily on moral suasion to encourage market participants to strengthen these markets.

We need to give a single entity broad and clear authority over systemically important payment and settlement systems and activities. Where such systems or their participants are already federally regulated, the authority of those federal regulators should be preserved and the single entity should consult and coordinate with those regulators.

Hedge Funds and Other Private Pools of Capital

U. S. law generally does not require hedge funds or other private pools of capital to register with a federal financial regulator, although some funds that trade commodity derivatives must register with the CFTC and many funds register voluntarily with the SEC. As a result, there are no reliable, comprehensive data available to assess whether such funds individually or collectively pose a threat to financial stability. However, in the wake of the Madoff episode it is clear that, in order to protect investors, we must close gaps and weaknesses in regulation of investment advisors and the funds they manage.

Accordingly, we recommend that all advisers to hedge funds (and other private pools of capital, including private equity funds and venture capital funds) with assets under management over a certain threshold be required to register with the SEC. All such funds advised by an SEC-registered investment adviser should be subject to investor and counterparty disclosure requirements and regulatory reporting requirements. The regulatory reporting requirements for such funds should require reporting, on a confidential basis, information necessary to assess whether the fund or fund family is so large or highly leveraged that it poses a threat to financial stability. The SEC should share the reports that it receives from the funds with the entity responsible for oversight of systemically important firms, which would then determine whether any hedge funds could pose a systemic threat and should be subjected to the prudential standards outlined above.

Credit Default Swaps and Other OTC Derivatives

The current financial crisis has been amplified by excessive risk-taking by certain insurance companies and poor counterparty credit risk management by many banks trading Credit Default Swaps (CDS) on asset-backed securities. These complex instruments were poorly understood by counterparties, and the implication that they could threaten the entire financial system or bring down a company of the size and scope of AIG was not identified by regulators, in part because the CDS markets lacked transparency.

Let me be clear: the days when a major insurance company could bet the house on credit default swaps with no one watching and no credible backing to protect the company or taxpayers from losses must end.

In our proposed regulatory system, the government will regulate the markets for credit default swaps and over-the-counter derivatives for the first time.

We will subject all dealers in OTC derivative markets and any other firms whose activities in those markets pose a systemic threat to a strong regulatory and supervisory regime as systemically important firms.

We will force all standardized OTC derivative contracts to be cleared through appropriately designed central counterparties (CCPs). We will also encourage greater use of exchange-traded instruments.

The CCPs will be subject to comprehensive settlement systems supervision and oversight, consistent with the authority outlined above.

We will require that all non-standardized derivatives contracts be reported to trade repositories and be subject to robust standards for documentation and confirmation of trades, netting, collateral and margin practices, and close-out practices.

We will bring unparalleled transparency to the OTC derivatives markets by requiring CCPs and trade repositories to make aggregate data on trading volumes and positions available to the public and make individual counterparty trade and position data available on a confidential basis to federal regulators, including those with responsibilities for market integrity.

Finally, we will strengthen participant eligibility requirements and, where appropriate, introduce disclosure or suitability requirements, and we will require all market participants to meet recordkeeping and reporting requirements.

Money Market Mutual Funds (MMFs)

In the wake of Lehman Brothers’ bankruptcy, we learned that even one of the most stable and least risky investment vehicles - money market mutual funds - was not safe from the failure of a systemically important institution. These funds are subject to strict regulation by the SEC and are billed as having a stable asset value - a dollar invested will always return the same amount. But when a major prime MMF “broke the buck” - lost money - the event sparked sharp withdrawals across the entire prime MMF industry. Those withdrawals resulted in severe liquidity pressures, not only on prime MMFs but also on financial and non-financial companies that relied significantly on MMFs for funding. The vulnerability of MMFs to breaking the buck and the susceptibility of the entire prime MMF industry to sharp withdrawals in such circumstances remains a significant source of systemic risk.

We believe that the SEC should strengthen the regulatory framework around MMFs in order to reduce the credit and liquidity risk profile of individual MMFs and to make the MMF industry as a whole is less susceptible to runs.

Resolution Authority

As I discussed on Tuesday, we must create a resolution regime that provides authority to avoid the disorderly liquidation of any nonbank financial firm whose disorderly liquidation would have serious adverse effects on the financial system or the U.S. economy.

Please note that the draft resolution legislation we have submitted is a first step intended to address a significant void in today's regulatory structure. This mechanism is intended to be a permanent authority and therefore, will also be a critical element of Treasury's broader regulatory reform proposals. As we move forward on those proposals, we will need to align the draft legislation with the broader regulatory reform effort as it develops. At this point, however, I will focus on how the authority and mechanism would work within our current regulatory framework.

We must cover financial institutions that have the potential to pose systemic risks to our economy but that are not currently subject to the resolution authority of the FDIC. This would include bank and thrift holding companies and holding companies that control broker-dealers, insurance companies, and futures commission merchants, or any other financial firm posing substantial risk to our economy.

Before any of the emergency measures specified could be taken, the Secretary of the Treasury, upon the positive recommendations of both the Federal Reserve Board and the FDIC and in consultation with the President, would have to make a triggering determination that (1) the financial institution in question is in danger of becoming insolvent; (2) its insolvency would have serious adverse effects on economic conditions or financial stability in the United States; and (3) taking emergency action as provided for in the law would avoid or mitigate those adverse effects.

The Treasury and the FDIC would decide whether to provide financial assistance to the institution or to put it into conservatorship/receivership. This decision will be informed by the recommendations of the Federal Reserve Board and the appropriate federal regulatory agency (if different from the FDIC). The U.S. government would be permitted to utilize a number of different forms of financial assistance in order to stabilize the institution in question. These include making loans to the financial institution in question, purchasing its obligations or assets, assuming or guaranteeing its liabilities, and purchasing an equity interest in the institution.

This authority is modeled on the resolution authority that the FDIC has under current law with respect to banks and that the Federal Housing Finance Agency has with regard to the GSEs. Here, conservatorships or receiverships aim to minimize the impact of the potential failure of the financial institution on the financial system and consumers as a whole, rather than simply addressing the rights of the institution’s creditors as in bankruptcy.

Depending on the circumstances, the FDIC and the Treasury would place the firm into conservatorship with the aim of returning it to private hands or a receivership that would manage the process of winding down the firm. The trustee of the conservatorship or receivership would have broad powers, including to sell or transfer the assets or liabilities of the institution in question, to renegotiate or repudiate the institution’s contracts (including with its employees), and to deal with a derivatives book. A conservator would also have the power to fundamentally restructure the institution by, for example, replacing its board of directors and its senior officers. None of these actions would be subject to the approval of the institution’s creditors or other stakeholders.

The proposed legislation would create an appropriate mechanism to fund the appropriately limited exercise of the resolution authorities it confers. This could take the form of a mandatory appropriation to the FDIC out of the general fund of the Treasury (subject to all the restrictions on the use of appropriated funds, including apportionments under the Anti-Deficiency Act), and/or through a scheme of assessments, ex ante or ex post, on the financial institutions covered by the legislation. The government would also receive repayment from the redemption of any loans made to the financial institution in question, and from the ultimate sale of any equity interest taken by the government in the institution. The Deposit Insurance Fund will not be used to fund such assistance.

Conclusion

The President has made clear that we will do what is necessary to stabilize the financial system and restore the conditions for economic growth. Working closely with the Congress, we have moved quickly and with forceful action to help get people back to work and the economy growing again. With your help we are also moving to repair the financial system so that it works for, rather than against, recovery.

Comprehensive regulatory reform is critical to these efforts. In the coming days and weeks, we will continue to lay out the steps we must take to protect against systemic risk. We will also lay out a detailed framework for stronger rules to protect consumers and investors against fraud and abuse.

Next week I will join President Obama in London for the G-20 leaders meeting to build support - with the help of other interested nations and strengthened international bodies -for higher global standards for financial regulation.

We are a strong and resilient country. We came into the current crisis without the authority and tools we needed to contain the damage to the economy from the financial crisis. We are moving to ensure that we are equipped with both in the future, and in the process, that we modernize our 20th century regulatory system meet 21st century financial challenges.

Bigger than Enron ..just this alone is 2 Billion

2009-03-25T05:23:00.000-07:00

Isn't that funny.....all the ignorant reporters kept writing 1.9 Billion Fraud!

Now they are going after 2 Billion from one investment bank> What gives?

Credit Suisse played an important part in an alleged fraud ?

What about JPMorgan, Chase, Citi, blah blah blah....

Investors in the failed National Century Financial Enterprises Inc. aren’t the only ones going after Credit Suisse, the investment bank that issued the Dublin company’s AAA-rated notes.

U.S. District Judge James Graham in Columbus this month allowed a litigation trust formed in the wake of National Century’s bankruptcy to pursue about $2 billion in claims against Credit Suisse. The company had been seeking to dismiss the case.

The trust has alleged Credit Suisse played an important part in an alleged fraud that led to about $2 billion in investment losses and sparked bankruptcy for its subsidiaries.

A federal probe into National Century has led to convictions of or guilty pleas from 10 of 11 former executives targeted in the investigation. The company bought lump sums of unpaid bills from health-care companies and sold the receivables as securities to be backed by the collections, but the probe found National Century executives were taking money for personal use by investing in uncollectible or nonexistent receivables.

While the criminal case against several former executives was pending, Graham in December 2007 refused to dismiss most claims against Credit Suisse from institutional investors who had alleged the investment bank knew the notes it marketed and sold were worthless.

The bank in the action filed by the litigation trust unsuccessfully argued the National Century fraud did harm only to investors represented in the other lawsuit, leaving the trust with no grounds for its claims.

Credit Suisse has argued it wasn’t liable because it didn’t make misrepresentations to clients and didn’t have knowledge of the fraud. Officials for the company declined to comment for this report.

Robert Madden, a partner at Houston-based Gibbs & Bruns LLP representing the trust and the largest group of investors within the related suit, said both cases are now running on roughly parallel tracks after the latest refusal to dismiss the suit. Discovery is complete for both cases and, barring a summary judgment, they’ll be headed to trial.

The only true statement in this AP article is

2009-03-24T12:36:00.000-07:00

Almost $400,000 seized in Ohio fraud case
By ANDREW WELSH-HUGGINS – 21 hours ago

This is misleaduing and WRONG!COLUMBUS, Ohio (AP) — A fugitive convicted in a $1.9 billion corporate fraud scheme put aside almost $400,000 in a bank account before she disappeared, money her trial attorney said he knew nothing about.

Rebecca Parrett, who has been on the lam nearly a year, gave the money to another attorney after removing it from an escrow account, according to federal court documents. But on Friday, U.S. District Court Judge Algenon Marbley said the funds should be seized from an Arizona bank account used by Parrett, 60, a former executive with National Century Financial Enterprises.

The government could use the money to provide restitution to investors who lost money.

Parrett, who will be sentenced Friday in absentia, faces up to 60 years in prison. She disappeared last March after her conviction on 13 counts of securities and wire fraud and money laundering while she worked for National Century in suburban Columbus. Prosecutors likened the fraud, which involved misleading investors and fabricating data, to the Enron or WorldCom scandals.

Arizona attorney Seymour Sacks told the U.S. marshals that Parrett had given him $350,000 from an escrow account, the warrant said. Sacks said he refused to turn the money over to Parrett's husband and son when they requested it after she disappeared, according to the warrant.

Gregory Peterson, who represented Parrett at trial, said he only learned of the money's existence after his client disappeared.

"I was not aware of any money she had anywhere," Peterson said Monday, repeating that he didn't know where his client was.

Parrett's sentencing in absentia will come a few hours before Marbley sentences Lance Poulsen, National Century's founder and former chief executive.

The sentencings are the latest chapter in the downfall of what was once the country's largest health care financing company. Since the FBI raided its offices in 2002, at least nine former executives have been convicted of corporate fraud.

At its height the company employed more than 300 people, most of them in the Columbus area. Executives made millions, with Poulsen alone earning more than $9.1 million between 1996 and 2002, according to the government.

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 raised the money to fund its business by selling bonds to investors. It declared bankruptcy in 2002 after the FBI raid.

Copyright © 2009 The Associated Press. All rights reserved.

AIG POLITICAL CONTRIBUTIONS

2009-03-20T13:49:00.000-07:00

March 8, 2004

AIG, Citigroup Battle Unions on Political Donation Disclosure

http://www.bloomberg.com/apps/news?pid=10000103&sid=arBbK7iUfgPM&refer=us

Merrill Backs Bush

Bush derives much of his campaign donations from executives at publicly traded companies, with employees at Merrill Lynch & Co., UBS AG and MBNA Corp. among those making up 13 of his top 20 donors last year, contributing $2.9 million.

Six of the top 20 donors to Senator John Kerry, who has clinched the Democratic Party's presidential nomination, were employees of listed companies, and they gave $275,000 since he began campaigning in January 2003, according to the Center for Responsive Politics.

The shareholder resolutions were filed in December and January by the Service Employees International Union and other affiliates of the AFL-CIO, a federation of 64 unions representing 13 million people. They seek annual reports about corporate donations and ``an accounting of the company's resources, including property and personnel, contributed or donated to'' political parties or candidates.

General Electric

Shareholder proposals included in proxy ballots seldom garner a majority of votes, though a high percentage of favorable returns can send a message to the board, said Sabato at the University of Virginia.

Many of the companies targeted by the proposal asked the SEC to let them exclude the information from their proxies on the grounds that political involvement is part of ordinary business. Warren, New Jersey-based Chubb Corp., which was denied its request to omit the proposal, said in letters to the SEC that the measure would constitute micro-management by shareholders.

``Providing detailed information regarding which members of management influence which decisions about political contributions extends deeply into the company's daily decision- making procedures,'' Chubb wrote.

The SEC denied a request by Wells Fargo & Co. to omit the resolutions from its proxy. Wells Fargo, based in San Francisco, will post its policy on political contributions on its Web site in accordance with the unions' request, said spokeswoman Julia Tunis.

General Electric Co., whose chairman and chief executive officer, Jeffrey Immelt, 48, donated $2,000 to the Bush campaign, included the resolution in its proxy -- along with a recommendation to shareholders to vote against it.
``Because GE is committed to complying with applicable campaign finance laws, including all reporting requirements, we do not believe the report requested in this proposal is necessary,'' the Fairfield, Connecticut-based company said in its proxy.
http://www.washingtonpost.com/wp-dyn/content/article/2009/03/18/AR2009031803201.html?wpisrc=newsletter

From 1987 to 2004, the company's financial products unit contributed more than $5 billion to AIG's pretax income. In spring 2005, after I left the company, AIG's credit rating was downgraded. It would have been logical for AIG's new management to end or reduce its business of writing credit default swaps because of the risk it faced of having to post billions of dollars in additional collateral in connection with certain credit default protection. Yet AIG ramped up its credit default swaps business; significantly, the quality of the securities AIG wrote credit protection for deteriorated, and the company plunged into subprime mortgages. The results were disastrous.

Bigger then Enron- Richard Scott and Friends

2009-03-20T13:46:00.000-07:00

March 26, 2008; By Jodi Andes; THE COLUMBUS DISPATCH

Nine other executives have been convicted or pleaded guilty in National Century's collapse.

Only Poulsen and executive James Happ still await trial.

Only Poulsen and executive James Happ still await trial?

December 18, 2008 - The ONE AND ONLY acquittal; James K Happ!
By Jodi Andes THE COLUMBUS DISPATCH

Prosecutors' case fell short, juror says National Century fraud case produces 1st acquittal ; The "not guilty" verdicts that came in federal court yesterday were not so much a vindication of the last National Century Financial Enterprises executive to stand trial, a juror said.

Instead, they were more a belief that federal prosecutors had not done their job, the juror said after he and his fellow jurors acquitted James K. Happ of five counts after 12 hours of deliberation. "He very well may have been guilty. A lot of us thought he was," said the juror who wouldn't give his name. "But if he was, you gotta have the evidence."

To unravel this massive fraud that links FRAUD intertwined with Healthcare, Corporate Bankruptcy and Financial Institutes we can go back to 1979-but I will start with 1997:

July 26, 1997, Los Angeles Times article:
A controversial deal maker whose hard-nosed business tactics have reshaped the medical industry resigned Friday as scandal engulfed the vast hospital empire he had assembled over the last decade.

Richard Scott -- sometimes called "the Bill Gates of health care" -- quit as chairman of Columbia/HCA Healthcare Corp. amid a massive federal investigation into the Medicare billing, physician recruiting and home-care practices of the nation's largest for-profit health care company.

Though the federal probe focuses on other states, Columbia's aggressive expansion has included California, where the company operates 15 hospitals, 13 surgery centers and 10 home-health-care agencies, employing more than 11,000.

July 26, 1997- Where was James K Happ?
SEC Form September 9, 2003 Annual Meeting of Stockholders, Med Diversified Inc.:
Previously, Mr. Happ served for three years as executive vice president of NCFE, during which time he restructured the servicer department to improve operational performance and accelerated the utilization of technology to increase operational efficiency.

Mr. Happ also served as chief financial officer of the Dallas-based Columbia Homecare Group, Inc.,
… In this role, he directed the company through the challenging reimbursement climate, known as the interim payment system, and participated in the divestiture of all of Columbia/HCA's home care operations

Who purchased the majority of this divestiture in late ’98 & early ’99?
Medshares, Inc. of Memphis, Tennessee
Who financed this divestiture?
National Century Financial Enterprises, Inc.

Sherry Gibson pleaded guilty in 2003 to a lesser charge of securities fraud in exchange for helping prosecutors. Gibson told jurors she told investors "absolutely nothing" about National Century's practices of advancing cash to Memphis, Tenn.-based Medshares, a home-health care provider… July 30, 1999 MEDSHARES INC: Health Care Services Provider Files Chapter 11

Wall Street Journal - Richard Scott HEALTHCARE BANDIT

2009-03-20T13:44:00.000-07:00

2009-The Wall Street Journal reported that Richard Scott, "the former chief executive of HCA Inc," had formed the non-profit organization Conservatives for Patients' Rights as part of a "lobbying campaign to derail or modify" President Obama's health care proposals, but failed to note that Scott resigned from HCA in 1997 amid a federal investigation into the company's Medicare billing, physician recruiting, and home-care practices. HCA eventually pleaded guilty to fraud charges and paid approximately $1.7 billion in fines and penalties.

THURSDAY, JUNE 26, 2003; WWW.USDOJ.GOV;
WASHINGTON, D.C.
HCA Inc. (formerly known as Columbia/HCA and HCA - The Healthcare Company)
LARGEST HEALTH CARE FRAUD CASE IN U.S. HISTORY SETTLED; HCA INVESTIGATION NETS RECORD TOTAL OF $1.7 BILLION
Note: Hospital Corporation of America (HCA) was acquired by Columbia in 1994.

Why does this matter? The wrath of Richard Scott and friends is to this day still affecting main street America.

Who is Richard Scott? More importantly, who are Richard Rainwater & his wife, Darla Moore?

Before GW Bush was affiliated with Richard Rainwater may I remind you-Richard Scott was the ex-partner of Richard Rainwater with Columbia Homecare Group.

In 1997, Fortune magazine ran a cover story on successful business executive Darla Moore, titled "The Toughest Babe in Business."….She created the corporate bankruptcy finance tool, DIP, debtor in possession while at a Wall Street bank.

Columbia/HCA is a partnership of financier Richard Rainwater of Ft. Worth and lawyer Richard Scott. Scott was recently terminated by Darla Moore, the wife of Richard Rainwater and according to Fortune Magazine, the “Toughest Babe in the Business”.
As part of Richard Scott's severance package from Columbia he was paid $5.13 million and given a five year consulting contract at $950,000 per year. His former president, Mr. Vandewater was paid $3.24 million and given a five year consulting contract at $600,000 per year.

Both former executives are allowed to exercise vested stock options within 90 days. Scott owned or had options on 9.4 million shares of Columbia stock as of May, 1997. Vanderwater controlled 617,375 shares. Columbia has agreed to pay attorney's fees and any fines or judgments against the two. In addition, the two former executives get their office expenses paid for two years including secretaries. If they move within the next two years their moving expenses are paid by Columbia/HCA. Not a bad deal for someone who just got fired! Wow! What a surprise!

Rainwater also owned a large stake in Magellan Health Care which controls Charter Medical. Magellan, run by Darla Moore, is the largest network of psychiatric hospitals in the country. They are becoming more and more involved in obtaining government money for services formerly not covered as health care, according to Fortune Magazine.

Columbia just decided to sell its home health-care business and its head announced she is forming a company of her own. The home care unit is valued at $ 450 million.

At least two other top executives of Columbia have resigned.
On Sept 8, 1998 Standard and Poors downgraded the bonds of Charter/HCA to negative bases on poor earnings. Looks like Rainwater and his Crescent Cos' have finally stumbled. One source within the company said it would be a long while before any new high-ticket acquisitions would take place. A previous deal with Prudential is in danger of being jettisoned.

Why does this matter- September 8, 1998?

We must review the case that just ended in December 2008 in Columbus Ohio with National Century Financial Enterprises which was headquartered in Dublin, Ohio. It began in 2002 when FBI raided the offices of National Century Financial Enterprises Dublin, Ohio

National Century Financial Enterprises:
“This case is one of the largest corporate fraud investigations involving a privately held company headquartered in small town America,” said Assistant Director Kenneth W. Kaiser of the FBI Criminal Investigative Division.

Just a reminder relating to the need for ‘healthcare financial service’ i.e. (NCFE) National Century Financial Enterprises; home health - which was struggling under the Balanced Budget Act of 1997; about 1,400 agencies closed nationwide in 1998.

3/9/2006
10-K SEC Filing, filed by J P MORGAN CHASE & CO on 3/9/2006: Enron litigation. JPMorgan Chase and certain of its officers and directors are involved in a number of lawsuits arising out of its banking relationships with Enron Corp.; the three current or former Firm employees are sued in their roles as former members of NCFE's board of directors

Leo Wise - Federal prosecutors had not done their job - Dec 2008

2009-03-20T13:35:00.000-07:00

Leo Wise Biographical Statement
February 18, 2007

“Federal prosecutors had not done their job” in 2008?

Leo Wise is a trial attorney with the Fraud Section of the Criminal Division of the United States Department of Justice in Washington, DC. Mr. Wise joined the Department of Justice through the Attorney General’s Honors Program in 2004.

His first assignment was with the Tobacco Litigation Team, a task force that successfully prosecuted United States v. Philip Morris, et al., the federal government’s racketeering case against the American cigarette industry in 2004 and
2005. Following a 10-month trial, Judge Gladys Kessler of the United States District Court for the District of Columbia found for the United States. Mr. Wise’s next position was with the Enron Task Force as member of the trial team in the successful prosecution of United States v. Jeffrey Skilling and Kenneth Lay. Following a 4-month trial, a Houston jury convicted both defendants in June 2006.

Mr. Wise is a recipient of awards from the Assistant Attorney General for the Civil Division in 2005, the Assistant Attorney General for the Criminal Division in 2006 and the Attorney General’s Award for Exceptional Service in 2006. Prior to joining the Department, Mr. Wise was a law clerk to the Honorable Jan E. DuBois of the United States District Court for the Eastern District of Pennsylvania in Philadelphia.

Mr. Wise is a graduate of the Harvard Law School, the School of Advanced International Studies and The Johns Hopkins University. In addition, Mr. Wise is a commissioned officer in the United States Navy Reserve Intelligence Program and an adjunct professor in the School of Public Affairs at American University

JULY 10, 2007 - SUPERSEDING INDICTMENT CHARGES EIGHT FORMER EXECUTIVES OF HEALTH CARE FINANCING COMPANY WITH CONSPIRACY, FRAUD, MONEY LAUNDERING

"This case is one of the largest corporate fraud investigations involving a privately held company headquartered in small town America," said FBI Criminal Investigative Division. (Because it was private, no one has ever heard of this case, cried one prosecutor)

December 18, 2008 - The ONE AND ONLY acquittal; James K Happ!

By Jodi Andes THE COLUMBUS DISPATCH
Prosecutors' case fell short, juror says National Century fraud case produces 1st acquittal; The "not guilty" verdicts that came in federal court yesterday were not so much a vindication of the last National Century Financial Enterprises executive to stand trial, a juror said.

Instead, they were more a belief that federal prosecutors had not done their job, the juror said

Federal prosecutors had not done their job!!

Charles Krauthammer-Bigger than Enron

2009-03-20T13:26:00.000-07:00

I AM SO CONFUSED!

Did this happen Januaray 20, 2009?

I am guessing NOT!

I say before 1999 even....but let us look:

Ready?

2004

AIG

2004

MERRILL

March 8, 2004

AIG, Citigroup Battle Unions on Political
Donation Disclosure

http://www.bloomberg.com/apps/news?pid=10000103&sid=arBbK7iUfgPM&refer=us

Merrill Backs Bush

Bush derives much of his campaign donations from executives at publicly traded companies, with employees at Merrill Lynch & Co., UBS AG and MBNA Corp. among those making up 13 of his top 20 donors last year, contributing $2.9 million.

Six of the top 20 donors to Senator John Kerry, who has clinched the Democratic Party's presidential nomination, were employees of listed companies, and they gave $275,000 since he began campaigning in January 2003, according to the Center for Responsive Politics.

WHO HAD ACCESS IN 2004? AIG or me?

Bigger then Enron- Credit Suisse

2009-03-20T11:55:00.000-07:00

Credit Suisse Loses Bid To Toss Nat'l Century Suit

Law360, New York (March 19, 2009) -- A federal judge has refused to dismiss a suit against Credit Suisse Securities LLC alleging that it helped National Century Financial Enterprises Inc. run the enormous Ponzi scheme that eventually drove it into bankruptcy.

Judge James L. Graham of the U.S. District Court for the Southern District of Ohio ruled Wednesday that nearly all claims of the lawsuit, which was filed by a trust...

My comment to Tom Daschle's Op-Ed in WaPO

2009-03-20T08:35:00.000-07:00

OBAMA says: The epitome of Fraud Waste and Abuse….

I SAY: Root that out and we can afford much more to spend!

PAY ATTENTION PEOPLE

Are you aware of the largest private financial fraud in our country's history that ended December 2008?

WHY?

It was not 'low income housing' mortgages; it was HEALTHCARE FINANCIAL FRAUD; the largest private "FINANCIAL INSTITUTION“in our country.

JULY 10, 2007 - SUPERSEDING INDICTMENT CHARGES EIGHT FORMER EXECUTIVES OF HEALTH CARE FINANCING COMPANY WITH CONSPIRACY, FRAUD, MONEY LAUNDERING

"This case is one of the largest corporate fraud investigations involving a privately held company headquartered in small town America," said FBI Criminal Investigative Division. (Because it was private, no one has ever heard of this case, cried one prosecutor)

A reminder relating to the NEED for ‘healthcare financial service’ i.e. (NCFE) National Century Financial Enterprises; home health - which was struggling under the Balanced Budget Act of 1997; about 1,400 agencies closed nationwide in 1998.

Recall in 1998: On Sept 8, 1998 Standard and Poors downgraded the bonds of Charter/HCA …

The following is an excerpt from a 10-K SEC Filing, filed by J P MORGAN CHASE & CO on 3/9/2006:
the three current or former Firm employees are sued in their roles as former members of NCFE's (National Century Financial Enterprises) board of directors

2002 FBI Raids NCFE headquarters in Dublin Ohio

Prior to the exposure of ‘some’ of the fraud at NCFE, the same entities were also involved in the "LARGEST PRIVATE" Bankruptcy Court in Memphis, TN in 1999. (Another “private’ company; remember, home health - which was struggling under the Balanced Budget Act of 1997)

Guess what this LARGEST PRIVATE Company filing bankruptcy in Tennessee was--- HOME HEALTHCARE!

The SEC NEVER received documentation of the publicly traded companies allegedly selling or divesting their home health units to this private company.
Six months or so later after the acquisition of all the losers, this private healthcare company filing bankruptcy in Tennessee held much of if not ALL of Columbia/HCA Homecare’s losing' assets, home health- financed by the largest fraudulent private "FINANCIAL INSTITUTION “in our country, NCFE.

Tennessee Bankruptcy court transcripts reveal lawyers crying Fraud only to be reprimanded by the appointed corporate bankruptcy judge. She forbade the lawyers from using the ‘F’ (fraud) word in her court. (Got to love those appointed judges) Guess what tool was used in this corporate bankruptcy court in TN? DIP FINANCE TOOL.

March 26, 2008; By Jodi Andes; THE COLUMBUS DISPATCH
Nine other executives have been convicted or pleaded guilty in National Century's collapse. Only Poulsen and executive James Happ still await trial.

Only CEO and ONE EXECUTIVE –JAMES K HAPP await trial? JAMES K HAPP –LAST PERSON ON TRIAL—

WHY?
Who is James K Happ? Where was James K Happ when Richard Scott was at Columbia in 1997?

In 1997 James K Happ was the CFO of the Dallas-based Columbia Homecare Group, Inc. “In this role, he directed the company through the challenging reimbursement climate, known as the interim payment system, and participated in the divestiture of all of Columbia/HCA's home care operations” (SEC Form)

Let me remind you the size and TOO BIG TO FAIL mentality for HCA-Hospital Corporation of America is in Nashville, TN. Remember Senator Bill Frist- Leader of the Senate- HOLY COW!

December 9, 2008. James K. Happ, 48, is charged with conspiracy, money-laundering conspiracy and three counts of wire fraud; the 11th National Century executive to be tried or admit guilt. , Also today, a former friend of Happ's testified that, while working at National Century, Happ boasted that he never could be charged with any fraud because he didn't sign anything.

(Just like Madoff’s sons never signed anything therefore they are not involved.)

December 18, 2008 - The ONE AND ONLY acquittal; James K Happ!

By Jodi Andes THE COLUMBUS DISPATCH
Prosecutors' case fell short, juror says National Century fraud case produces 1st acquittal; The "not guilty" verdicts that came in federal court yesterday were not so much a vindication of the last National Century Financial Enterprises executive to stand trial, a juror said.

Instead, they were more a belief that federal prosecutors had not done their job, the juror said after he and his fellow jurors acquitted James K. Happ of five counts after 12 hours of deliberation. "He very well may have been guilty. A lot of us thought he was," said the juror who wouldn't give his name. "But if he was, you gotta have the evidence."

“Federal prosecutors had not done their job” in 2008?

To be continued…..

AIG Agency Auto reaches its customers through

2009-03-16T14:30:00.000-07:00

AIG Agency Auto reaches its customers through local agents and brokers who are committed to providing personalized service. Agents and brokers are licensed insurance professionals dedicated to providing the personal expertise our customers deserve.

Insurance provided by Member Companies of American International Group, Inc. Products and services may not be available in all states.

AIG-AIG Agency Auto

2009-03-16T14:28:00.000-07:00

Product Distribution

AIG Agency Auto reaches its customers through local agents and brokers who are committed to providing personalized service. Agents and brokers are licensed insurance professionals dedicated to providing the personal expertise our customers deserve.

Locate an agent or broker in your area.

Leading the way
We have long been a pioneer within the insurance industry, well known for entering new markets and developing innovative products and services to meet evolving customer needs.

Relationships

We stay close to our customers and respond quickly to their changing needs. By building mutually beneficial relationships with customers, we are able to better understand their specific needs and tailor solutions to best meet them.

Good Citizenship

We contribute and volunteer in our communities. AIG has a long-standing tradition of giving back to the communities in which we operate. In 2005, the AIG Diaster Relief Fund raised $8.6 million to help in recovery efforts and provide assistance to those affected by the year's major natural disasters.

AIG Agency Auto , AIG companies

2009-03-16T14:25:00.000-07:00

AIG companies serve commercial, institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer. In addition, AIG companies are leading providers of retirement services, financial services and asset management in the United States.

Agency Auto
For more than 28 years, AIG Agency Auto has been a market leader providing innovative insurance solutions through our network of more than 23,000 independent agencies and brokerages throughout the United States. Our array of Auto, Motorcycle, Recreation Vehicle and Commercial Vehicle insurance products separate Agency Auto from other carriers as we strive to meet the evolving needs of the customers we serve. AIG Agency Auto features products backed by member companies of American International Group, Inc. (AIG). We have financial strength and expert claims service unparalleled in the industry so we'll be there when you need us.

AIG companies

2009-03-16T14:11:00.000-07:00

American International Group Inc.
AIG: NYSE; Financials/Insurance - Multiline

AIG companies serve commercial, institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer. In addition, AIG companies are leading providers of retirement services, financial services and asset management in the United States.

American International Group was the largest insurance company in the United States before it suddenly collapsed in September 2008 under the weight of bad bets it made insuring mortgage-backed securities. The company was bailed out by the Federal Reserve, but even after that $85 billion infusion, losses continued to mount and in November the Treasury announced a new rescue package that brought the total cost to $150 billion.

On March 1, 2009, the federal government agreed to provide an additional $30 billion to A.I.G. and loosen the terms of its huge loan to the insurer, even as the insurance giant reported a $61.7 billion loss, the biggest quarterly loss in history.

The intervention would be the fourth time the United States has had to help the giant insurer avert bankruptcy. The government already owns nearly 80 percent of the A.I.G.'s holding company as a result of earlier interventions, which included a $60 billion loan, a $40 billion purchase of preferred shares and $50 billion to soak up the company’s toxic assets.

Much of the company, an assortment of businesses that run the gamut from aircraft leasing to life insurance for Indians to retirement plans for elementary schoolteachers, remained profitable. But that could not offset losses, primarily from one London based unit, that reached $25 billion for the third quarter of 2008. Given A.I.G.'s size and the complexity of its deals, federal officials decided that a bailout was preferable to the havoc in international markets that would likely follow bankruptcy.

The company's complex structure and aggressive approach reflects the determination of the man who built A.I.G., Maurice R. Greenberg, to create a global empire operating in complementary businesses. Not even the company’s annual reports to shareholders or its regulatory filings offer a chart of its complex corporate structure.

Though its name is American, the company is rooted in Asia. According to company lore, its founder, Cornelius Vander Starr, a World War I veteran, traveled to Asia with only 300 Japanese yen (less than $3 today) in his pocket and started the firm in Shanghai in 1919. With a partner, he sold marine and fire insurance and expanded rapidly throughout the Philippines, Indonesia and China by hiring locals as agents and managers, a business strategy A.I.G. uses today. Nearly half of A.I.G.’s 116,000 direct employees — about 62,000 people — are in Asia.

Mr. Greenberg, who joined A.I.G. in 1960, focused on making giant commercial deals, increasing the company's share of the life insurance business and writing what were, decades ago, unusual types of coverage, like insurance against kidnapping and protection from suits against a company’s officers and directors.

A.I.G.’s problems rest in its London-based financial products unit, part of its financial services group, which is exposed to securities tied to the value of home loans — the same kind of securities that forced Lehman Brothers into bankruptcy proceedings the day before A.I.G. was bailed out. The financial products group sold credit-default swaps, complex financial contracts allowing buyers to insure securities backed by mortgages. Many of the buyers were European banks. As home values have fallen, the value of the underlying mortgages has declined, and A.I.G. has had to reduce the value of the securities on its books.

The company's distress followed an unusual period of turmoil at the company. Early in 2005, questions arose about financial transactions that had the effect of making the company’s earnings look better. Mr. Greenberg resigned as chief executive after regulators sent a wave of subpoenas to A.I.G.; eventually it restated earnings covering a five-year period. His successor's efforts to restore confidence did not meet with investor approval and he was replaced after the company announced that it lost $7.8 billion in 2008's first quarter.

Commercial Real Estate Fraud-AIG, Morgan, JP, Citi,

2009-03-16T08:13:00.000-07:00

AG Cuomo/Mr Frank- Interested in the Commercial Real Estate Fraud?

Please investigate this: (NYSE: CEI) has finally found a buyer!!!! Morgan Stanley? May 2007?

May 22, 2007
Morgan Stanley Grabs Crescent in $6.5B Deal
Move Underscores Continued Momentum for REIT Take-Private Deals and Private Equity Boom

Crescent Real Estate Equities Co. (NYSE: CEI) has finally found a buyer, and one that seems to like its mixed-use approach. Morgan Stanley Real Estate has agreed to acquire the Fort Worth, Texas-based REIT for a deal that totals $6.5 billion, including the assumption of debt.

Crescent, a mixed-use REIT owned by Texas billionaire Richard Rainwater, was in the midst of morphing itself into a pure-play office REIT. After evaluating its strategic options, the company came to the conclusion that it could "take advantage of the void left by rabid industry consolidation" as a remade office REIT. More likely, it was positioning itself better for an outright sale.

Morgan Stanley will pay $22.80 per share in cash for the REIT, which represents a 12% premium to the prior 30-day average closing price for the stock. But, the premium shrinks to just 5.4% above yesterday's close of $21.62 per share.

Morgan Stanley Grabs Crescent in $6.5B Deal-Is this what AIG securitzed?

2009-03-16T07:15:00.000-07:00

Another "Private Deals and Private Equity Boom"

Remember with National National Century Financial Enterprises (NCFE)
'The federal prosecutor noted in the NCFE case: "Ladies and gentlemen, this is a case of staggering fraud," Wise said. "It is one of the largest frauds the FBI has ever investigated."
National Century's collapse never gained much attention outside business circles, largely because it was a privately held company

May 22, 2007Morgan Stanley Grabs Crescent in $6.5B DealMove Underscores Continued Momentum for REIT Take-Private Deals and Private Equity Boom
Crescent Real Estate Equities Co. (NYSE: CEI) has finally found a buyer, and one that seems to like its mixed-use approach. Morgan Stanley Real Estate has agreed to acquire the Fort Worth, Texas-based REIT for a deal that totals $6.5 billion, including the assumption of debt.

Crescent, a mixed-use REIT owned by Texas billionaire Richard Rainwater, was in the midst of morphing itself into a pure-play office REIT. After evaluating its strategic options, the company came to the conclusion that it could "take advantage of the void left by rabid industry consolidation" as a remade office REIT. More likely, it was positioning itself better for an outright sale.

Morgan Stanley will pay $22.80 per share in cash for the REIT, which represents a 12% premium to the prior 30-day average closing price for the stock. But, the premium shrinks to just 5.4% above yesterday's close of $21.62 per share.

The deal also includes the assumption of $3.1 billion of outstanding debt and the redemption of Crescent's outstanding preferred shares. Crescent does not plan to pay any further dividends on the common share. The deal, which is expected to close in the third quarter, is subject to approval by Crescent's shareholders.

"The primary goal of the strategic plan we announced on March 1, 2007 was to maximize value for our shareholders. This transaction accelerates the realization of that goal by delivering value to our shareholders more quickly and with greater certainty. We are delighted to announce this agreement and we look forward to working closely with Morgan Stanley Real Estate on a transition that will be seamless for our customers, partners and employees," said John C. Goff, Crescent's vice chairman and CEO, in a statement.

Prior to the deal with Morgan Stanley, Crescent had set into motion a series of deals, including the $550 million sale of its six hotels plus the 343,664-square-foot Austin Centre office building for $75.5 million to Walton Street Capital LLC in March. It also struck a deal recently to sell a portfolio of Dallas-area office assets to a venture between Trimarchi Management and UBS for about $420 million, according to published reports. Crescent also sold the historic Exchange Building in Seattle for $80.6 million to a joint venture between GE Asset Management and The Ashforth Co. The REIT was preparing to shop its resort and residential development business through JP Morgan and was still evaluating plans for Canyon Ranch, a wellness lifestyle company owned in partnership with Mel Zuckerman and Jerry Cohen.

Crescent's portfolio includes 70 office properties totaling 27 million square feet, with major concentrations in Dallas, Houston, Austin, Denver, Miami and Las Vegas. It also holds a stake in AmeriCold REIT, an owner and operator of refrigerated warehousing, transportation management and other logistical services.

It's not clear what Morgan Stanley will do with the various pieces of Crescent going forward. The financial services firm considers Crescent's "unique" platform complimentary to its own wide range of business lines.

Morgan Stanley has certainly cast a wide net for real estate acquisitions, gobbling up properties and real estate companies in all sectors of the industry, and has been a major force in the take-private deals that have fueled the hot investment sales market over the past two years. Last year, it acquired Town and Country Trust, an apartment REIT, through a venture with Onex Real Estate and Sawyer Realty Holdings LLC, in a deal valued at $1.5 billion. Also in 2006, it paid $1.9 billion to acquire Glenborough Realty Trust, a San Mateo, CA-based office REIT. It recently acquired CNL Hotels & Resorts for about $6.6 billion, including the sale of a portion of the properties to Ashford Hospitality Trust.

The financial firm has also reached into its deep pockets for a plethora of property acquisitions lately. It recently paid about $2.43 billion to buy a portfolio of former EOP assets in San Francisco from Blackstone. It also acquired a 28-story office tower at 2 Park Ave. in Manhattan for $519 million. On the retail side, Morgan Stanley recently formed a joint venture with Inland Western Retail Real Estate Trust Inc. to acquire and manage retail properties in target markets across the U.S. with a goal of building a billion-dollar portfolio.

The Crescent deal just underscores the notion that the private equity boom is still in full swing. According to a New York Times article citing data from Thomson Financial, there have been $281 billion worth of private equity deals in the U.S. so far this year -- that's triple the amount compared to the same period last year, which ended up breaking all sorts of records.

There seems to be plenty of momentum left for REIT take-private deals, too. Year to date, 12 REITs have gone private for a total of $16.2 billion. But, there's still a ways to go to catch up to the lofty levels of 2006, when 23 deals totaling $64.3 billion, including the mammoth EOP buyout, took place, according to SNL Financial data listed in an article by The Wall Street Journal.

Greenhill & Co. LLC served as Crescent's financial advisor and Pillsbury Winthrop Shaw Pittman LLP provided legal counsel. Morgan Stanley acted as financial advisor to Morgan Stanley Real Estate with Goodwin Procter LLP and Jones Day providing legal counsel.

2009-03-13T10:26:00.000-07:00

Net Worth:$1.7 bil
Fortune:self made
Source:HCA Healthcare
Age:70
Country Of Citizenship:United States
Residence:Nashville, Tennessee
Industry:Health Care
Education:Vanderbilt University, Bachelor of Arts / Science, Washington University, Medical Doctor
Marital Status:married, 3 children

Former Air Force flight surgeon took HCA, nation's largest hospital operator, private with Bain Capital, KKR and Merrill Lynch in 2006. At the time the $33 billion leveraged buyout was the largest in history; eclipsed by $45 billion purchase of power giant TXU four months later. "Being private in these times is a blessing. The timing couldn't have been better." Founded Hospital Corp. of America with father and Jack Massey 1968; took public following year. Led management buyout 1989; took public again 3 years later. Merged with Richard Rainwater's 1994, became chief exec again 3 years later. Nashville native left board in January, now focused on philanthropy through family foundation.

Are you aware of the largest private financial fraud in our country's history that ended December 2008? I will give you a hint: It was not 'low income housing' mortgages, it was publicly traded HEALTHCARE Companies including Columbia dumping their losing asset, home healthcare into a private company.

The one and only executive acquitted in this case out of more than 12 convicted was James K Happ; jurors said prosecutor did not do his job! Guess where James K Happ came from? Columbia Homecare Group, he was the CFO!

Bigger then Enron....self made....I think not!

2009-03-13T10:25:00.000-07:00

"update of the August 10 R&D Earmarks analysis..."

2009-03-12T05:04:00.000-07:00

Congress Piles on R&D Earmarks in 2006 Appropriations
(This analysis is an update of the August 10 R&D Earmarks analysis. Please see the August 10 analysis for full information. This update covers developments since August.)
- As the FY 2006 appropriations process drags on well into the new fiscal year, Senate appropriators are on a record-setting pace for R&D earmarks with $1.5 billion so far (see Table A and Figure 1). House R&D earmarks are lagging behind Senate levels because of tighter budget targets, but final FY 2006 appropriations could end up adding House and Senate earmarks together instead of splitting differences.
- Since August, the Senate has drafted a Department of Defense (DOD) appropriations bill containing $520 million in R&D earmarks, bringing the total to $1.5 billion among all agencies. Like the House, the Senate’s earmarks are concentrated: four agencies (DOD, $520 million; USDA, $334 million; DOE, $318 million; and Commerce, $198 million) receive 91 percent of Senate R&D earmarks, while NIH,NSF, DHS, and other agencies are earmark-free.
- FY 2006 R&D earmarks are likely to exceed the $1.9 billion total in 2004 or the $2.1 billion total in FY 2005 if House and Senate earmarks are combined in final budgets. In finalizing the USDA budget,congressional negotiators allocated $334 million for R&D earmarks, more than earlier House ($183 million) and Senate ($292 million) bills had provided.

Bigger than Enron-Financial FRAUD

2009-03-12T04:51:00.000-07:00

How long was Sen Grassley Chairman of the Finance Com? Our financial system went off a cliff Sep 08

Where does Assosciated Press get their information...Bigger then Enron...they don't even touch the real story...Richard Scott can you find him here?

2009-03-11T17:19:00.000-07:00

Sentencing set for Ohio CEO in $1.9B fraud case
Associated Press - March 11, 2009 12:13 PM ET

COLUMBUS, Ohio (AP) - The former chief executive of a failed health care financing company will learn his sentence later this month in a $1.9 billion fraud case.

U.S. District Court Judge Algenon Marbley will sentence 65-year-old Lance Poulsen on March 27 in Columbus.

Marbley set the date in a court filing Wednesday.

Poulsen was convicted in October on 12 counts of securities fraud, wire fraud and money laundering.

Prosecutors likened the fraud uncovered at National Century Financial Enterprises in suburban Columbus to the Enron or WorldCom scandals.

Poulsen faces up to 135 years in prison, though his actual sentence will likely be shorter under federal sentencing guidelines.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Bigger than ENRON JUDGES....OHIO and TENNESSEE

2009-03-10T10:22:00.000-07:00

What do you want from Southern Ohio?
Really?
You have the Bankruptcy Judge in Memphis telling lawyers not to sue the 'F'raud worj in her court amidst of the NCFE FRUADULENT CLAIMS,,,,why would this judge in SOUTHERN Ohio be any different?

Ex-National Century Exec Drops Claims V. JPMorgan
Law360, New York (March 09, 2009) -- A judge has signed off on the stipulated dismissal of crossclaims brought by a former National Century Financial Enterprises Inc. executive against JPMorgan Chase & Co. and two of the company's former outside directors in multidistrict litigation over the health care lender's multibillion-dollar collapse.

Judge James L. Graham of the U.S. District Court for the Southern District of Ohio approved the dismissal with prejudice Friday and brought the crossclaims by former National Century Chief...

Economic Pear Harbor

2009-03-09T06:17:00.000-07:00

CNBC great show? Well let us look at John Stewart's clip showing us how GREAT CNBC is!
IDIOTS!

N.Y. Times, 'CNBC Thrives as Hosts Deliver News With Attitude,' by Brian Stelter and Tim Arango: 'One month shy of its 20th anniversary, CNBC is being jokingly called 'the recession network' within the halls of its headquarters in New Jersey. After it achieved record ratings last fall, the network's audience remains above its annual average. But CNBC's executives and hosts seem well aware that their ratings have traditionally stagnated in down times for the Dow. 'People do not want to come to a show each night and hear how poor they are,' ['Mad Money' host Jim] Cramer said. But in a change from previous downturns, CNBC is now a place for politics, to borrow a phrase from its sister channel MSNBC. The network's journalists have been encouraged to speak their minds, making the line between reporter and commentator almost indistinguishable at times. ... With economic attention focused on Washington, the network is spending less time on bullish stock picks and more time assessing the government's actions. In recent weeks some have perceived the network to be leading the campaign against President Obama's economic agenda. ... Just as the first cable news channel, CNN, rose to prominence during the gulf war in 1991, and another one, the Fox News Channel, became a ratings leader in the period before the Iraq war in 2002 and 2003, CNBC is on a war footing. ... CNBC is a boon to NBC Universal's bottom line; it has posted record profits for at least the last three years.'

John Stewart, where are you?

Richard Scott the MEDICAID FRAUD THIEF writes to President....PLEASE !

2009-03-08T09:15:00.000-07:00

"Mr. President, Americans don’t want surprises…Please tell us the specifics of
your plan so that all Americans can make a judgment on it for themselves."

The epitome of Fraud Waste and Abuse---Richrd Scott & Richard Rainwater!

Summary: The Wall Street Journal reported that Richard Scott, "the former chief executive of HCA Inc," had formed the non-profit organization Conservatives for Patients' Rights as part of a "lobbying campaign to derail or modify" President Obama's health care proposals, but failed to note that Scott resigned from HCA in 1997 amid a federal investigation into the company's Medicare billing, physician recruiting, and home-care practices. HCA eventually pleaded guilty to fraud charges and paid approximately $1.7 billion in fines and penalties.

THURSDAY, JUNE 26, 2003; WWW.USDOJ.GOV;
HCA Inc. (formerly known as Columbia/HCA and HCA - The Healthcare Company)
LARGEST HEALTH CARE FRAUD CASE IN U.S. HISTORY SETTLED; HCA INVESTIGATION NETS RECORD TOTAL OF $1.7 BILLION
Note: Hospital Corporation of America (HCA) was acquired by Columbia in 1994.

Who is Richard Scott? Who is Richard Rainwater? Who is Darla Moore?

Dear Mr. President:
Americans generally agree that our health care system is too expensive.
You made health care a centerpiece of your campaign and just last week announced a sweeping
$634 billion plan to reform our nation’s health care system. While you were very specific
about how you would pay for this plan, you offered virtually no details on your plan itself.
One of our basic rights as consumers is to be able to shop and compare. As taxpayers, we should have
the ability to not only know the cost of your plan, but the specifics of what we get out of your plan.
That is the only way Americans can make an informed decision.
As you convene your health care summit at the White House, we call upon you to lay out the
details and specifics of your plan for all to see. We are entitled to a healthy debate on how
your plan will impact each of us.
Many Americans are leery about allowing the government to have a more significant role in
making private health care decisions that should only be made by a patient and their doctor.
Americans learned that buried deep inside your stimulus plan was a very ominous sounding
“Federal Coordinating Council.” This “Council” could have a very far reaching impact on
how our doctors treat us in the future.
Mr. President, Americans don’t want surprises. And we don’t want national boards or faceless
bureaucrats taking away our rights to make our own health decisions in the name of
controlling costs.
Sharing the details of your plan is the best way to allay our fears and end the speculation. Please
tell us the specifics of your plan so that all Americans can make a judgment on it for themselves.
Respectfully,
Rick Scott

Conservatives for Patients’ Rights

http://cprights.org/pdf/openletter20090305.pdf

A Hospital Giant Comes to Town, Bringing Change...1993 Richard Scott & James K Happ

2009-03-08T09:08:00.001-07:00

A Hospital Giant Comes to Town, Bringing Change
By KATHRYN JONES
Published: Sunday, November 21, 1993
WHEN Richard L. Scott rolled into town three years ago and bought two small, down-at-the-heels hospitals, he and his Columbia Healthcare Corporation made quite an impression on the local health care industry.

"Everybody thought they were crazy," said Dr. Donald Huge, medical director for Sanus/New York Life Health Plan, one of Houston's largest health maintenance organizations. "No one could figure out why they would want hospitals like that." Columbia was largely ignored.

But Columbia kept buying hospitals, here and elsewhere. In September Columbia put up $3.4 billion to acquire Galen Health Care Inc., a 73-hospital chain spun off by Humana Inc. Then last month Columbia announced a merger with the HCA-Hospital Corporation of America that will create the world's largest investor-owned hospital group.

Now, it is hard to ignore Columbia. The HCA merger, if approved, will make Columbia the largest hospital chain in Houston, with 10 hospitals and 2,800 beds, or about 16 percent of the market. It seems everyone is calling Columbia's Houston office, where Jay Grinney, president of the Southwest division, plots Columbia's acquisitions with big red dots on a wall map. Dr. Huge, whose company has been expanding its network of doctors and hospitals, was one of those callers after the Galen merger. "I called Jay and said, 'Hey, we need to have lunch, old buddy.' I was going to need him desperately."

If Rick Scott has his way, the for-profit, publicly traded Columbia will become an equally formidable presence in many other cities, including Atlanta, Chicago and Kansas City. (The company is already strong in Miami and El Paso; it has no hospitals in the Northeast.) For those cities and many others where the hospital industry is fast consolidating, Mr. Scott's performance in Houston could be a study of what happens when a powerful force like Columbia comes to town.

Mr. Scott's guiding philosophy is that bigger is better. In Houston, as in other cities, Columbia has bought hospitals and consolidated overlapping operations like marketing and cardiac treatment to save millions of dollars in overhead, and it has done this with only about 25 layoffs. Using its size, it has negotiated volume discounts from medical-supply companies for everything from surgical masks to operating-room equipment.

To fill more of its beds, it invests heavily in new medical services and better equipment to make the hospitals more attractive to health plans, patients and physicians. It also woos physicians with equity stakes.

The formula has worked for Columbia. All of its hospitals here and elsewhere are profitable. But while Columbia has lowered operating costs, its effect on the prices patients and their insurers pay is still uncertain, although there are some promising signs.

Analysts said the HCA merger will give Columbia the size to bargain with the big buyers of health services envisioned under the Clinton Administration's health reform plan.

But some health care industry experts worry that as the hospital industry consolidates, with Columbia and big competitors gaining strength in markets like Houston, these companies could someday be in a powerful position to raise prices.

Columbia, based in Louisville, was founded in 1987 by Mr. Scott, then a Dallas attorney and now chairman and chief executive, and Richard Rainwater, a Fort Worth financier who made his fortune cutting deals for Sid Bass, one of the billionaire Bass brothers.

After early successes in El Paso and Miami-Fort Lauderdale, the company moved into Houston. In addition to acquiring hospitals, Columbia has added a residential mental health center for adolescents and children. The company has also expanded or started programs including rehabilitation services, inpatient and outpatient psychiatric programs, outpatient diagnostic services, and nursing-home and home-health-care services. A recent affiliation with Medical Care America Inc. will add outpatient surgery and home-infusion care to the list.

"I want to make sure we have all the different systems that managed care needs," Mr. Scott said.

The HCA merger, which still must be approved by shareholders and regulators, would give Columbia four more west side hospitals and 1,200 more beds in Houston. Columbia closed some hospitals in El Paso and Miami; it has not done so here.

Health-care industry executives said Columbia's biggest impact has been to speed an industry consolidation in Houston. Its closest competitor, Memorial Healthcare System, last month announced an agreement that will give it more than 2,000 beds. Other hospitals are also making acquisitions and forming networks with a variety of services and doctors. And many people here say it's just a matter of time before some hospitals close.

Columbia would like to acquire even more hospitals in Houston, Mr. Scott said. It wants 25 percent to 35 percent of the market.

THE Houston area has about 100 hospitals, many owned by several companies -- Columbia, Memorial, American Medical International, Healthtrust and Epic Healthcare Group -- and others independent.

But some who watch the health care business said they are concerned that Columbia and Memorial are emerging as the two dominant hospital companies in Houston. They worry that Columbia particularly, because of its deep pockets, will gain too much power and then dictate prices.

Merrill Matthews, health policy director of the not-for-profit National Center for Policy Analysis in Dallas, compared this business to the military industry. "You could get something like the Pentagon, with a few major suppliers like a Lockheed or a General Dynamics," he said. "Nobody argues that the stuff they sell is cheap. And the little guy, where much of the innovation comes from, gets squeezed out."

MR. Scott recognizes such criticism. "I think that's a concern. I don't think it's good in any business for anyone to have a monopoly. On the other hand, you need to have size to get costs down. The truth is, for patients, physicians and whoever the payer is, I think size is very positive."

With all its hospitals profitable, Columbia, whose shares are traded on the New York Stock Exchange, earned $25.9 million, or $1.18 a share, on revenues of $819.3 million last year. In 1991, it earned $15.2 million, or 92 cents a share, on revenues of $499.4 million. However, the company said it lost $115 million in this year's third quarter after taking charges for the Galen acquisition. Nevertheless, for the year it is expected to earn $1.95 per share, according to analysts. (The HCA merger, expected to be completed in February, would result in an entity called Columbia/HCA Healthcare Corporation, with annual revenues of more than $10 billion.)

Columbia could not show how its presence has affected the prices paid by patients and insurers in Houston. But Mr. Scott said prices are generally falling. Others in the Houston health-care industry said it was too early to tell. But some have seen some good signs. "We've already seen some improvement in quoted rates to us on a per-diem basis in contracts," Dr. Huge said.

Operating expenses per patient day at Columbia's Houston hospitals fell from $801 in 1990 to $794.12 last year. Company officials pointed to several examples of how they have made hospitals more efficient and lowered operating costs.

Columbia said it immediately cut $1.5 million in overhead from its initial acquisitions in Houston. The company said it is also filling more beds. For example, the average daily number of patients in beds at the Sam Houston hospital has almost tripled to 125 from 45 in 1990, Mr. Grinney said. The company said it is attracting more patients with improvements to its hospitals and expanded services.

Columbia's size -- 94 hospitals before the HCA merger, 190 hospitals in 26 states after it -- gives it leverage with big national suppliers. Mr. Scott said Columbia has cut its hospital supply costs in Houston by more than 15 percent.

It has also eliminated some duplication of services. For example, Rosewood Medical Center had planned an $8 million expansion that would have included a comprehensive heart program. But Spring Branch, only 10 to 15 minutes away, already had such a program. Columbia's solution was to set up an outpatient cardiac catheterization unit at Rosewood; more serious cases go to the Spring Branch hospital.

"Instead of assuming that every facility has to be completely equipped, we look at it on a systemwide basis," Mr. Grinney said.

Terry Goss, executive director of the Durham Medical Center, a multi-specialty group with 17 physicians that has aligned with Columbia, recalled how doctors' complaints about outdated CAT-scan, operating-room and intensive-care-unit equipment had been ignored by the previous administration at the Heights Hospital. But when doctors raised the issue with Columbia executives, they ordered the equipment. Columbia also helped negotiate and finance a building for Durham in a good location.

And when negotiating a contract with a health plan, Columbia offers a medical network that includes not only its facilities but also the services of certain doctors. "They're bringing business to the physicians who are in independent practice," said Diane Love, an associate professor of health care administration at the University of Houston at Clear Lake City.

SOME physicians are concerned that Columbia is getting so large that it will control the local market and they won't have a say, equity stake or not. And some competitors played down Columbia's impact in a market where a growing number of services take place outside the hospital.

"We're not doing anything differently since they've been in the market," said W. Randolph Smith, executive vice president of operations at American Medical.

There will be losers. Mr. Scott said he expects 30 percent of the nation's hospitals to close in five years. Some will be in Houston.

"Slowly, they're going to go out of business," he said. "It sounds bad, but it will lower health care costs in the city." SHOULD DOCTORS OWN HOSPITALS?

WHEN the Columbia Healthcare Corporation comes to town, it woos local physicians with promises of an ownership stake in its hospitals.

But the equity stakes, which have become a cornerstone of Columbia's strategy for moving into new markets, are increasingly under fire.

Critics, including some lawmakers, contend that such business relationships are a blatant conflict because they could encourage physicians to order unnecessary treatments and jack up patient bills at hospitals where they have a financial interest.

But Columbia officials said that selling partnerships to a hospital's staff physicians helps reduce the cost of providing care by focusing physicians on the bottom line and giving them a voice in a hospital's operation.Columbia officials said they are well within current Federal guidelines for physician ownership of facilities. The guidelines give a "safe harbor" to organizations with physician ownership of 40 percent or less.

Typically, Columbia limits its aggregate physician ownership in its local hospitals to 30 percent, said Jay Grinney, president of Columbia's southwest division.

In Houston, 130 physicians own 11.5 percent of the hospitals, and that percentage will probably grow as more doctors become interested in investing.

The original partnership units sold for $15,000 each.

Photos: Jay Grinney of Columbia Healthcare plots the company's acquisitions in Houston on a wall map. (F. Carter Smith for The New York Times); Richard Scott, left, visits Willie Burton, a patient in Louisville. (Jackie Wallace for The New York Times)

"Bigger Than Enron," Friday, June 21, 2002 Where was CNBC?

2009-03-06T19:29:00.000-08:00

FRONTLINE's "Bigger Than Enron," airing Thursday, June 20, at 9 p.m. EDT on PBS (check local listings), looks at an oversight system gone soft and how market deregulation and conflicts of interest eroded the system of controls designed to protect stockholders. Producer Hedrick Smith was online Friday, June 21, to talk about what he learned from SEC officials, corporate executives, members of Congress, and investor advocates.

wrath of Richard Scott’s fraud just ended in December 2008

2009-03-06T18:40:00.000-08:00

Why does this matter? Because the wrath of Richard Scott’s fraud just ended in December 2008 in the largest private financial fraud case in our country's history in 2002 when FBI raided the offices of National Century Financial Enterprises Dublin, Ohio, headquarters.

Guess where Columbia and many of the other publicly traded healthcare companies DUMPED their losing asset, Home healthcare? National Century Financial Enterprises

National Century Financial Enterprises:
“This case is one of the largest corporate fraud investigations involving a privately held company headquartered in small town America,” said Assistant Director Kenneth W. Kaiser of the FBI Criminal Investigative Division.

The following is an excerpt from a 10-K SEC Filing, filed by J P MORGAN CHASE & CO on 3/9/2006: Enron litigation. JPMorgan Chase and certain of its officers and directors are involved in a number of lawsuits arising out of its banking relationships with Enron Corp.; the three current or former Firm employees are sued in their roles as former members of NCFE's board of directors

March 26, 2008; By Jodi Andes; THE COLUMBUS DISPATCH
Nine other executives have been convicted or pleaded guilty in National Century's collapse. Only Poulsen and executive James Happ still await trial.

Only Poulsen and executive James Happ still await trial?

December 9, 2008. James K. Happ, 48, is charged with conspiracy, money-laundering conspiracy and three counts of wire fraud; the 11th National Century executive to be tried or admit guilt. , Also today, a former friend of Happ's testified that, while working at National Century, Happ boasted that he never could be charged with any fraud because he didn't sign anything.

December 18, 2008 - The ONE AND ONLY acquittal; James K Happ!
By Jodi Andes THE COLUMBUS DISPATCH
Prosecutors' case fell short, juror says National Century fraud case produces 1st acquittal ; The "not guilty" verdicts that came in federal court yesterday were not so much a vindication of the last National Century Financial Enterprises executive to stand trial, a juror said.

Instead, they were more a belief that federal prosecutors had not done their job, the juror said after he and his fellow jurors acquitted James K. Happ of five counts after 12 hours of deliberation. "He very well may have been guilty. A lot of us thought he was," said the juror who wouldn't give his name. "But if he was, you gotta have the evidence."
Who is James K Happ? Where was James K Happ when Richard Scott was at Columbia in 1997?

November 28, 2006 - Bigger Than Enron

2009-03-06T18:28:00.000-08:00

"...spying of former Hewlett-Packard (HP) Chair Patricia Dunn on H-P board members and high tech journalists..."

"...antics of Enron bad boys Andrew Fastow and Jeffrey Skilling, but it's depth and breadth are unsurpassed by anything that happened at Enron or HP."

THIS WAS NOTHING!!

November 28, 2006 by Christine Zibas
"...What is the problem so pervasive that it is overtaking these corporate nosedives? It's stock option backdating, and according to the "Wall Street Journal" in its "scandal scorecard," the number of companies now facing federal investigation is at least 130: the number reporting internal probes: 153; the number of executives or directors resigning or being fired: at least 42, including 10 CEOs; the number criminally charged: 5; and the amount of misstated profits from misdated options: $5.3 billion from more than 60 companies."

"...US Attorney's Office for the Northern District of California formed a special force of prosecutors and FBI agents. According to Lynn Turner, a former chief accountant at the SEC, "The sheer magnitude of the numbers of companies, executives, and corporate boards that have disclosed options-related investigations in mind-boggling...." Add to that the millions of dollars being spent in the corporate sector by more than 100 companies, and you have a corporate scandal many times larger than anything cooked up by Enron or HP."

Bigger Than Enron? There's a New Corporate Scandal Brewing
Stock Option Backdating Leads to Federal Scrutiny of More Than 130 Companies

Although much recent attention has been given to the spying of former Hewlett-Packard (HP) Chair Patricia Dunn on H-P board members and high tech journalists, a far greater scandal has been brewing that has flown largely under the public's radar. It's not as tawdry as the Hewlett-Packard scandal, and it does not have the cheekiness of the antics of Enron bad boys Andrew Fastow and Jeffrey Skilling, but it's depth and breadth are unsurpassed by anything that happened at Enron or HP. What is the problem so pervasive that it is overtaking these corporate nosedives? It's stock option backdating, and according to the "Wall Street Journal" in its "scandal scorecard," the number of companies now facing federal investigation is at least 130: the number reporting internal probes: 153; the number of executives or directors resigning or being fired: at least 42, including 10 CEOs; the number criminally charged: 5; and the amount of misstated profits from misdated options: $5.3 billion from more than 60 companies. No small potatoes here.

This dirty little secret has been gracing the pages of the "Wall Street Journal" and other business media, but gone largely unnoticed by the general media. Yet this scandal has rocked some of the most successful companies in the American vernacular: Apple, Home Depot, UnitedHealth Group, and a stunning number of Silicon Valley companies, where backdating one's stock options was a "no brainer."

Stock Option Backdating Leads to Federal Scrutiny of More Than 130 Companies
The current investigation by the Securities and Exchange Commission (SEC) has become so large that it is now relying on internal investigations by companies to determine just which companies to pursue on federal indictments. What is this scandal all about? In a nutshell, this story centers on the practice of corporate executives improperly affording themselves undeserved wealth through the process of backdating stock options to dates when a company's stock price is low, giving the grant recipient an instant paper profit. Stock options, part of the typical corporate executive's pay pack, allow the executive to buy company stock at a fixed price on a certain, pre-determined date, allowing the executive to profit if the stock rises in value from the date of purchase. How to win at this game? Pick the date with the lowest stock price. How can the executive know that date? Only through backdating, an illegal practice that now has some 70 companies scrambling to restate or reduce their profits because of said illegal practice.

This problem first came to the attention of the federal government more than 3 years ago, when Stephen Cutler, then an enforcement officer at the SEC read an account suggesting that executives has issued options just prior to the release of news so favorable that it caused a significant rise in the company's stock price. Today, the problems are so large that the SEC, Federal Bureau of Investigation (FBI), the US Postal Service, and 9 US attorney offices have largely come to rely on corporate self-policing, stepping in when they feel internal probes are skirting serious issues, such as in the case of Affiliated Computer Services, Inc. (ACS). At ACS, the odds of the chosen dates for option granting were determined to be 300 billion to 1 against being randomly selected.

Backdating options are clearly illegal if not reported to shareholders, causing serious accounting and tax problems for companies and their executives. The SEC, which is leading the federal investigation, has more than 150 lawyers and accountants working on the scandal, despite the number of companies conducting their own internal examinations and turning the results over to federal authorities. The situation in Silicon Valley is so serious that the US Attorney's Office for the Northern District of California formed a special force of prosecutors and FBI agents. According to Lynn Turner, a former chief accountant at the SEC, "The sheer magnitude of the numbers of companies, executives, and corporate boards that have disclosed options-related investigations in mind-boggling...." Add to that the millions of dollars being spent in the corporate sector by more than 100 companies, and you have a corporate scandal many times larger than anything cooked up by Enron or HP.
The scandal is now so large that the SEC must let the fox watch the hen house, relying on self-reporting of a practice that has become so common in corporate America as to overwhelm federal investigative resources. Clearly some companies will escape prosecution altogether, while many will be let off the hook for their good effort for restating financials and self-correcting internally. The sheer number of companies conducting such internal investigations, to the tune of several million dollars in legal fees, is unprecendented. Yet, it is clearly not enough and raises questions of fairness for those who choose not to conduct internal reviews, instead taking the gamble such practices will not be discovered. Although the SEC now has put in place measures to evaluate the outside investigators, this is a problem now so widespread that nothing like its magnitude has been seen since the 1970s when the overseas bribery scandal rocked the financial pages of newspapers everywhere.

Stock option backdating may not have the audacity of the Enron scandal or the intrigue of the HP debacle, but it has a serious impact on the earnings of many, many US corporations and the ability of the top 1 percent of wage earners to profit at the expense of us all. Isn't that a scandal you should know about?

The epitome of Fraud Waste and Abuse

2009-03-05T10:22:00.000-08:00

The epitome of Fraud Waste and AbuseSummary: The Wall Street Journal reported that Richard Scott, "the former chief executive of HCA Inc," had formed the non-profit organization Conservatives for Patients' Rights as part of a "lobbying campaign to derail or modify" President Obama's health care proposals, but failed to note that Scott resigned from HCA in 1997 amid a federal investigation into the company's Medicare billing, physician recruiting, and home-care practices. HCA eventually pleaded guilty to fraud charges and paid approximately $1.7 billion in fines and penalties.

Who is Richard Scott? Who is Richard Rainwater? Who is Darla Moore?
Before GW Bush was affiliated with Richard Rainwater may I remind you-Richard Scott was the ex-partner of Richard Rainwater with Columbia Homecare Group.

THURSDAY, JUNE 26, 2003; WWW.USDOJ.GOV;
HCA Inc. (formerly known as Columbia/HCA and HCA - The Healthcare Company)
LARGEST HEALTH CARE FRAUD CASE IN U.S. HISTORY SETTLED; HCA INVESTIGATION NETS RECORD TOTAL OF $1.7 BILLION
Note: Hospital Corporation of America (HCA) was acquired by Columbia in 1994.

Why does this matter? Because the wrath of Richard Scott’s fraud just ended in December 2008 in the largest private financial fraud case in our country's history in 2002 when FBI raided the offices of National Century Financial Enterprises Dublin, Ohio, headquarters.

Guess where Columbia and many of the other publicly traded healthcare companies DUMPED their losing asset, Home healthcare? National Century Financial Enterprises

National Century Financial Enterprises:
“This case is one of the largest corporate fraud investigations involving a privately held company headquartered in small town America,” said Assistant Director Kenneth W. Kaiser of the FBI Criminal Investigative Division.
The following is an excerpt from a 10-K SEC Filing, filed by J P MORGAN CHASE & CO on 3/9/2006: Enron litigation. JPMorgan Chase and certain of its officers and directors are involved in a number of lawsuits arising out of its banking relationships with Enron Corp.; the three current or former Firm employees are sued in their roles as former members of NCFE's board of directors

March 26, 2008; By Jodi Andes; THE COLUMBUS DISPATCH
Nine other executives have been convicted or pleaded guilty in National Century's collapse. Only Poulsen and executive James Happ still await trial.

Only Poulsen and executive James Happ still await trial?

December 9, 2008. James K. Happ, 48, is charged with conspiracy, money-laundering conspiracy and three counts of wire fraud; the 11th National Century executive to be tried or admit guilt. , Also today, a former friend of Happ's testified that, while working at National Century, Happ boasted that he never could be charged with any fraud because he didn't sign anything.

December 18, 2008 - The ONE AND ONLY acquittal; James K Happ!
By Jodi Andes THE COLUMBUS DISPATCH
Prosecutors' case fell short, juror says National Century fraud case produces 1st acquittal ; The "not guilty" verdicts that came in federal court yesterday were not so much a vindication of the last National Century Financial Enterprises executive to stand trial, a juror said.

Instead, they were more a belief that federal prosecutors had not done their job, the juror said after he and his fellow jurors acquitted James K. Happ of five counts after 12 hours of deliberation. "He very well may have been guilty. A lot of us thought he was," said the juror who wouldn't give his name. "But if he was, you gotta have the evidence."

July 26, 1997- Where was James K Happ?
SEC Form September 9, 2003 Annual Meeting of Stockholders, Med Diversified Inc.:
Previously, Mr. Happ served for three years as executive vice president of NCFE, during which time he restructured the servicer department to improve operational performance and accelerated the utilization of technology to increase operational efficiency.

Mr. Happ also served as chief financial officer of the Dallas-based Columbia Homecare Group, Inc.,
… In this role, he directed the company through the challenging reimbursement climate, known as the interim payment system, and participated in the divestiture of all of Columbia/HCA's home care operations

Columbia-Richard Rainwater-GW Bush-and the PROSECUTOR did not do his JOB!

Who is Richard Scott? Columbia Homecare Group, Inc. and National Century Financial Enterprises

2009-03-04T14:46:00.000-08:00

Who is Richard Scott? Before GW Bush was affiliated with Richard Rainwater may I remind you-Richard Scott was the ex-partner of Richard Rainwater with Columbia Homecare Group.

From the July 26, 1997, Los Angeles Times article:
A controversial deal maker whose hard-nosed business tactics have reshaped the medical industry resigned Friday as scandal engulfed the vast hospital empire he had assembled over the last decade.
Richard Scott -- sometimes called "the Bill Gates of health care" -- quit as chairman of Columbia/HCA Healthcare Corp. amid a massive federal investigation into the Medicare billing, physician recruiting and home-care practices of the nation's largest for-profit health care company.
Though the federal probe focuses on other states, Columbia's aggressive expansion has included California, where the company operates 15 hospitals, 13 surgery centers and 10 home-health-care agencies, employing more than 11,000.

Why does this matter? Because the wrath of Richard Scott’s fraud just ended in December 2008 in the largest private financial fraud case in our country's history in 2002 when FBI raided the offices of National Century Financial Enterprises Dublin, Ohio, headquarters.

Just a reminder relating to the need for a financial service institute as NCFE: home health - which is struggling under the Balanced Budget Act of 1997; about 1,400 agencies closed nationwide in 1998.

“This case is one of the largest corporate fraud investigations involving a privately held company headquartered in small town America,” said Assistant Director Kenneth W. Kaiser of the FBI Criminal Investigative Division.
The following is an excerpt from a 10-K SEC Filing, filed by J P MORGAN CHASE & CO on 3/9/2006: Enron litigation. JPMorgan Chase and certain of its officers and directors are involved in a number of lawsuits arising out of its banking relationships with Enron Corp.; the three current or former Firm employees are sued in their roles as former members of NCFE's board of directors

March 26, 2008; By Jodi Andes; THE COLUMBUS DISPATCH; Nine other executives have been convicted or pleaded guilty in National Century's collapse. Only Poulsen and executive James Happ still await trial.December 18, 2008 - The ONE AND ONLY acquittal; By Jodi Andes THE COLUMBUS DISPATCH ; Prosecutors' case fell short, juror says National Century fraud case produces 1st acquittal ; The "not guilty" verdicts that came in federal court yesterday were not so much a vindication of the last National Century Financial Enterprises executive to stand trial, a juror said. Instead, they were more a belief that federal prosecutors had not done their job, the juror said after he and his fellow jurors acquitted James K. Happ of five counts after 12 hours of deliberation. "He very well may have been guilty. A lot of us thought he was," said the juror who wouldn't give his name. "But if he was, you gotta have the evidence."

July 26, 1997- Where was James K Happ?
SEC Form September 9, 2003 Annual Meeting of Stockholders, Med Diversified Inc.:
Previously, Mr. Happ served for three years as executive vice president of NCFE, during which time he restructured the servicer department to improve operational performance and accelerated the utilization of technology to increase operational efficiency.

Mr. Happ also served as chief financial officer of the Dallas-based Columbia Homecare Group, Inc.,
… In this role, he directed the company through the challenging reimbursement climate, known as the interim payment system, and participated in the divestiture of all of Columbia/HCA's home care operations

Who purchased the majority of this divestiture in late ’98 & early ’99? Medshares, Inc. of Memphis, Tennessee. Who financed this divestiture? National Century Financial Enterprises, Inc.

Who is Richard Scott? What the Wall Street Journal won't reveal

2009-03-04T14:26:00.000-08:00

Group launches health care offensive
By JONATHAN MARTIN | 3/3/09 4:18 AM EST
Firing some of the first shots in the coming showdown over health care, a conservative group led by the former owner of the Hospital Corporation of America is beginning a multimillion-dollar campaign Tuesday in opposition to government-run coverage.

Conservatives for Patients Rights is going on TV, radio and the Web in the same week President Barack Obama hosts a health care summit at the White House. The group’s leader, Richard Scott, is hoping a pro-free-market message will rally the right to join the fray on what may be the most hard-fought policy battle in the first year of the new administration.

“If we have more government involvement we’re going to have dramatically worse health care,” said Scott, the wealthy health care executive who is overseeing the effort and seeding it with $5 million of his own cash.

Scott, a major GOP donor, is pushing for four principles to any health care reform package: individual choice, competition between carriers, giving patients’ ownership over their own coverage and rewarding those who make healthy lifestyle choices.

“I want health care reform to happen but I want it the right way,” Scott said.

Toward that goal, Scott’s group is enlisting a group of veteran Republican consultants to fashion a multi-media battle, warning against the move toward more government involvement. The new group starts a three-week TV and radio campaign featuring Scott Tuesday and will plaster the Internet with ads while also launching its homepage.

The goal is to provide conservatives with a central organization to resist any move by Obama and congressional Democrats toward universal coverage. Scott said the group would spend up to $20 million on the campaign, and volunteered that he would consider reaching further into his pocket.
Scott shied away from comparing his effort to the famous industry-led “Harry and Louise” ad campaign that helped torpedo universal coverage in the Clinton administration, saying that while they may receive some aid from health care stakeholders, the “goal is to get support from individuals.”

Scott’s first salvo is being fired Tuesday largely on conservative talk radio shows and on cable news.

“Imagine waking up one day and all your medical decisions are made by a central national board,” Scott says in the radio ad. “Bureaucrats decide the treatments you receive, the drugs you take, even the doctors you see.”

He goes on to raise the prospect of “national boards” and “waiting lists” as in the nationalized systems of Great Britain and Canada. “That’s what some in Washington mean by reform,” Scott says in the spot.

Page 2

Some on the left have already formed their own group, Health Care for America Now, a coalition to push for guaranteed health care for all Americans. The group has a $35 million budget this year and is planning on spending half of that on advertising in addition to holding grass-roots events in Washington, and in the districts of key members of Congress.

“We are fully operational, organized, and mobilized to make sure Congress supports the president’s plan to win quality, affordable health care for all this year,” said Jacki Schechner, the group’s communications director

Pro-health reform activists also have begun circulating information in an effort to discredit Scott, a move that underscores the huge stakes involved in the issue.

According to a 2000 article in Forbes, Scott was forced to resign as head of what became known as Columbia/HCA after fraud charges against the massive health care company in 1997. He was replaced by Thomas Frist Jr., the original founder of HCA and brother of future Senate Majority Leader Bill Frist (R-Tenn.)

The company eventually paid over $880 million to reach a settlement with the Justice Department in 2002 on the charges.

Obama already has sought to rebut criticism that he wants a government takeover of health care by outlining eight principles of any overhaul, including letting patients stick with their own doctors and health care plans, reducing insurance premiums and guaranteeing that Americans will have a choice of health plans and physicians.

Beyond that, the Obama administration has signaled that it will push back hard on conservatives who try to label Obama’s efforts as “socialized medicine” or a massive government takeover of day-to-day health decisions. In his radio address Saturday, Obama said he’s ready for a fight against anyone who tries to block his efforts to remake health care and other programs.

But that’s exactly one of Scott’s key arguments. He said he’ll try to draw a comparison between Obama’s plan and nationalized health care systems in Great Britain and Canada, during the second round of its campaign, Scott said in an interview.

“We’ll give people information about how single-payer systems…impact the average person that needs expensive care,” he said.

To do so, Scott has enlisted former CNN reporter Gene Randall and another former producer from the cable network to travel to the two countries to gather footage.

Scott is now primarily an investor, but he does own an urgent care company with over 20 facilities across the country. He said he draws a “very insignificant amount of money from Medicare and Medicaid” and that his primary interest is not his own bottom line.

“What I care about is the free-market system,” he said.

Editor’s Note: Conservatives for Patients’ Rights purchased advertising space on POLITICO.com for this campaign.

Federal prosecutors had not done their job

2009-02-26T14:35:00.000-08:00

James Happ will not share his former work colleagues’ fate.

Happ, an accountant and former vice president of servicer operations for Dublin-based National Century Financial Enterprises Inc., has been found not guilty of a count each of conspiracy and money laundering conspiracy and three counts of wire fraud.

A 12-member jury at the U.S. District Court in Columbus returned the verdict Wednesday afternoon after a day-and-a-half of deliberations.

Happ was the seventh former executive from National Century to go to trial and the only one to be acquitted. Six former executives were convicted of fraud and four pleaded guilty. Happ was the eleventh and final National Century employee to face criminal charges.

Happ’s trial began Dec. 1 and ended just two weeks later after his defense attorneys declined to put any witnesses on the stand.

In opening arguments, attorney Craig Gillen told jurors that Happ never had a hand in any wrongdoing at the company.

“Jim Happ never told a lie to any investors. Period,” Gillen said.

Happ stood trial on accusations he was part of an executive-level cabal at the medical financing company that defrauded investors for years. A financier for health-care providers like doctors’ offices and hospitals, National Century’s bread and butter was buying accounts receivable from care providers at a discount, then securitizing the receivables into AAA-rated bonds for sale to investors. At its peak, the company employed more than 350 at its office campus in Dublin while recording annual revenue of more than $250 million.

The government has alleged National Century collapsed after running a sophisticated pyramid scheme that fell apart. In addition to purchasing legitimate accounts receivable, the government alleged National Century funded companies owned by its founders without getting receivables in return, effectively making risky unsecured loans with investor cash. The company charged its clients for those advances, the government has said, which inflated National Century’s revenue and generated bonuses for senior executives.

Government attorneys argued that Happ, as the firm’s chief accountant and head of servicer operations, was responsible for making sure that purchased accounts receivable were eligible. In a July 2007 indictment, the government alleged that Happ improperly advanced as much as $5.4 million to a company owned by NCFE founder Lance Poulsen.

The government also accused Happ of ordering a National Century subordinate to remove safeguards on the company’s computer system relative to a health-care provider he planned to join after leaving National Century.
******************************************************************************
Before ENRON, before the Mortgage Fraud, what about the Healthcare Finance Fraud?

JULY 10, 2007
FOR IMMEDIATE RELEASE
http://www.usdoj.gov/usao/ohsn
SUPERSEDING INDICTMENT CHARGES FORMER EXECUTIVES OF HEALTH CARE FINANCING COMPANY WITH CONSPIRACY, FRAUD, MONEY LAUNDERING
"...superseding indictment charging eight former executives of National Century Financial Enterprises (NCFE) with conspiring to defraud investors by diverting millions of dollars in investors' funds, fabricating data in investor reports, and moving money back and forth between accounts in order to conceal investor fund shortfalls. NCFE, based in Dublin, Ohio, was one of the largest healthcare finance companies in the United States ..." before FBI raided the office in Dublin, Oh.

“This case is one of the largest corporate fraud investigations involving a privately held company headquartered in small town America,” said Assistant Director Kenneth W. Kaiser of the FBI Criminal Investigative Division.

JPMORGAN CHASE and CITI PAID GOVERNMENT SETTLED AGREEMENTS FOR FRAUD in National Century Financial Enterprises, Inc. (NCFE), the “LARGEST ‘PRIVATE’ FINANACIAL FRAUD CASE “in our nation's history

February 3, 2008- THE COLUMBUS DISPATCH
By the numbers
All defendants, except for James K Happ, were initially indicted in May, 2006. United States District Judge Algenon L. Marbley will preside over the case which is scheduled for trial on November 5, 2007. National Century Financial Enterprises (NCFE)

Friday, February 8, 2008- Business First of Columbus - Business First
Poulsen isn't the only National Century executive scheduled for a trial apart from the five now in court. James Happ is scheduled for trial in October because "he wasn't charged in connection with the company's failure until last May."

"All defendants, except for Happ...?"

At trial, the government presented evidence that the defendants engaged in a scheme to deceive investors and rating agencies about the financial health of NCFE and how investor monies would be used between May 1998 and May 2001.
Note: May 1998 James K Happ was the chief financial officer of the Dallas-based Columbia Homecare Group, Inc. and used NCFE to finance his divestiture of Columbia Homecare Group’s losing assets, homecare. . , "All defendants, except for Happ...?"

Mr. Happ, as chief financial officer of the Dallas-based Columbia Homecare Group, Inc., a home care company with more than 500 locations nationwide and more than $1 billion in revenue in 1997 directed the company through the challenging reimbursement climate, … and participated in the divestiture of all of Columbia/HCA's home care operations.

1998-1999 Who financed this divestiture? NCFE- National Century Financial Enterprises.
Where did James K Happ divest the losing assets of Columbia Homecare Group, Inc? One man owned company, Medshares, Inc. in Memphis, TN. A ‘private’ company financed by a ‘private’ financial institution, NCFE.

In July 1999, Medshares, Inc. filed the LARGEST Bankruptcy case in the history of Western Tennessee's bankruptcy court held all of the Dallas-based Columbia Homecare Group, Inc.’s home care units . All entities filed with the court were financed by NCFE. In this courtroom, documents reveal the uproar from scores of lawyers crying fraud in the bankruptcy court and the BANKRUPTCY JUDGE scolded the attorneys and forbade the ‘F’ word in her court. (NO FRAUD)

February 21, 2008 - Associated Press
COLUMBUS, Ohio (AP) - A guilty executive told jurors she told investors "absolutely nothing" about National Century's practices of advancing cash to Memphis, Tenn.-based Medshares, a home-health care provider.

Thursday, December 18, 2008 - National Century fraud case produces 1st acquittal
Prosecutors' case fell short, juror says
By Jodi Andes THE COLUMBUS DISPATCH
The "not guilty" verdicts that came in federal court yesterday were not so much a vindication of the last National Century Financial Enterprises executive to stand trial, a juror said.
Instead, they were more a belief that federal prosecutors had not done their job, the juror said after he
and his fellow jurors acquitted James K. Happ of five counts after 12 hours of deliberation. "He very well may have been guilty. A lot of us thought he was," said the juror who wouldn't give his name. "But if he was, you gotta have the evidence."

James K Happ was the chief financial officer of the Dallas-based Columbia Homecare Group, Inc. prior to arriving at NCFE and the ONLY executive of NCFE ACQUITTED.

Office of Congressional Ethics AUSA Leo Wise

2009-02-26T14:20:00.000-08:00

The Columbus Dispatch reports that the Office of Congressional Ethics, created earlier this year by the House, will be led by AUSA Leo Wise (.pdf), who successfully prosecuted former National Century Financial Enterprises CEO Lance Poulsen in both his fraud and witness tampering trials. Wise was named staff director and chief counsel. He’ll have his hands full.

HOWEVER, he did not do his job with the last executive to go on trial in December 2008.The "not guilty" verdicts that came in federal court yesterday were not so much a vindication of the last National Century Financial Enterprises executive to stand trial, a juror said.

Instead, they were more a belief that federal prosecutors had not done their job, the juror said after he and his fellow jurors acquitted James K. Happ of five counts after 12 hours of deliberation. "He very well may have been guilty. A lot of us thought he was," said the juror who wouldn't give his name. "But if he was, you gotta have the evidence."

James K Happ was the chief financial officer of the Dallas-based Columbia Homecare Group, Inc. prior to arriving at NCFE and the ONLY executive of NCFE ACQUITTED.

The Pickens Profile You Haven't Read

2009-02-26T13:14:00.000-08:00

An exerpt posted in this week's Newsweek : http://www.newsweek.com/id/151727/page/2

Pickens likes to portray his years as a corporate buccaneer during the 1980s as "shareholder activism." When Mesa fell into a cash crisis in the mid '90s after the price of natural gas collapsed, there was no mercy for him on Wall Street. Pickens called in Texas financier Richard Rainwater, and his wife and business partner, Darla Moore, to help raise capital. (Rainwater helped another oilman, George W. Bush, escape his money problems by making him co-owner of the Texas Rangers, a deal that eventually made Bush a multimillionaire.)

Moore, a leveraged-buyout specialist dubbed "the Toughest Babe in the Business" by Fortune, tried to raise $1 billion on Wall Street for Mesa. "I found out there wasn't a bank in the country that would touch the deal if Boone was CEO," Moore told NEWSWEEK. "I tried to soften the message [but] he was really surprised. 'But I get along with all those guys,' is what he said." The Rainwaters worked out a deal for Pickens to retire as CEO, and bought him out, a deal that still rankles the billionaire. Moore whooped with surprise when told by a NEWSWEEK reporter that Pickens had compared her in his book to a "wolverine that pisses on everything it doesn't eat." Moore responds, "I think what people don't know about Boone is that deep down he is actually—I hate to say this—a nice man. And he knows more about energy than anybody in the world."

Just a little insight to Darla Moore;
Darla Moore In 1981, at Chemical Bank in New York, Moore and Conway were focused on a new idea: loaning money to corporations teetering on the brink of bankruptcy,
Soon after, she met and married Rainwater, who made her president of his investment company. They now had $500 million to put wherever they wanted.That's when she pushed T. Boone Pickens out . . . and then to a hard look at Rick Scott.

Scott was Rainwater's good friend. They had bought two hospitals in Texas and shared a vision: a nationwide chain of hospitals using cost controls.

By 1997, Scott's company, Columbia/HCA, was the nation's largest managed care provider.

But Moore said Scott was unwise to ignore subordinates who questioned his practices and foolish to dismiss a federal investigation of how Columbia billed Medicare.

According to the SEC Form :
Med Diversified Inc.
Annual Meeting Of Stockholders
September 9, 2003

JAMES K. HAPP has served as chief executive officer of our subsidiary, Tender Loving Care Health Care Services, Inc., since October 2002.

Previously, Mr. Happ served for three years as executive vice president of NCFE, during which time he restructured the servicer department to improve operational performance and accelerated the utilization of technology to increase operational efficiency. (1999-2002 by deduction of SEC statement)

Mr. Happ also served as chief financial officer of the Dallas-based Columbia Homecare Group, Inc., a home care company with more than 500 locations nationwide and more than $1 billion in revenue in 1997. In this role, he directed the company through the challenging reimbursement climate, known as the interim payment system, and participated in the divestiture of all of Columbia/HCA's home care operations (At least1997 until 1999)

Participated in the "DIVESTITURE"...Where did this divestiture 'divest' to?
Look at SEC form 10-K for HCA Inc./TN Filing Date: 4-1-1996.

WANTED By the US Marshals....

2009-02-26T13:10:00.000-08:00

Mr. James K Happ
I wonder if there were people involved in her disappearance deeper than what was exposed in the court. I guess they couldn’t find her dead in bed like they did Ken Lay, remember him, Mr. Enron!

Good thing she disappeared prior to the one and only executive to be acquitted in the last trial of this six year case, Mr. James K Happ. Prior to the arrival at National Century Financial Enterprises (NCFE), the ex-CFO of Columbia Homecare Group, Inc. was the only acquittal and the last executive to stand trial, December 2008. Mr. James K Happ

National Century figure is featured fugitive
Thursday, January 8, 2009 10:06 PM
BY TIM DOULIN
THE COLUMBUS DISPATCH

WANTED By the US Marshals
http://www.rebeccaparrett.com/
Case Synopsis:
From 1995 to 2002, PARRETT and eight others participated in a large-scale fraud involving investments in accounts receivables owed to healthcare providers. PARRETT and her co-conspirators owned and operated National Century Financial Enterprises (NCFE), which purchased accounts receivable or money owed to healthcare providers by government and private insurance companies. This allowed the healthcare providers cash up-front in lieu of waiting for payments from the insurance companies. NCFE raised the funds to provide to the healthcare providers by selling asset-backed bonds or notes to investors, such as financial institutions, pension funds, and investment firms. These notes were offered through NCFE's subsidiaries, including NPF VI, Inc. and NPF XII, Inc. Investors were promised that these high-quality accounts receivables were actually purchased and owned by NPF VI, Inc. and NPF XII, Inc. and served as collateral. Instead of using investors’ money as promised to purchase accounts receivable from its healthcare provider clients, and for other authorized expenses, PARRETT and others, defrauded investors and enriched themselves. PARRETT provided money to certain healthcare providers far in excess of the value of their accounts receivable, thus providing unsecured loans to less than creditworthy borrowers, many of whom were entities in which PARRETT directly or indirectly maintained an ownership interest. As a result, these healthcare provider clients owed NCFE tens, and even hundreds, of millions of dollars, which created growing shortfalls in NPF VI and NPF XII. PARRETT concealed from investors these unsecured advances and the resulting shortfalls by making false statements to investors, fabricating financial data provided to investors, double counting funds in NPF VI and NPF XII by transferring money between the two programs on different days, and loading false data onto the accounts receivable system. In November 2002, unable to continue this fraud, NCFE filed for bankruptcy protection, while NPF VI and NPF XII owed bondholders approximately $840 million and $2 billion, respectively, amounts far outweighing the value of the accounts receivable and all other collateral held by NCFE or their healthcare provider clients. The total amount of proceeds earned from the fraud is approximately USD 1.772 billion, of which, USD 7.6 million went directly to PARRETT. On 13 March 2008, in the District Court, Southern District of Ohio, PARRETT was found guilty by a jury of conspiracy to commit fraud, six counts of securities fraud, wire fraud, and money laundering conspiracy, but fled before she could be sentenced, resulting in the issuance of a warrant for her arrest on 28 March 2008.

Before ENRON, before the Mortgage Fraud, what about the Healthcare Finance Fraud?

JULY 10, 2007
FOR IMMEDIATE RELEASE
http://www.usdoj.gov/usao/ohsn
SUPERSEDING INDICTMENT CHARGES FORMER EXECUTIVES OF HEALTH CARE FINANCING COMPANY WITH CONSPIRACY, FRAUD, MONEY LAUNDERING
"...superseding indictment charging eight former executives of National Century Financial Enterprises (NCFE) with conspiring to defraud investors by diverting millions of dollars in investors' funds, fabricating data in investor reports, and moving money back and forth between accounts in order to conceal investor fund shortfalls. NCFE, based in Dublin, Ohio, was one of the largest healthcare finance companies in the United States ..." before FBI raided the office in Dublin, Oh.

“This case is one of the largest corporate fraud investigations involving a privately held company headquartered in small town America,” said Assistant Director Kenneth W. Kaiser of the FBI Criminal Investigative Division.

JPMORGAN CHASE and CITI PAID GOVERNMENT SETTLED AGREEMENTS FOR FRAUD in National Century Financial Enterprises, Inc. (NCFE), the “LARGEST ‘PRIVATE’ FINANACIAL FRAUD CASE “in our nation's history

February 3, 2008- THE COLUMBUS DISPATCH
By the numbers
All defendants, except for James K Happ, were initially indicted in May, 2006. United States District Judge Algenon L. Marbley will preside over the case which is scheduled for trial on November 5, 2007. National Century Financial Enterprises (NCFE)

Friday, February 8, 2008- Business First of Columbus - Business First
Poulsen isn't the only National Century executive scheduled for a trial apart from the five now in court. James Happ is scheduled for trial in October because "he wasn't charged in connection with the company's failure until last May."

"All defendants, except for Happ...?"

At trial, the government presented evidence that the defendants engaged in a scheme to deceive investors and rating agencies about the financial health of NCFE and how investor monies would be used between May 1998 and May 2001.
Note: May 1998 James K Happ was the chief financial officer of the Dallas-based Columbia Homecare Group, Inc. and used NCFE to finance his divestiture of Columbia Homecare Group’s losing assets, homecare. . , "All defendants, except for Happ...?"

Mr. Happ, as chief financial officer of the Dallas-based Columbia Homecare Group, Inc., a home care company with more than 500 locations nationwide and more than $1 billion in revenue in 1997 directed the company through the challenging reimbursement climate, … and participated in the divestiture of all of Columbia/HCA's home care operations.

1998-1999 Who financed this divestiture? NCFE- National Century Financial Enterprises.
Where did James K Happ divest the losing assets of Columbia Homecare Group, Inc? One man owned company, Medshares, Inc. in Memphis, TN. A ‘private’ company financed by a ‘private’ financial institution, NCFE.

In July 1999, Medshares, Inc. filed the LARGEST Bankruptcy case in the history of Western Tennessee's bankruptcy court held all of the Dallas-based Columbia Homecare Group, Inc.’s home care units . All entities filed with the court were financed by NCFE. In this courtroom, documents reveal the uproar from scores of lawyers crying fraud in the bankruptcy court and the BANKRUPTCY JUDGE scolded the attorneys and forbade the ‘F’ word in her court. (NO FRAUD)

February 21, 2008 - Associated Press
COLUMBUS, Ohio (AP) - A guilty executive told jurors she told investors "absolutely nothing" about National Century's practices of advancing cash to Memphis, Tenn.-based Medshares, a home-health care provider.

DECEMBER 2008- National Century fraud case produces 1st acquittal
Thursday, December 18, 2008 3:29 AM Prosecutors' case fell short, juror says
By Jodi Andes THE COLUMBUS DISPATCH
The "not guilty" verdicts that came in federal court yesterday were not so much a vindication of the last National Century Financial Enterprises executive to stand trial, a juror said.
Instead, they were more a belief that federal prosecutors had not done their job, the juror said after he
and his fellow jurors acquitted James K. Happ of five counts after 12 hours of deliberation. "He very well may have been guilty. A lot of us thought he was," said the juror who wouldn't give his name. "But if he was, you gotta have the evidence."

James K Happ was the chief financial officer of the Dallas-based Columbia Homecare Group, Inc. prior to arriving at NCFE and the ONLY executive of NCFE ACQUITTED.

Cal Thomas' Poll for CHRISTIANS......

2009-02-26T06:30:00.000-08:00

Poll: Is it time for Christians to redirect their efforts from politics mainly to the greater power inherent in the Kingdom of God?
total: 10286
YES (82 %)
N0 (18 %)

National Homeownership Month, 2003

2009-02-19T09:28:00.000-08:00

Department of Housing and Urban Development is leading an Administration-wide effort to bring new tools and resources to would-be homeowners

For Immediate Release
Office of the Press Secretary
June 13, 2003
National Homeownership Month, 2003 By the President of the United States of America
A Proclamation
Homeownership is more than just a symbol of the American Dream; it is an important part of our way of life. Core American values of individuality, thrift, responsibility, and self-reliance are embodied in homeownership. I am committed to helping more families know the security and sense of pride that comes with owning a home.
The Department of Housing and Urban Development is leading an Administration-wide effort to bring new tools and resources to would-be homeowners. We are providing financial assistance to qualified families through the American Dream Downpayment Fund, funding educational programs that stress financial literacy, and offering a compassionate hand to those who dream of moving from subsidized housing into homeownership. And through the Self-Help Homeownership Opportunity Program, my Administration partners with nonprofit organizations that offer homeownership oppor-tunities to families willing to contribute their skills and labor to help build a home of their own. We are also proposing ways to make it easier to shop for a mortgage and to make mortgages available to more families through the Federal Housing Administration.

Today, the United States is fortunate in that our homeownership rate is at an all-time high, and low interest rates continue to encourage millions of Americans to become first-time homeowners. Although a record number of Americans own their own homes, we continue to see a gap between the homeowner-ship rates of minorities and nonminorities. By a significant margin, minority families are less likely to own their own homes. Therefore, I have called upon the entire housing industry to join with my Administration to expand minority homeownership across the Nation. Our goal is to help at least 5.5 million minority families become homeowners by the end of this decade, and our Blueprint for the American Dream Partnership is taking bold steps to make this a reality.
Across our Nation, every citizen, regardless of race, creed, color, or place of birth, should have the opportunity to become a homeowner. Homeownership represents a pathway to pride and prosperity for many families, encourages values of responsibility and sacrifice, creates stability for neighborhoods and communities, and generates economic growth that helps strengthen the entire Nation.
NOW, THEREFORE, I, GEORGE W. BUSH, President of the United States of America, by virtue of the authority vested in me by the Constitution and laws of the United States, do hereby proclaim June 2003 as National Homeownership Month. I call upon the people of the United States to join me in recognizing the importance of offering every American the opportunity to realize their dream of homeownership and to help work towards making that dream a reality.
IN WITNESS WHEREOF, I have hereunto set my hand this thirteenth day of June, in the year of our Lord two thousand three, and of the Independence of the United States of America the two hundred and twenty-seventh.
GEORGE W. BUSH

Morgan Stanley private incarnation

2009-02-14T12:20:00.000-08:00

Another PUBLIC goes PRIVATE SCAM....PONZI SCHEME

Morgan Stanley hasn't said yet if Crescent's top executives will stay with its new, private incarnation.

"...despite four shareholder lawsuits in Tarrant County, Texas, contesting it. "

This spring, Crescent said it intended to sell off its non-office holdings. A deal to sell the whole company to Morgan Stanley came up in May.

Financial adviser Richard Rainwater of Fort Worth, who formerly worked with Texas' wealthy Bass brothers, co-founded Crescent in 1994 with CEO John Goff.
Wednesday, August 1, 2007
REIT with extensive Colo. holdings to be soldDenver Business Journal

Shareholders in Crescent Real Estate Equities Co. of Fort Worth, Texas, OK'd the company's sale on Wednesday to Morgan Stanley for roughly $6 billion.

As of mid-July, Crescent owned 2.5 million square feet of office properties in Colorado and several residential developments in downtown Denver and mountain ski towns.

Nearly 74 percent of holders of Crescent's outstanding shares favored the sale.

The transaction includes a $22.80 per-share offering, valued at $2.3 billion, plus the assumption of $3.1 billion in Crescent debt.

The sale is expected to close Aug. 3, despite four shareholder lawsuits in Tarrant County, Texas, contesting it. Publicly traded Crescent (NYSE: CEI) will merge into an affiliate of New York-based Morgan Stanley's (NYSE: MS) real estate group. The existing Crescent company will cease to operate.

Crescent, a real estate investment trust (REIT), currently has 23 million square feet of office space nationwide, as well as residential and resort holdings.

The Texas company sold its 613-room Marriott City Center hotel in downtown Denver -- one of the metro area's largest hotels -- in a package deal in March. Walton TCC Hotel Investors V LLC bought the Marriott and Crescent's 190-room Park Hyatt Beaver Creek Resort for $550 million.

Crescent's current Denver-area office holdings include:

Johns Manville Plaza -- 675,400 square feet at 717 17th St., Denver, one of downtown Denver's largest office buildings;
707 17th Street (also called MCI Tower) -- 550,805 square feet in downtown Denver;
Regency Plaza One -- 309,862 square feet at 4643 S. Ulster St. in the Denver Tech Center;
Peakview Tower -- 264,149 square feet at 6465 S. Greenwood Plaza Blvd. in Centennial;
44 Cook -- 124,174 square feet at 44 Cook St. in Denver;
55 Madison -- 137,176 square feet at 55 Madison St. in Denver;
The Citadel -- 130,652 square feet at 3200 Cherry Creek South Drive in Denver.
Crescent's Denver residential developments that have not yet sold out include One Riverfront and The Park at One Riverfront. The company has another 310 acres in metro Denver for future housing development, including nearly seven acres downtown.

The Fort Worth company's mountain residential holdings range from Eagle Ranch in Eagle to Three Peaks in Silverthorne and Riverfront Village in Beaver Creek. Crescent has 170 acres for future projects.

This spring, Crescent said it intended to sell off its non-office holdings. A deal to sell the whole company to Morgan Stanley came up in May.

Financial adviser Richard Rainwater of Fort Worth, who formerly worked with Texas' wealthy Bass brothers, co-founded Crescent in 1994 with CEO John Goff.

Rainwater currently sits on company boards, and owns or controls more than 4 percent of the company's shares, according to GlobeSt.com. He also has more than 5 million partnership units. Goff and company president Dennis Alberts recently forfeited their $10.3 million worth of partnership units as part of the Morgan Stanley deal.

Morgan Stanley hasn't said yet if Crescent's top executives will stay with its new, private incarnation.

JPMorgan Chase, Citi, Bank of America, Goldman Sachs, ....

2009-02-11T07:35:00.000-08:00

MORE PONZI SCHEMES? THIS NEEDS TO END! WAKE UP AMERICA!
JPMorgan and CITI were found GUILTY of contributing to the ENRON PONSI SCHEME.
JPMORGAN CHASE and CITI PAID GOVERNMENT SETTLED AGREEMENTS FOR FRAUD in our nation's “LARGEST ‘PRIVATE’ FINANACIAL FRAUD CASE “ in our history! National Century Financial Enterprises, Inc. (NCFE) Federal prosecutors proclaimed “no one has ever heard of” this case. I believe that was intentional. (DOJ case ended 2008)

This month, FEBRUARY ‘09, although the DOJ’s NCFE case ended in December 2008, we now have ‘Credit Suisse Securities LLC has asked the court overseeing litigation over the collapse of health care lender National Century Financial Enterprises Inc. to sanction Lloyds TSB Bank PLC for allegedly hiding a deal with Moody's Investor Services Inc…’

December 2008, at the last trial of NCFE in Columbus, Ohio, ALL executives EXCEPT ONE, was acquitted. Funny, Mr. Happ was the last executive to go on trial, even after the so-called master mind, CEO Lance Poulsen.

Mr. James K Happ, the ONE and ONLY EXECUTIVE acquitted in this trial that NO ONE HAS EVER HEARD OF. Who is Mr. James K Happ?

Mr. James K Happ was the CFO at Richard Rainwater's Columbia Homecare Group prior to arriving at National Century Financial Enterprises, Inc. (NCFE)

As CFO at Columbia Homecare Group, Mr. James K. Happ was responsible for divesting the ‘losing assets’ of a publicly traded company’s homecare segment via NCFE's financing. The alleged divestiture was a sale to a 'PRIVATE' company, Medshares, Inc. Medshares was a healthcare company that was already under investigation for MEDICARE/MEDICAID FRAUD. Medshares acquired this divestiture and six months or so later, filed bankruptcy.

Associated Press - February 21, 2008
COLUMBUS, Ohio (AP) - A former executive of NCFE says the company withheld financial information from its investors. Sherry Gibson testified Thursday in federal court in the government's securities fraud case against five former owners and executives of National Century Financial Enterprises.
The government alleges the five schemed to defraud investors of $1.9 billion.
A guilty executive told jurors she told investors "absolutely nothing" about National Century's practices of advancing cash to Memphis, Tenn.-based Medshares, a home-health care provider.

National Century executives also had voting control of Medshares stock. National Century wired that company $93 million without receivables during that same time frame.

The last trial in the “LARGEST ‘PRIVATE’ FINANACIAL FRAUD CASE “in our history, the one and only executive, James K Happ gets his acquittal. According to the jurors, “The PROSECUTOR did not do his JOB!”

The LARGEST CORPORATE BANKRUPTCY ever filed in Memphis, TN was filed by Medshares, Inc. in 1999.

If one searches the court records, the outcry from so many lawyers of fraud were only to be scolded by the judge and warned not to use the "F" word in her court.

HARRY MARKOPOLOS....look at the publicly traded companies dumping the losing assets into private companies....

2009-02-08T09:24:00.001-08:00

THIS NEEDS TO END! WAKE UP AMERICA! MORE PONZI SCHEMES?
JPMorgan and CITI were found GUILTY of contributing to the ENRON PONSI SCHEME. Both JPMORGAN CHASE and CITI PAID GOVERNMENT SETTLED AGREEMENTS FOR FRAUD in our nation's “LARGEST ‘PRIVATE’ FINANACIAL FRAUD CASE “ in our history! National Century Financial Enterprises, Inc. (NCFE) Federal prosecutors proclaimed “no one has ever heard of”. I believe that was intentional.
In the trial in Columbus, ALL executives except one, was acquitted. Who was this one and only executive acquitted? James K Happ. Mr. James K Happ was the CFO at Richard Rainwater's Columbia Homecare Group before arriving at National Century Financial Enterprises, Inc. NCFE.
BUT HOLD ON......Now, FEBRUARY 2009, even though NCFE case was supposedly CLOSED by the DOJ in the BUSH ADMINISTRAION, in 2008, is now back in the INVESTIGATIN OF :
Credit Suisse Seeks Sanctions against Lloyds
Law360, New York (February 03, 2009) -- Credit Suisse Securities LLC has asked the court overseeing litigation over the collapse of health care lender National Century Financial Enterprises Inc. to sanction Lloyds TSB Bank PLC for allegedly hiding a deal with Moody's Investor Services Inc. in order to manipulate a deposition in its favor.Credit Suisse, which is accused by Lloyds and others of committing fraud as an agent for National Century's note offerings, said in a motion filed Friday that Lloyds concealed an...

WAKE UP AMERICA! Credit Suisse Securities LLC investigates NCFE...

2009-02-08T09:14:00.000-08:00

THIS NEEDS TO END! WAKE UP AMERICA! MORE PONZI SCHEMES?
JPMorgan and CITI were found GUILTY of contributing to the ENRON PONSI SCHEME. Both JPMORGAN CHASE and CITI PAID GOVERNMENT SETTLED AGREEMENTS FOR FRAUD in our nation's “LARGEST ‘PRIVATE’ FINANACIAL FRAUD CASE “ in our history! National Century Financial Enterprises, Inc. (NCFE) Federal prosecutors proclaimed “no one has ever heard of”. I believe that was intentional.
In the trial in Columbus, ALL executives ECCEPT ONE, was acquitted. Who was this one and only executive acquitted? James K Happ. Mr. James K Happ was the CFO at Richard Rainwater's Columbia Homecare Group before arriving at National Century Financial Enterprises, Inc. NCFE.
BUT HOLD ON......Now, FEBRUARY 2009, even though NCFE case was supposedly CLOSED by the DOJ in the BUSH ADMINISTRAION, in 2008, is now back in the INVESTIGATIN OF :
Credit Suisse Seeks Sanctions against Lloyds
Law360, New York (February 03, 2009) -- Credit Suisse Securities LLC has asked the court overseeing litigation over the collapse of health care lender National Century Financial Enterprises Inc. to sanction Lloyds TSB Bank PLC for allegedly hiding a deal with Moody's Investor Services Inc. in order to manipulate a deposition in its favor.Credit Suisse, which is accused by Lloyds and others of committing fraud as an agent for National Century's note offerings, said in a motion filed Friday that Lloyds concealed an...

made loans to inner-city Medicare hospitals....HEALTH and FINANCIAL FRAUD connection

2009-02-04T06:00:00.000-08:00

The treasurer has stated on numerous occasions that a Texas law firm helped recover funds from the NCFE case, and has said he is not sure whether Goddard's office is entitled to the full 35 percent.

The state treasury lost $14.3 million to NCFE. So far, the state has recovered about 53 percent of $131 million in losses, Martin said.

An accompanying provision was touted by Martin as a means to ensure independent attorneys could be hired only to handle complex cases such as securities, bankruptcy matters and to offer financial advice.

The fraud, committed in 2002 by National Century Financial Enterprises, cost Arizona governments approximately $131 million. Two-hundred local Arizona governmental entities and many governments in other states invested in NCFE, which made loans to inner-city Medicare hospitals,...

January 27, 2009
Breaking News
Changes coming for bill on state Treasurer’s legal counsel

By Christian Palmer, christian.palmer@azcapitoltimes.com

A bill intended to allow the Office of the State Treasurer to hire his own attorney to handle complex financial cases was held by a House committee on Jan. 27 after its sponsor raised concerns the legislation would have more sweeping effects.The decision to hold H2103 came from Rep. Sam Crump, the chairman of the House Government Committee. Crump also was the prime sponsor of the proposal, which State Treasurer Dean Martin told committee members could cut costs and help end a longstanding "political turf war."

In official capacity, Martin is represented by the Attorney General's Office, but Crump's bill would attach the Treasurer's Office to a list of nine agencies allowed to hire and pay for their own representation.

An accompanying provision was touted by Martin as a means to ensure independent attorneys could be hired only to handle complex cases such as securities, bankruptcy matters and to offer financial advice.
However, House analysts contested Martin's translation of the bill. They said the measure, as written, would allow the state treasurer to secure lawyers separate from the Attorney General's Office for any matters.

David Gass, a legislative liaison for the Attorney General Terry Goddard, told committee members the option to hire outside legal counsel should not be extended to the Treasurer's Office, which conducts business with almost all state agencies on a daily basis.

The frequent interaction - and the prospect of differing opinions on legal matters - can provide the foundation for interagency conflict, he said.

"You create a conflict that's statewide," Gass said.

Yet, Martin said the benefits to the state presented by the law change are apparent. State law dictates the attorney general is entitled to collect a 35-percent fee on recovered funds, an amount Martin regards as outlandish and far more expensive than bills that would be incurred through specialized private-sector attorneys.

Crump said he will amend the bill and give it another try.

"Let's get it right and bring it back," he told members of the committee.

The issue of the treasurer's access to independent counsel stems from a years-long dispute between Goddard and Martin over a legal bill Martin's office was asked to pay in return for money recouped in a national fraud settlement.

The fraud, committed in 2002 by National Century Financial Enterprises, cost Arizona governments approximately $131 million. Two-hundred local Arizona governmental entities and many governments in other states invested in NCFE, which made loans to inner-city Medicare hospitals, before collapsing in 2002 in a fraud scandal involving $3 billion in lost investments.

After the legal battle, then-Chief Deputy Treasurer Blaine Vance refused to transfer payment for the attorney general's legal services without written approval from the state solicitor general. But in June of 2006, the state Treasurer's Office agreed to pay the Attorney General's Office $1.9 million for legal expenses associated with recouping the lost investments.

The payment was not disclosed to the state Board of Investment, which oversees the state's investment portfolio.

The deal came months after agents with Goddard's office seized computers, 15,000 pages of documents and other materials from the Treasurer's Office as part of an investigation into allegations that Petersen had committed several felonies by using his office to promote character-building teaching materials sold by Character First.

Initially, Petersen faced charges of theft, fraud and conflict of interest. But weeks after resigning in October 2006, he pleaded guilty to a single misdemeanor count for failing to disclose a $4,200 commission he received for selling Character First products.

Martin, as a candidate running for treasurer in 2006, cast suspicions on the payment and criticized Petersen's sentence, which included three years of probation, as a "slap on the wrist."

Goddard has defended the payment repeatedly; pointing out that state law authorizes the Attorney General's Office to receive 35 percent of all state funds it recovers.

Upon taking office, Martin stopped issuing Goddard's office a portion of the fraud settlement, which was being distributed to the state periodically, and asked Maricopa County Attorney Andrew Thomas and Maricopa County Sheriff Joe Arpaio to investigate the payment.

Martin has asked for separate legal counsel to review the deal and to conclude how much the Attorney General's Office should be paid. The treasurer has stated on numerous occasions that a Texas law firm helped recover funds from the NCFE case, and has said he is not sure whether Goddard's office is entitled to the full 35 percent.

The state treasury lost $14.3 million to NCFE. So far, the state has recovered about 53 percent of $131 million in losses, Martin said.

The final stage in the money laundering process ...

2009-02-01T10:19:00.000-08:00

The Money Laundering Process
There is no single way to launder money. Rather, the term refers to any series of financial transactions that moves cash or other assets from one location to another or from one form to another in such a way as to hide its origins and, in the end, make the money appear legitimate. While there are countless variations on the theme, money laundering generally involves three stages: placement, layering, and integration.

Placement
The first stage in the money laundering process is placement. Placement brings the illicit cash into the legal financial system. The objective at this initial stage is to obscure the start of an audit trail, which means avoiding financial accounts or products that record ownership. This cover-up is typically achieved by converting cash into cash equivalent instruments such as cashier’s checks, money orders, bank drafts, traveler’s checks and wire transfers. Structuring, the practice of breaking up large cash transactions into multiple smaller transactions (for the purpose of evading reporting or recordkeeping requirements) is characteristic of what takes place in the placement stage.

Layering
To further obscure the money trail from its illicit source, cash equivalents obtained in the placement stage are used to purchase a variety of financial instruments in the second stage of the money laundering process. This stage is called layering.

Simply exchanging cash for money orders and then depositing those money orders into a personal bank account does little to hide the link between the criminal and the crime. Instead, the cash equivalents are used as premiums and deposits for more sophisticated financial products that provide liquidity and, more important, distribute or disburse funds in a manner that appears fully legitimate. For this purpose, “sophisticated financial products” can include cash value life insurance and deferred annuity contracts.

Integration
The final stage in the money laundering process is called integration. Here, the cleansed money is circulated back into the hands of the criminal and ultimately into the financial system. Like clothes that have completed a wash cycle, money that has cycled through the placement and layering process is clean and ready to be used again. It can be invested quietly or flashed around in public and, for any questions as to its source, there is a legitimate answer.

HEALTHCARE, FINANCIAL INSTITUTES, FDIC BANKS, AUTO INDUSTRY & FRAUD

2009-01-28T15:20:00.000-08:00

I once had a brilliant Economics Professor that stressed the value of one’s country’s currency. My currency, the US Dollar, is only as good as my government. We of course had the STRONGEST, MOST TRUSTED currency in the WORLD.
I listened to Rep Kanjorski from PA on C-Span. I understand he is searching for information on behaviors that occurred over the past twenty years that has crippled our financial system and all that follows. By the way, I am one US citizen that truly understands how we were once the most trusted system in the WORLD. I am on my third passport. It is my understanding that Rep Kanjorski and I assume others, are searching for information on HOW our country is in this crisis. The WORLD’s trust in OUR financial system is GONE!
I would appreciate it very much if you would direct this to Rep Kanjorski or Rep Kucinich.
Please, do not allow the American people to believe “the low-income housing” was the cause of this. Rep Kanjorski stated it very well. Lack of communication to the American people can or will not be acceptable in this time of crisis. As complicated and complex as this crisis is, to allow the American people to inform themselves through the ‘mainstream’ media venues vs. the ‘state of the art’ tools that could be used is a BIG MISTAKE. There are better ways in 2009. Mainstream media is not the tool to use to gather the support of the American people.
I believe this mentality and mantra TOO BIG TO FAIL is all the proof we need to get to the root of the systemic tolerance and refusal to adapt in our democracy and the rule of law. The refusal to change or confront the failed methods that continue to be so detrimental to our country’s once greatness is why we are here now, in a crisis. We must remember that the failing healthcare industry was TOO BIG TO FAIL. The Financial Institutes that financed these fraudulent corporations were TOO BIG TO FAIL. Were exceptions made to Healthcare Corporations and Financial Institutions fraudulent behaviors because they were TOO BIG TO FAIL?
THURSDAY, JUNE 26, 2003; WWW.USDOJ.GOV;
WASHINGTON, D.C.
HCA Inc. (formerly known as Columbia/HCA and HCA - The Healthcare Company)
LARGEST HEALTH CARE FRAUD CASE IN U.S. HISTORY SETTLED; HCA INVESTIGATION NETS RECORD TOTAL OF $1.7 BILLION
Note: Hospital Corporation of America (HCA) was acquired by Columbia in 1994. Columbia/HCA will pay $71 million to settle a tax dispute with the IRS. The agency had originally sought $276 million in back taxes and interest, in the dispute involving $525 million in stock options deducted by Hospital Corporation of America (HCA). Under the settlement, the IRS will drop charges that HCA, which was acquired by Columbia in 1994, paid unreasonable compensation or golden parachute payments in the form of stock options to more than 100 executives and managers as part of a management-led buyout of HCA in 1989.
10-K SEC Filing, filed by J P MORGAN CHASE & CO on 3/9/2006:
Jul 28, 2003; 2003-87; SEC Settles Enforcement Proceedings against J.P. Morgan Chase and Citigroup
FOR IMMEDIATE RELEASE;

J.P. Morgan Chase Agrees to Pay $135 Million to Settle SEC Allegations that It Helped Enron Commit Fraud;

Citigroup Agrees to Pay $120 Million to Settle SEC Allegations that It Helped Enron and Dynegy Commit Fraud;
The following is an excerpt from a 10-K SEC Filing, filed by J P MORGAN CHASE & CO on 3/9/2006: Enron litigation. JPMorgan Chase and certain of its officers and directors are involved in a number of lawsuits arising out of its banking relationships with Enron Corp.; the three current or former Firm employees are sued in their roles as former members of NCFE's board of directors.

National Century Financial Enterprises litigation.
JPMorgan Chase, JPMorgan Chase Bank, JPMorgan Partners, Beacon Group, LLC and three current or former Firm employees have been named as defendants in more than a dozen actions filed in or transferred to the United States District Court for the Southern District of Ohio (the "MDL Litigation"). In the majority of these actions, Bank One, Bank One, N.A., and Banc One Capital Markets, Inc. are also named as defendants.

JPMorgan Chase Bank and Bank One, N.A. are also defendants in an action brought by The Unencumbered Assets Trust ("UAT"), a trust created for the benefit of the creditors of National Century Financial Enterprises, Inc. ("NCFE") as a result of NCFE's Plan of Liquidation in bankruptcy.
"...the Order finds that JPMorgan Chase was a cause of NCFE's violations of Section 17(a)(3) of the Securities Act, requires JPMorgan Chase to cease and desist from committing or causing any violations and any future violations of Section 17(a)(3) of the Securities Act, and orders JPMorgan Chase to pay disgorgement of $1,286,808.82 and prejudgment interest of $711,335.76. JPMorgan Chase consented to the issuance of the Order without admitting or denying any of the findings therein."
JP Morgan Settles SEC Proceeding Relating to Activities as Trustee to National Century Financial Enterprises
The SEC settled administrative proceedings against JPMorgan Chase & Co relating to its activities as an asset-backed indenture trustee for certain special-purpose subsidiary programs (programs) of National Century Financial Enterprises, Inc. (NCFE), formerly a Dublin, Ohio healthcare financing company, during the approximate period 1999-2002. According to the SEC's Order, JPMorgan Chase and Bank One Corporation, which merged into JPMorgan Chase in 2004, at the instruction of NCFE, made transfers between reserve accounts in the programs that contradicted NCFE's representations to investors about how the reserve accounts would be used and contravened the requirements of the indentures governing the programs. In addition, the Order finds that pursuant to NCFE's instructions, JPMorgan Chase and Bank One made month-end transfers of huge amounts of reserve account funds and that these transfers helped NCFE mask substantial and growing reserve account shortfalls. Based on the above, the Order finds that JPMorgan Chase was a cause of NCFE's violations of Section 17(a)(3) of the Securities Act, requires JPMorgan Chase to cease and desist from committing or causing any violations and any future violations of Section 17(a)(3) of the Securities Act, and orders JPMorgan Chase to pay disgorgement of $1,286,808.82 and prejudgment interest of $711,335.76. JPMorgan Chase consented to the issuance of the Order without admitting or denying any of the findings therein. In the Matter of JPMorgan Chase & Co.

The Asset-Backed Securities Danger
NCFE was basically a financial "factor," advancing cash to hospitals, physicians, and other health-care facilities in exchange for their receivables—the delayed payments made by insurance companies and government agencies for patients' treatment. NCFE would place these receivables into pools, then issue derivative securities—known as asset-backed securities—backed by the expected insurance payments

All of the Debtors' outstanding bonds at this time consist of:
Amount Issuer Indenture Trustee
------ ------ -----------------
$924,995,000 NPF VI, Inc. JP Morgan Chase & Co.

$2,047,500,000 NPF XII, Inc. Bank One, N.A.

In papers filed with the Bankruptcy Court this week, the Company reports that, as of September 30, 2002, its books and records reflected approximately $3.8 billion in assets and approximately $3.6 billion in liabilities.

An Investor Report dated October 23, 2002, and delivered to Bank One reports that:

(a) NCFE held $851,993 in a Seller Credit Reserve Account as
of October 1, 2002, when there was supposed to be around
$145 million in that account on Oct. 1;

(b) NCFE held $498,321 in an Offset Reserve Account on
Oct. 1, when $44 million should have been on deposit; and

A little history of National Century Financial Enterprises (NCFE):
Prior to bankruptcy, NCFE provided financing to various healthcare providers through wholly-owned special-purpose vehicles, including NPF VI and NPF XII, which purchased discounted accounts receivable to be paid under third-party insurance programs. NPF VI and NPF XII financed the purchases of such receivables, primarily through private placements of notes.

HEALTHCARE, FINANCIAL INSTITUTES, FDIC BANKS, AUTO INDUSTRY & FRAUD
CORPORATE BANKRUPTCY and its finance tool, Debtor in Possession (DIP)
The LARGEST ‘PRIVATE FINANCIAL INSTITUTION’ fraud case in our history
The LARGEST ‘PRIVATE HEALTHCARE’ Bankruptcy /Fraud case in our history

The LARGEST ‘PRIVATE FINANCIAL INSTITUTION’ fraud case in our history: National Century Financial Enterprises Inc. National Century Financial Enterprises, Inc. role in FINANCING PUBLICLY TRADED HEALTHCARE COMPANIES with their ‘divestitures’ of their home healthcare and skilled nursing facilities into a PRIVATE healthcare company, Medshares and affiliates. We must recall the stock prices of the publicly traded companies were falling rapidly especially after the healthcare reform bill passed.
The federal prosecutor noted in the NCFE case: 'Ladies and gentlemen, this is a case of staggering fraud,' Wise said. 'It is one of the largest frauds the FBI has ever investigated. The total is over $2 billion.' It's a game that ended only after greed consumed company reserves and investor money dried up. That's the history of National Century Financial Enterprises, federal prosecutor Leo Wise told jurors in closing arguments yesterday in the trial of Lance K. Poulsen, 65, the company's founder and chief executive.
A very interesting part of the NCFE case is what was not disclosed: the Medshares connection. Medshares and its affiliates filed the largest Bankruptcy Case in the Western District in Memphis, Tennessee on July 29, 1999. The majority of dockets in this Bankruptcy Case were those that James K Happ divested six months earlier while he was CFO at Columbia Homecare Group, Inc. prior to arriving at NCFE, the financier of the divestiture.
Per the SEC Form: prior to joining NCFE, Mr. James K Happ one and only executive acquitted , served as chief financial officer of the Dallas-based Columbia Homecare Group, Inc., a home care company with more than 500 locations nationwide and more than $1 billion in revenue in 1997. In this role, he directed the company through the challenging reimbursement climate, known as the interim payment system, and participated in the divestiture of all of Columbia/HCA's home care operations.
Declining share price for the LARGEST PUBLICLY TRADED Healthcare companies were attributed to the assets held in home health agencies. With Healthcare Reform in 1997, reduced payments for Medicare/Medicaid payments for home health agencies would not be a profitable entity to retain. How would they be able to sell? Who would purchase these losing not profitable assets?
Note: The divestiture of all of Columbia/HCA's home care operations was financed by National Century Financial Enterprises, Inc. ; all of Columbia/HCA's home care operations were filed in the largest Bankruptcy Case in the Western District in Memphis, Tennessee on July 29, 1999. Corporate Bankruptcy’s financial tool, Debtor in Possession (DIP) FINANCE was utilized In the LARGEST PRIVATE BANKRUPTCY case in the history of Western Tennessee’s Bankruptcy Court. A majority of dockets in this case were the losing entities of Columbia Homecare Group, Inc.
The divestiture of Columbia/HCA's home care operations were a part of the PUBLICLY traded company’s strategy to improve their share price that was on a steep decline. The Street did not favor the Healthcare Reform Bill which was passed 1997.

National Century Financial Enterprises, Inc.

2006 JPMorgan Chase & Co., the largest U.S. bank by market value, agreed to pay $425 million to settle claims by Arizona noteholders. The noteholders said JPMorgan and other banks underwrote or were trustees of the notes used to defraud investors.

At trial, the government presented evidence that the defendants engaged in a scheme to deceive investors and rating agencies about the financial health of NCFE and how investor monies would be used. Between May 1998 and May 2001, NCFE sold notes to investors with an aggregate value of $4.4 billion, which evidence presented at trial showed were worth approximately six cents on the dollar at the time of NCFE’s bankruptcy in November 2002.
Note: between May 1998 and May 2001, James K Happ, the LAST National Century Financial Enterprises executive to stand trial and the only one ACQUITTED was at NCFE.

Mr. James K Happ National Century fraud case produced one and only acquittal, James K Happ.
National Century fraud case produces 1st acquittal
DECEMBER 2008
Prosecutors' case fell short, juror says
National Century fraud case produces 1st acquittal
Thursday, December 18, 2008 3:29 AM Prosecutors' case fell short, juror says
By Jodi Andes THE COLUMBUS DISPATCH
The "not guilty" verdicts that came in federal court yesterday were not so much a vindication of the last National Century Financial Enterprises executive to stand trial, a juror said.
Instead, they were more a belief that federal prosecutors had not done their job, the juror said after he
and his fellow jurors acquitted James K. Happ of five counts after 12 hours of deliberation. "He very well may have been guilty. A lot of us thought he was," said the juror who wouldn't give his name. "But if he was, you gotta have the evidence."

A very interesting part of the NCFE case is what was not disclosed: the Medshares connection. Medshares and its affiliates was the largest Bankruptcy Case in the Western District in Memphis, Tennessee on July 29, 1999. This case held all of the Columbia entities that James K Happ divested prior to his arrival at NCFE. The majority of the dockets in the Medshares case were James K Happ’s ‘divested assets financed by NCFE.
Prior to joining Med Diversified, James Happ served as executive vice president of National Century Financial Enterprises ("NCFE"), a health care financing company and the primary lender of Med Diversified. In his three years in this role, he restructured the Servicer department to improve operational performance and accelerated the utilization of technology to increase operations.
Business First of Columbus - by Kevin Kemper
National Century computer system unreliable
MARCH 5, 2008: Important information on a National Century Financial Enterprises Inc. computer system was either lost or tampered with, a computer expert testified for the defense, however the government did its best to call the witness's testimony into question.

Jon Bryant, an information technology computer consultant that used to work at National Century, told jury members on Tuesday and Wednesday that the AS/400 mainframe computer used by National Century to track accounts receivable was missing information after a crash that left nine of its hard drives inoperable.
Summer of 1998
National Century Financial Enterprises: Medshares Consolidated, Inc., entered into an agreement to purchase certain home health agencies from Columbia/HCA, now known as HCA, Inc. As part of the Asset Purchase Agreement, Medshares agreed to purchase assets of certain home healthcare agencies owned by HCA and certain subsidiaries and joint ventures, which assets included accounts receivable outstanding at the time of closing. (James K Happ was the CFO at Columbia (HCA) responsible for the ‘divestiture’. Once again, James K Happ was the one and only executive acquitted from National Century Financial Enterprises, Inc.)
At the time of the sale transaction between Medshares and HCA, the valuation of the purchase accounts receivable was uncertain. Under the Medshares Purchase Agreement, Medshares agreed to
purchase the "Threshold Amount" of the accounts receivable. If more than the Threshold Amount was collected, the excess funds would be returned to HCA. "...After the sale transaction between HCA and Medshares, Medshares continued to receive periodic interim payments from Medicare under HCA's provider number."
HCA sued NCFE in Tennessee state court in a case styled Columbia Healthcare Corp. v. Medshares Consolidated, Inc., et al.
Corporate Bankruptcy’s financial tool, Debtor in Possession (DIP) FINANCE was utilized In the LARGEST PRIVATE BANKRUPTCY case in the history of Western Tennessee’s Bankruptcy Court. A majority of dockets in this case were the losing entities of Columbia Healthcare Corp.
On May 4, 1999, NCFE made a demand on HCA for the return of the $1,305,137. HCA has never returned the money. NCFE filed counterclaims in the Tennessee Litigation to recover the $1,305,137 amount.
Of course there is so much more……to be continued!

Office of Public Liaison & Intergovernmental Affairs...My comment

2009-01-28T15:16:00.001-08:00

OPL-IGA
Office of Public Liaison & Intergovernmental Affairs (OPL-IGA) is the front door to the White House through which everyone can participate and inform the work of the President

Comment sent:
Please, do not allow the American people to believe “the low-income housing” was the cause of this. Rep Kanjorski stated it very well. Lack of communication to the American people can or will not be acceptable in this time of crisis. As complicated and complex as this crisis is, to allow the American people to inform themselves through the ‘mainstream’ media venues vs. the ‘state of the art’ tools that could be used is a BIG MISTAKE. There are better ways in 2009. Mainstream media is not the tool to use to gather the support of the American people.
We must remember that the failing healthcare industry was TOO BIG TO FAIL. The Banks that financed these fraudulent corporations were TOO BIG TO FAIL. Were exceptions made to Healthcare Corporations and Financial Institutions fraudulent behaviors because they were TOO BIG TO FAIL?
THURSDAY, JUNE 26, 2003; WWW.USDOJ.GOV;
WASHINGTON, D.C.
HCA Inc. (formerly known as Columbia/HCA and HCA - The Healthcare Company)
LARGEST HEALTH CARE FRAUD CASE IN U.S. HISTORY SETTLED; HCA INVESTIGATION NETS RECORD TOTAL OF $1.7 BILLION
Note: Hospital Corporation of America (HCA) was acquired by Columbia in 1994. Columbia/HCA will pay $71 million to settle a tax dispute with the IRS. The agency had originally sought $276 million in back taxes and interest, in the dispute involving $525 million in stock options deducted by Hospital Corporation of America (HCA). Under the settlement, the IRS will drop charges that HCA, which was acquired by Columbia in 1994, paid unreasonable compensation or golden parachute payments in the form of stock options to more than 100 executives and managers as part of a management-led buyout of HCA in 1989.
10-K SEC Filing, filed by J P MORGAN CHASE & CO on 3/9/2006:
Jul 28, 2003; 2003-87; SEC Settles Enforcement Proceedings against J.P. Morgan Chase and Citigroup
FOR IMMEDIATE RELEASE;

J.P. Morgan Chase Agrees to Pay $135 Million to Settle SEC Allegations that It Helped Enron Commit Fraud;

Citigroup Agrees to Pay $120 Million to Settle SEC Allegations that It Helped Enron and Dynegy Commit Fraud;

Six years and four criminal trials ...only the HAPP trial was missing computer files and he was acquitted

2009-01-08T15:20:00.000-08:00

“This was the most document-intensive case this office has ever undertaken.”
except for the missing COMPUTER FILES .....
Funny , that is what James K Happ, the only executive to be acquitted, was in charge of divestiture at at Columbia Homecare Group prior to arriving at NCFE...

Friday, December 26, 2008
Newsmakers
National Century saga closes with 10 convictions
Business First of Columbus - by Kevin Kemper

Six years and four criminal trials after a Central Ohio company’s $2.8 billion collapse, the resulting legal saga wrapped up in 2008 with seven former executives convicted – including one who remains on the run – and one who was acquitted on charges stemming from the scam.

The collapse of Dublin-based National Century Financial Enterprises Inc. kept courtrooms inside the Joseph P. Kinneary U.S. District Courthouse in Columbus busy for most of the year with criminal trials and hearings involving former executives and their associates.

Once the largest health-care financing company in the nation, National Century fell into bankruptcy in 2002 after what the government alleged was a massive fraud unraveled. In the six years since, 10 of 11 executives the government targeted for prosecution either pleaded guilty or were convicted on criminal charges for their actions.

“This case set a standard for prosecuting white-collar criminal cases,” said Fred Alverson, spokesman for the U.S. Attorney’s office in Columbus. “This was the most document-intensive case this office has ever undertaken.”

$5.89 MILLION IN CIVIL FRAUD SETTLEMENTS...home healthcare agency

2009-01-07T10:01:00.000-08:00

MEDIA RELEASE
Attention: News Director U.S. DEPARTMENT OF JUSTICE
For Immediate Release DAVID L. HUBER
March 23, 2007 UNITED STATES ATTORNEY
Western District of Kentucky
Contact: Sandy Focken
(502) 582-5911
******************************************************************************
FEDERAL FALSE CLAIMS ACT CASE RESULT IN
$5.89 MILLION IN CIVIL FRAUD SETTLEMENTS
- Former owner of Louisville, Kentucky, based home healthcare agency, and his wife, both
now residing in Dallas, Texas, pay $2.3 million
- Medshares Diversified, Inc., a former Memphis, Tennessee, home healthcare agency, pays
$2,242,470
- National Century Financial Enterprises, Inc. pays $1.35 million.
*** *** ***
David L. Huber, United States Attorney for the Western District of Kentucky, along with the
Department of Justice, Commercial Litigation Branch, Civil Frauds Division, and the Office of the
Inspector General for the Department of Health and Human Services, announces that after a multiyear
investigation, the United States has reached civil fraud settlements totaling over $5.89 million
with several defendants for their role in alleged violations of the federal False Claims Act. In
particular, William Riddle and Robin Riddle, both of Dallas, Texas, have paid the United States
$2.3 million to settle certain civil fraud claims; Medshares Diversified, Inc., a former Memphis,
Tennessee, home healthcare agency, through its bankruptcy proceedings, paid $2,242,470; and
National Century Financial Enterprises, Inc., through its bankruptcy proceedings, recently paid
$1.35 million..
Background
In May, 1999, 86 former employees of a Louisville based home healthcare entity known as
Homecare and Hospital Management, Inc. (“HHM”), filed a federal whistle blower lawsuit in
Louisville, Kentucky. United States ex rel. Employees of HHM 1-86 v. Homecare and Hospital
Management, Inc., William Riddle, Jr., National Century Financial Enterprises, Inc., et al., Civil
Action No. 3:99CV-340-H (W.D. Ky). The complaint asserted a barrage of claims, including
violations of the federal False Claims Act. The complaint levied these claims against numerous
defendants, including William Riddle, the former CEO of HHM, and Lance Poulsen, the former
CEO of National Century Financial Enterprises, Inc. (“NCFE”). Mr. Poulsen has since been
indicted for his involvement in an alleged multi-billion dollar criminal fraud case being prosecuted
by the United States Attorney’s Office for the Southern District of Ohio.
HHM was a national home health agency headquartered in Prospect, Kentucky between 1993
through 1998. From its inception, HHM’s business plan was focused on growth accomplished
through the aggressive acquisition of existing home health care businesses. Between fiscal year
(“FY”)1993 and FY 1996 HHM purchased 24 health care businesses, increasing its revenue from
$23.7 million in FY 1994 to $166.8 million in FY 1996. To finance these acquisitions, HHM
utilized NCFE proceeds to supply the funds needed to purchase these agencies. HHM, in turn,
passed through to Medicare all of the financing costs associated with these NCFE funds, thereby
having the Medicare program “underwrite” HHM’s acquisition schedule. It did so by claiming that
these financing costs were reasonably related to patient care and, therefore, reimbursable by
Medicare. In fact, costs associated with these acquisitions were not reimbursable, and their
submission to Medicare for reimbursement was fraudulent.
NCFE was HHM’s primary lender. NCFE’s method of providing funding to HHM was
through a mechanism known as accounts receivable financing. Through this process, HHM would
pledge essentially all of its Medicare receivables to receive advance funding from NCFE. Accounts
receivable financing essentially permitted HHM to immediately gain access to funds using HHM’s
receivables as collateral, thereby permitting HHM to have immediate use of its receivables before
they were actually paid by Medicare.
By 1998, HHM was in dire financial straits, and sold many of its subsidiaries to Medshares.
Nevertheless, in August 1998, HHM was forced into bankruptcy. Many employees were not paid
certain employee benefits, such as paid days off, bonuses, or final paychecks. Mr. Riddle was
named as a defendant in several lawsuits initiated by former employees as well as NCFE (which was
owed millions of dollars from HHM).
Investigation
As part of its investigation, the United States developed certain facts indicating that William
Riddle and Lance Poulsen conspired to defraud the Medicare system by using Medicare to finance
HHM’s growth without the need for investors to pay for HHM’s acquisitions. Funding by NCFE
was timed by William Riddle and Lance Poulsen to create the illusion that NCFE was offering
financing for patient care when, in fact, financing was being used to buy new HHM subsidiaries.
Forensic accounting demonstrated that HHM then passed through its financing costs associated with
NCFE funds used to purchase these subsidiaries to Medicare for reimbursement, despite the fact that
these funds were not used for patient care. The United States estimated that Medicare paid HHM
$2,837,628.00 as a result of this fraudulent conduct.
Medshares, for its part, was investigated by the United States for (1) submitting false claims
to the United States in the form of fraudulent cost reports; (2) submitting for Medicare
reimbursement expenses related to patient care which were not qualified expenses related to actual
patient care; and, (3) engaging in practices that included improperly charging Medicare for NCFE
fees, improperly allocating amounts between HHM’s corporate and regional costs, seeking
reimbursement for “ghost employees” and improperly charging management fees to the Medicare
program. In 1999 Medshares filed a chapter 11 bankruptcy petition in the Western District of
Tennessee, case number 99-29024-L.
William Riddle subsequently moved to Dallas, Texas with his new wife, Robin Riddle, and
entered into a marital partition agreement that effectively severed any rights William Riddle would
have to certain community property realized by his marriage to Robin Riddle. The United States
alleged that this marital partition agreement was a sham, entered into by the Riddles to shield their
assets from William Riddle’s liability as a result of HHM’s debacle.
Settlements
In March, 2006, William Riddle and Robin Riddle, denying all liability, entered into a
settlement with the United States, agreeing to pay $2.3 million. In July 2006, NCFE agreed to settle
the United States’ claims against it for $1.35 million, as directed through its bankruptcy proceedings.
In July 2003, Medshares entered into a consent judgment with the United States settling its liability
for $2,807,924. The net amount realized from this bankruptcy settlement was $2,242,470. The
federal whistle blowers will receive 15% of the total settlement amounts received by the United
States in accordance with their rights under the federal False Claims Act.
This case was prosecuted by Assistant United States Attorneys William F. Campbell and
Benjamin S. Schecter, and Vanessa Reed, Trial Attorney, with the Department of Justice
Commercial Litigation Branch Civil Frauds Division, with assistance from the Office of the
Inspector General for the Department of Health and Human Services.
- END

Important information on a National Century Financial Enterprises Inc. computer system was either lost or tampered with

2009-01-07T06:40:00.000-08:00

Wednesday, March 5, 2008
IT expert: National Century computer system unreliable
Business First of Columbus - by Kevin Kemper Business First

Important information on a National Century Financial Enterprises Inc. computer system was either lost or tampered with, a computer expert testified for the defense, however the government did its best to call the witness's testimony into question.

Jon Bryant, an information technology computer consultant that used to work at National Century, told jury members on Tuesday and Wednesday that the AS/400 mainframe computer used by National Century to track accounts receivable was missing information after a crash that left nine of its hard drives inoperable.

The crash occurred, Bryant said, sometime after he stopped working for National Century in 2001, possibly when the government gained control of the system during its investigation.

Defense attorneys hired Bryant as an expert witness in 2007 to conduct an analysis of the information contained on National Century's AS/400 system. When Bryant conducted his analysis, he found that there was $300 million in accounts receivable missing from the system due to the crash.

The government has used information from the AS/400 to allege to the jury that millions of dollars went missing from the National Century's accounts.

Dublin-based National Century was a financier of last resort for health-care providers. The firm specialized in buying receivables from medical businesses at a discount, giving them cash up front so they could pay their bills. It then packaged the receivables as asset-backed bonds and sold them to investors.

Five of the company's former executives - Rebecca Parrett, Donald Ayers, Roger Faulkenberry, Randolph Speer and James Dierker - are facing charges of fraud, conspiracy and money laundering for their alleged involvement in National Century's nearly $3 billion collapse and bankruptcy in 2002.

They have all pleaded not guilty to the charges.

When the government got its chance to cross-examine Bryant, Assistant U.S. Attorney Douglas Squires did his best to call Bryant's word into question.

Squires first attempted to show that Bryant was not an information technology expert.

Squires asked Bryant about memos that circulated among National Century executives that suggested computer programs Bryant wrote did not work properly.

Bryant said he was not familiar with those memos.

Squires then asked Bryant about his relationship with Parrett. When Bryant admitted the two are friends, Squires suggested Bryant might lie for her. Bryant said he would not.

Squires also asked Bryant about statements Bryant made to the FBI in 2002. Bryant admitted he told the FBI that the company tried to deceive auditors and that funds were moved among accounts to hide shortfalls.

Squires also suggested that Bryant was disgruntled when he worked for National Century and that he volunteered to be a government witness in the case.

Bryant said neither was true.

Defense attorneys called their third witness after Bryant, a securitizations expert named Gregory Gac.

Gac, owner of Shorewood, Minn.-based Quadrant Financial Group LLC, was hired by the defense at a rate of $450 an hour to analyze the documents that governed National Century's bond funds.

The government has alleged that because the defendants allowed reserve funds for National Century bonds to be depleted, they had committed securities fraud. But Gac said National Century's bond reserve funds were allowed to fluctuate.

Under cross-examination, he admitted that he had sat in on earlier testimony in the trial when the government's star witness said she was behind a massive and ongoing fraud at the company. Gac said he found her testimony, "appalling," and that her behavior gives everyone in the finance industry a black eye.

The defense also called two character witnesses on behalf of Dierker, in advance of his expected testimony on Thursday. Barry Salmons, a friend and vice president of marketing at Huntington National Bank, testified that Dierker was a man of character, integrity and honesty. Susan Horn, a former executive vice president of marketing at Victoria's Secret, said that when Dierker worked for her, he was an outstanding employee with great morals and if she heard him testify she would believe what he said.

Ask, "What Healthcare companies"? Maybe HCA & IHS ?

2009-01-03T16:44:00.000-08:00

"National Century had overfunded certain health-care providers by $50 million to $200 million."
Ask, "What Healthcare companies"? Maybe HCA & IHS ? The two largest healthcare companies in our nation in 1996.

Ooops...1997 HealthCare Reform passed! Had to get rid of the industry known losing entities of thesse giants, Homehealth care.

Take a look at DIP Financing Tool that was used in the largest case in the history of Western Tennessee Bankruptcy Court. In that case, one would view the "Queen of Bankruptcy", Darla Moore and her bankruptcy tool, DIP FInance at its best.

This case would ultimatley benefit her husband's losing assets Columbia Homecare Group financed by NCFE.

Rainwater's aka HCA/TN aka Columbia Homecare Group was dumped into a private company financed by the largest private finance company.
Both of which aer no longer in existence.
But once again, the case in Tennessee was also 'unheard of' just like NCFE.

of HCA/TN,,Columbia Homecare Group---(Ricard Rainwater's Baby)

National Century was once the nation’s largest financier of physician practices and other health-care firms. It specialized in buying doctors’ receivables at discounts so the physicians could quickly secure they cash they needed for their businesses

Thursday, October 2, 2008
NCFE money exec put little stock in Poulsen, company claimsBusiness First of Columbus - by Kevin Kemper

After less than three months on the job, a former National Century Financial Enterprises Inc. executive wrote in his notes that he couldn’t trust statements made by his boss, CEO Lance Poulsen.

William Parizek, once the Dublin company’s director of corporate finance, testified Thursday as the government’s first witness in the fraud trial of Poulsen that he began to question financial decisions of National Century just weeks into his job at the business.

An accountant by training, Parizek started at National Century on Oct. 31, 1996 and left Jan. 16, 1997. Parizek testified Poulsen, who co-founded National Century, hired him to raise capital from investors who were interested in becoming part-owners of the company.

The government has accused Poulsen, 65, on conspiracy, wire fraud, money laundering and securities fraud charges for which he is standing trial in Columbus. Poulsen has pleaded not guilty to all the charges.

Parizek said he moved his family from Wichita, Kan., to join National Century because he had a chance to eventually make nearly $1 million a year if he met all of his job goals.

In order to pitch National Century to investors, Parizek testified he needed a full understanding of the company. A few weeks into his financial education, Parizek told jurors he discovered National Century had overfunded certain health-care providers by $50 million to $200 million.

National Century was once the nation’s largest financier of physician practices and other health-care firms. It specialized in buying doctors’ receivables at discounts so the physicians could quickly secure they cash they needed for their businesses. National Century then packaged the receivables as asset-backed bonds and sold them to investors.

The company collapsed into bankruptcy in 2002, allegedly forcing other medical businesses to fail and prompting the Justice Department to begin looking into the company’s failure. The government has alleged Poulsen and other executives at the company overfunded health-care companies owned by Poulsen and National Century’s other principles in a ploy to enrich themselves.

As Parizek asked more executives about the company, he became convinced the company was not operating legally, he told the jury. It was around that time that Parizek wrote in his notes: “Attribute no value to LKP (Lance K. Poulsen) statements.”

Parizek also wrote: “Attribute little value to internally generated documentation and data.”

On the day he resigned, more than two months after he joined the business, Parizek said Poulsen called him on his office phone. Poulsen started off friendly, Parizek told the jury, and then became angry and vulgar.

In his notes, Parizek wrote that Poulsen said: “I don’t know what your agenda is, but the only ... agenda in this company is mine.” Parizek also wrote in his notes that Poulsen said he didn’t need Parizek’s morality.

Under questioning by William Terpening, Poulsen’s attorney, Parizek sparred over whether he was fired or resigned from his job. Parizek maintained he resigned.

“You were fired by Mr. Poulsen,” Terpening said.

“That was not the case,” Parizek replied.

When Terpening asked Parizek about many of National Century’s financial inner workings, the witness said he couldn’t recall details. Terpening asked why Parizek’s detailed notes should then be considered accurate.

Terpening also asked why Parizek didn’t go to the government if he was concerned about National Century. Parizek answered he wanted to move on and didn’t think about National Century until the government contacted him in 2002 after the company went bankrupt.

Oh! Did I mention? James K. Happ, arrived at NCFE after dumping Columbia's losing assets into the largest Bankruptcy case in Tennessee only to be ,,,

2009-01-03T16:22:00.000-08:00

...financed by National Centruy Finanacial Enterprises, Inc. (NCFE)
Funny, he was the one to divest the losing assets dragging HCA's stock price to its lowest in years. Shall I continue?

If I could only reach Bob Woodward!

Jury acquits last National Century exec
Wednesday, December 17, 2008 1:54 PM
By Jodi Andes

THE COLUMBUS DISPATCH
James K. Happ, the last National Century Financial Enterprises executive charged in the multibillion-dollar fraud that damaged pensions across the country, has been found not guilty on all charges by a jury in U.S. District Court in Columbus.

The verdicts came shortly before 2:30 p.m. after about 12 hours of deliberation.

Happ, 48, had been charged with conspiracy, money-laundering conspiracy and three counts of wire fraud in connection with advances he authorized while he was in charge of purchasing National Century's accounts receivable.

He was a vice president of the Dublin-based company, which collapsed in 2002. Close to $2 billion in investors' money was lost, and 275 health-care businesses went bankrupt.

Using cash generated by the sale of bonds to investors, National Century bought accounts receivable from health-care providers and collected them for a fee. But investors were never told about money being given to providers without National Century getting the accounts receivable in return, prosecutors said.

Ten former executives were convicted or pleaded guilty on fraud charges tied to the company's collapse.

Federal Prosecutors did not do their job....Really? No surprise...

2009-01-03T14:48:00.000-08:00

Why would Federal Prosecutors open a can opf worms that is directly connected to GW Bush's ex-partner, Richard Rainwater of Columbia Homecare Group, (Dallas Ft Worth Homecare) and an exctension of HCA. The crooks in Nashville!
Just look at what they dumped into Medshares, Inc in TN financed by NCFE...
ALL THE LOSERS from the PUBLICLY TRADED companies y of HCA and IHS!!!
National Century fraud case produces 1st acquittal
Prosecutors' case fell short, juror says
Thursday, December 18, 2008 3:29 AM
By Jodi Andes

THE COLUMBUS DISPATCH
The "not guilty" verdicts that came in federal court yesterday were not so much a vindication of the last National Century Financial Enterprises executive to stand trial, a juror said.

Instead, they were more a belief that federal prosecutors had not done their job, the juror said after he and his fellow jurors acquitted James K. Happ of five counts after 12 hours of deliberation.

"He very well may have been guilty. A lot of us thought he was," said the juror who wouldn't give his name. "But if he was, you gotta have the evidence."

Happ, 48, of Dublin, was tried on conspiracy, money-laundering conspiracy and three counts of wire fraud in connection with money advances that he authorized while in charge of purchasing National Century's accounts receivable.

He was the only one of 11 former National Century executives charged in the scam who walked out of the courtroom with a not-guilty verdict.

For Happ, the acquittal was vindication.

"Praise God. He answers prayers," Happ said. "I never believed I had any intent to defraud anyone."

But there was no doubt that fraud had occurred at National Century, the juror said.

The Dublin-based company bought accounts receivable from health-care providers and collected the money owed on them for a fee. Money generated from the sale of bonds to investors provided the funding.

However, investors didn't know that National Century also gave providers millions of dollars without purchasing accounts receivable to back up the loans. That's because a separate set of books hid that and the company's shrinking reserve accounts.

Investors lost $1.9 billion when National Century collapsed in 2002. It's considered to be the largest fraud case by a private company in U.S. history.

Witnesses testified that Happ was part of that deceit. But the witnesses were "tainted," the juror said.

The key witness, Sherry Gibson, had falsified National Century's books herself. Frank Magliochetti, who testified that Happ boasted he could never be prosecuted because he didn't sign anything, bragged about his own ties to organized crime.

Prosecutors should have brought in more witnesses and greater proof to show that Happ had personally been deceitful, the juror said.

Happ's attorneys admitted that he advanced money to health-care companies. But that's simply how National Century did business, his attorneys said, and auditors and banks oversaw company accounts.

They also argued that the advances had been made for eight years before Happ joined the company in 2000.

After leaving National Century, Happ went to work for Tender Loving Care, a client of National Century's that had received close to $100 million in unmerited advances.

TLC later filed for bankruptcy. But Happ, TLC's chief executive officer, oversaw the sale of company assets to repay National Century, the defense noted.

That did not make things right, Assistant U.S. Attorney Doug Squires told the jury.

"If someone takes your wallet and it later is recovered, does that mean that no crime is committed? No, it doesn't," Squires said.

After the verdict, the prosecutorial team of Squires, N. Nathan Dimock and Nicole Sprinzen declined to comment through the office spokesman, Fred Alverson.

"We appreciate the effort of all the (FBI and Internal Revenue Service) agents in preparation of the evidence," Alverson said. "And we respect the jury's decision."

The case was tried in U.S. District Court in Columbus before Judge Algenon L. Marbley.

jandes@dispatch.com

Bush, Rainwater, Moore, Poulsen, Happ, Fraud, Healthcare Fraud, Bankruptcy Fraud, Financial Fraud

2009-01-03T14:40:00.000-08:00

Columbia Homecare Group was also involved with the largest Bankruptcy in Western Tennessee . Medshares, Inc. which was also connected to the largest ‘private’ fraud case in Columbus Ohio, National Cantury Finanacial Enterprises, Inc. (NCFE).

Funny, the only executive to be acquitted was the ex-CFO of Columbia Homecare Group out of Dallas Ft Worth, Mr. Richard Rainwater’s losing assets of HCA/TN.
James K Happ, the ex-CFO, dumped all the homecares into Medshares, financed by, you guessed it, NCFE!!

Guess it pays to be the ex-partner of the worst President in our modern history.
Rainwater & Bush----go TEXAS RANGERS!!!!
I woncder if BUSH & RAINWATER will have dinner at the White House or maybe at the "WESTERN" White HOUSE. Oh and don't forget, Rainwater's wife, the Queen of Bankruptcy,Darla Moore. Remember, she was the inventor of 'DIP FINANCE' while at CHASE BANK for CORPORATE BANKRUPTCY.

Columbia Hospital Corporation & National Century Finanacial Enterprises & James K Happ

2009-01-03T14:19:00.000-08:00

The one and only executive from NCFE who by the way came from Columbia to NCFE before the FBI raided their offices, was acquitted.
Funny, he was the last person to go on trial.

How convenient!

Undercover: How I Went from Company Man to FBI Spy -- and Exposed the Worst Healthcare Fraud in US History (Hardcover)

Review

“…[an] exciting story of an ordinary man who finds himself in extraordinary circumstances. You could say it’s a rags-to-riches morality tale, with good emerging victorious (up to a point) over bad.” Milwaukee Journal Sentinel

When John Schilling, an unassuming mid-level accountant, went to work for the Columbia Hospital Corporation, he never expected to become the catalyst for the series of “whistleblower” cases that ripped through the healthcare industry in the late 1990s. But when he unwittingly discovered that the company was siphoning billions of dollars away from Medicare and stealing from American taxpayers, he was faced with a choice: Speak up for what he believed to be right, or remain silent. Undercover tells the story of Schilling’s harrowing journey from ordinary citizen to federal informant. The book recounts how Schilling allied himself with the FBI and the Justice Department and–unable to confide in friends or family–journeyed into an undercover world in which he carried a wire and mapped out offices for secret government raids. Suspenseful and provocative, Undercover chronicles Schilling’s nine-year ordeal that eventually led to the resignation of high-level executives and forced Columbia to return $1.7 billion dollars to the federal government. A compelling account of one man’s decision to risk everything for the greater good, this book reveals the personal side of a thankless role that resulted, ultimately, in justice.

See all Editorial Reviews

order Undercover: How I Went from Company Man to FBI Spy — and Exposed the Worst Healthcare Fraud in US History: John W. Schilling form Amazon.

2009-01-03T14:18:00.000-08:00

By Dennis Jay
Jan 2, 2009, 4:18 PM EST

Let’s make 2009 the year we finally turn the corner on insurance fraud and truly make a difference in curbing this crime — and in the process, helping to keep insurance affordable and making the insurance system fairer for everyone.

To that end, here are a few New Year’s resolutions for the fraud-fighting community:

Insurers: Resolve to adopt a zero-tolerance attitude towards fraud. Provide adequate resources to your SIUs and recognize that a down economy is exactly the wrong time to cut back on anti-fraud activities;

Fraud bureaus: Resolve to become more efficient and adopt more strategies to deter fraud, including publicizing arrests and convictions;

Regulators: Resolve to seek greater uniformity in anti-fraud regulations from state to state, and ensure all insurers comply with anti-fraud requirements;

Prosecutors: Resolve to find creative ways to accept more fraud cases, especially the difficult ones.

State legislators: Resolve to give fraud-fighters more tools by enacting needed fraud legislation, and that goes double for lawmakers in Oregon, Virginia and Alabama, the last states that lack even a basic insurance fraud statutue;

President-elect Obama and Congress: Resolve to include strong anti-fraud provisions in any new healthcare initiatives;

Consumers: Resolve to resist the temptation to inflate insurance claims; encourage your friends, family and co-workers to stay honest.

And lastly, the coalition: Resolve to strengthen partnerships with all constituents groups, including other anti-fraud organizations, and to have a measurable impact on reducing insurance fraud.

May you stick to all of your resolutions and have a successful 2009!

FBI reports when case is not over...why is that?

2008-12-31T08:39:00.000-08:00

This report, released in March of 2008, implied that this case was over yet the CEO and the 'ONLY' Ex-Executive that was acquitted had gone on trial.

Funny, the FBI assumed it was over.
Now, the Ex-Executive that was acquitted,James K Happ and last to go on trial early December 2008. Hmm.....

James K Happ , who by chance, arrived at National Century Finanacial Enterprises, Inc. in Columbus, Ohio from the CFO position at HCA/Columbia 'family and friends' along with Richard Rainwater in Ft. Worth, Texas.

Funny how that works. !!!

FOR IMMEDIATE RELEASE CRM

THURSDAY, MARCH 13, 2008 (202) 514-2007

WWW.USDOJ.GOV TDD (202) 514-1888

FORMER NATIONAL CENTURY FINANCIAL ENTERPRISES EXECUTIVES FOUND GUILTY ON ALL CHARGES IN $3 BILLION SECURITIES FRAUD SCHEME
Defendants Guilty of Conspiracy, Fraud and Money Laundering

WASHINGTON – A federal jury has found five former executives of National Century Financial Enterprises (NCFE) guilty of conspiracy, fraud and money laundering, following a six-week trial and less than two days of deliberation, Assistant Attorney General Alice S. Fisher and U.S. Attorney Gregory G. Lockhart of the Southern District of Ohio announced today. The Columbus, Ohio, jury returned the guilty verdict on all charges contained in a 27-count superseding indictment stemming from a scheme to deceive investors about the financial health of NCFE. The company, which was based in Dublin, Ohio, was one of the largest healthcare finance companies in the United States until it filed for bankruptcy in November 2002.

Donald H. Ayers, 71, of Fort Meyers, Fla., an NCFE vice chairman, chief operating officer, director and an owner of the company, was found guilty on charges of conspiracy, securities fraud and money laundering.

Rebecca S. Parrett, 59, of Carefree, Ariz., an NCFE vice chairman, secretary, treasurer, director and an owner of the company, was found guilty on charges of conspiracy, securities fraud, wire fraud and money laundering.

Randolph H. Speer, 58, of Peachtree City, Ga., NCFE’s chief financial officer, was found guilty on charges of conspiracy, securities fraud, wire fraud and money laundering.

Roger S. Faulkenberry, 46, of Dublin, Ohio, a senior executive responsible for raising money from investors, was found guilty on charges of conspiracy, securities fraud, wire fraud and money laundering.

James E. Dierker, 40, of Powell, Ohio, associate director of marketing and vice president of client development, was found guilty on charges of conspiracy and money laundering.

“These convictions send a clear message to corporate America that executives will be brought to justice for lying to investors and misrepresenting the actions taken in their normal course of business,” said Deputy Attorney General Mark Filip, chairman of the President’s Corporate Fraud Task Force. “These are the latest successes in our efforts to improve the integrity of our financial markets.”

“By holding accountable those who break the law, today’s convictions help restore some of the faith and trust the public loses every time corporate executives defraud their investors. The jury’s verdict demonstrates that the public will not stand by while company executives commit billion dollar frauds, leaving the honest investors to bear the losses they create,” said Assistant Attorney General Alice S. Fisher. “I would like to thank the trial attorneys from the Fraud Section and the U.S. Attorney’s Office as well as the FBI, IRS, Immigration and Customs Enforcement and U.S. Postal Inspection Service for their diligent and successful work on this case.”

“The jury convicted company executives of building a financial house of cards and deceiving investors using financial sleight of hand,” said Gregory G. Lockhart, United States Attorney for the Southern District of Ohio. “I commend the agents, investigators and prosecutors from the Fraud Section and our office for their hard work on this lengthy and complex case.”

“This case is one of the largest corporate fraud investigations involving a privately held company headquartered in small town America,” said Assistant Director Kenneth W. Kaiser of the FBI Criminal Investigative Division. “The FBI continues to leverage its corporate fraud expertise gained through large-scale investigations such as Enron and WorldCom, to ensure that corporations represent their true health. From Dublin, Ohio, to Houston, Texas to New York, New York, the message is clear that the FBI will not stand by as corporate executives manipulate their financial statements and conceal illegal activities from criminal and regulatory authorities.”

“IRS aggressively pursues corporations and their officers who use their positions of trust for illegal activities. This kind of fraud touches the lives of many unsuspecting citizens and the public should know that the government is serious about holding corporations and their executives accountable,” said Eileen C. Mayer, chief, Internal Revenue Service Criminal Investigation.

At trial, the government presented evidence that the defendants engaged in a scheme to deceive investors and rating agencies about the financial health of NCFE and how investor monies would be used. Between May 1998 and May 2001, NCFE sold notes to investors with an aggregate value of $4.4 billion, which evidence presented at trial showed were worth approximately six cents on the dollar at the time of NCFE’s bankruptcy in November 2002.

NCFE presented a business model to investors and rating agencies that called for NCFE to purchase high-quality accounts receivable from healthcare providers using money NCFE obtained through the sale of asset-backed notes to institutional investors. The evidence at trial showed that NCFE advanced money to health care providers without receipt of the requisite accounts receivable, oftentimes to healthcare providers that were owned in whole or in part by the defendants. The evidence further showed that the defendants lied to investors and rating agencies in order to cover up this fraud.

The evidence at trial showed that NCFE concealed from investors the shortfalls produced by this fraud by moving money back and forth between accounts, fabricating data in investor reports, incorporating false information into the accounting system, and making other false statements to investors and rating agencies. Moreover, the defendants’ compensation was tied to the amount of money they advanced to healthcare providers and those providers’ outstanding balance owed to NCFE. The government presented evidence at trial that showed that the defendants knew that the business model NCFE presented to the investing public differed drastically from the way NCFE did business within its own walls and that NCFE was making up the information contained in monthly investor reports to make it appear as though NCFE was in compliance with its own governing documents.

Defendants face the following maximum penalties: Donald H. Ayers, 55 years in prison and $2.25 million in fines; Rebecca S. Parrett, 75 years in prison and $2.5 million in fines; Randolph H. Speer, 140 years in prison and $4.25 million in fines; Roger S. Faulkenberry, 85 years in prison and $2.5 million in fines; James E. Dierker, 65 years in prison and $1.75 million in fines.

The case was prosecuted by Assistant U.S. Attorney Douglas Squires of the Southern District of Ohio, Senior Trial Attorney Kathleen McGovern and Trial Attorney Wes R. Porter of the Fraud Section, with assistance from Fraud Section Paralegal Specialists Crystal Curry and Sarah Marberg, FBI agents Matt Daly, Ingrid Schmitt, and Tad Morris, IRS Inspectors Greg Ruwe and Mark Bailey, U.S. Postal Inspector Dave Mooney and ICE Agent Celeste Koszut.

Press Releases | Cincinnati Home Page | Privacy Policy

2008-12-31T08:35:00.000-08:00

In In re National Century Financial Enterprises, Inc. Investment Litigation, Lieff Cabraser serves as Lead Counsel for the New York City Employees' Retirement System, Teachers' Retirement System for the City of New York, New York City Police Pension Fund, and New York City Fire Department Pension Fund in a securities fraud and breach of fiduciary duties lawsuit against Bank One, JPMorgan Chase Bank, Credit Suisse First Boston LLC, and additional defendants.

The complaint charges that plaintiffs suffered $89 million in losses as a result of a massive Ponzi scheme orchestrated and implemented by National Century Financial Enterprises and defendants. To date, the funds have recovered approximately 60% of their losses through settlements and bankruptcy recoveries. Lieff Cabraser continues to prosecute the case against the non-settling defendants.

Likewise, Lieff Cabraser represented Kofuku Bank, Namihaya Bank and Kita Hyogo Shinyo-Kumiai (a credit union) in individual lawsuits against, among others, Martin A. Armstrong and HSBC, Inc., the successor-in-interest to Republic New York Corporation, Republic New York Bank and Republic New York Securities Corporation for alleged violations of federal securities and racketeering laws.

http://www.lieffcabrasersecurities.com/cases/madoff.htm

MISSED THE BIGGER PICTURE FOLKS!!!!

2008-12-29T10:38:00.000-08:00

"Happ’s trial is expected to last most of December..."
The ONLY EXECUTIVE TO WALK AWAY....hmmm.....

Really? Funny how that LAST trial went to fast? Did not matter that Happ came from HCA ---RICHARD RAINWATER'S 'pet' Columbia Homecare Group...he dumped those into the Bankruptcy Court 6 mos prior in Western Tennessee's Medshares PONZI SCHEME!!!

What a bunch of CRAP!!!

Monday, December 1, 2008
NCFE’s Happ starts his day in courtBusiness First of Columbus - by Kevin Kemper

The fourth and final criminal trial involving a former executive of National Century Financial Enterprises Inc. began Monday at U.S. District Court in Columbus as lawyers picked jurors to decide the fate of James Happ.

The government has accused Happ of a count each of conspiracy and money laundering conspiracy plus three counts of wire fraud.

He has pleaded not guilty to all of the charges.

The former executive vice president of Dublin-based National Century is standing trial on accusations he was part of an executive-level cabal at the medical financing company that defrauded investors out of $2.84 billion.

Happ’s trial began at 9 a.m. with jury selection, which was expected to last the day. It will be followed by opening arguments from government attorneys and then defense lawyers, likely to begin Tuesday.

Happ becomes the seventh National Century executive to stand trial on fraud charges and the 11th to be charged with crimes. Six other former executives, including company founders Lance Poulsen, Rebecca Parrett and her ex-husband Donald Ayers, were found guilty by juries earlier in the year.

A financier for health-care providers like doctors’ offices and hospitals, National Century’s bread and butter was buying accounts receivable from care providers at a discount, then securitizing the receivables into AAA-rated bonds for sale to investors. At its peak, the company employed more than 350 workers at its office campus in Dublin while recording annual revenue of more than $250 million.

The government has alleged the company collapsed into bankruptcy in 2002 after running a sophisticated pyramid scheme that fell apart.

In addition to purchasing legitimate accounts receivable, the government alleged National Century funded companies owned by its founders without getting receivables in return, effectively making risky unsecured loans with investor cash. The company charged its clients for those advances, the government has said, which inflated National Century’s revenue and generated bonuses for senior executives.

Happ’s trial is expected to last most of December.

James K Happ...From Columbia HCA to NCFE....NO CONFLICT? NO SALE of Columbia to NCFE...via Bankruptcy Court in Western Tennessee

2008-12-29T10:35:00.000-08:00

Wednesday, December 17, 2008
Final National Century exec acquittedBusiness First of Columbus

James Happ will not share his former work colleagues’ fate.

Happ, an accountant and former vice president of servicer operations for Dublin-based National Century Financial Enterprises Inc., has been found not guilty of a count each of conspiracy and money laundering conspiracy and three counts of wire fraud.

A 12-member jury at the U.S. District Court in Columbus returned the verdict Wednesday afternoon after a day-and-a-half of deliberations.

Happ was the seventh former executive from National Century to go to trial and the only one to be acquitted. Six former executives were convicted of fraud and four pleaded guilty. Happ was the eleventh and final National Century employee to face criminal charges.

Happ’s trial began Dec. 1 and ended just two weeks later after his defense attorneys declined to put any witnesses on the stand.

In opening arguments, attorney Craig Gillen told jurors that Happ never had a hand in any wrongdoing at the company.

“Jim Happ never told a lie to any investors. Period,” Gillen said.

Happ stood trial on accusations he was part of an executive-level cabal at the medical financing company that defrauded investors for years. A financier for health-care providers like doctors’ offices and hospitals, National Century’s bread and butter was buying accounts receivable from care providers at a discount, then securitizing the receivables into AAA-rated bonds for sale to investors. At its peak, the company employed more than 350 at its office campus in Dublin while recording annual revenue of more than $250 million.

The government has alleged National Century collapsed after running a sophisticated pyramid scheme that fell apart. In addition to purchasing legitimate accounts receivable, the government alleged National Century funded companies owned by its founders without getting receivables in return, effectively making risky unsecured loans with investor cash. The company charged its clients for those advances, the government has said, which inflated National Century’s revenue and generated bonuses for senior executives.

Government attorneys argued that Happ, as the firm’s chief accountant and head of servicer operations, was responsible for making sure that purchased accounts receivable were eligible. In a July 2007 indictment, the government alleged that Happ improperly advanced as much as $5.4 million to a company owned by NCFE founder Lance Poulsen.

The government also accused Happ of ordering a National Century subordinate to remove safeguards on the company’s computer system relative to a health-care provider he planned to join after leaving National Century.

Go back to Grasso ....

2008-12-24T08:04:00.000-08:00

SEC Chief Defends His Restraint
Cox Rebuffs Criticism of Leadership During Crisis

By Amit R. Paley and David S. Hilzenrath
Washington Post Staff Writers
Wednesday, December 24, 2008; Page A01

Christopher Cox, the embattled chairman of the Securities and Exchange Commission, is defending his restrained approach to the financial crisis, saying he has provided steady leadership as Wall Street's main regulator at a time when other federal regulators have responded precipitously to upheaval in the markets.

During his tenure, the SEC has watched as all the investment banks it oversaw collapsed, were swallowed up or got out of their traditional line of business. The agency, meanwhile, was on the sidelines while the Treasury Department and Federal Reserve worked to bail out the financial sector. And the SEC, by its own admission, failed to detect an alleged $50 billion fraud by Bernard L. Madoff that may be the largest Ponzi scheme in history.

But in his first interview since the Madoff scandal broke, Cox said he was not responsible for the agency's failure to detect the alleged fraud and that he had responded properly to the broader financial crisis given the information he had. Confronted with a barrage of criticism from lawmakers, former officials and even some of his staff, Cox said he took pride in his measured response to the market turmoil.

"What we have done in this current turmoil is stay calm, which has been our greatest contribution -- not being impulsive, not changing the rules willy-nilly, but going through a very professional and orderly process that takes into account unintended consequences and gives ample notice to market participants," Cox said. This caution, he added, "has really been a signal achievement for the SEC."

Taking a swipe at the shifting response of the Treasury and Fed in addressing the financial crisis, he said: "When these gale-force winds hit our markets, there were panicked cries to change any and every rule of the marketplace: 'Let's try this. Let's try that.' What was needed was a steady hand."

Cox said the biggest mistake of his tenure was agreeing in September to an extraordinary three-week ban on short selling of financial company stocks. But in publicly acknowledging for the first time that this ban was not productive, Cox said he had been under intense pressure from Treasury Secretary Henry M. Paulson Jr. and Fed Chairman Ben S. Bernanke to take this action and did so reluctantly. They "were of the view that if we did not act and act at that instant, these financial institutions could fail as a result and there would be nothing left to save," Cox said.

Although Cox speaks of staying calm in the face of financial turmoil, lawmakers across the political spectrum counter that this is actually another way of saying that his agency remained passive during the worst global financial crisis in decades. And they say that Cox's stewardship before this year -- focusing on deregulation as the agency's staff shrank -- laid the groundwork for the meltdown.

"The commission in recent years has handcuffed the inspection and enforcement division," said Arthur Levitt, SEC chairman during the Clinton administration. "The environment was not conducive to proactive enforcement activity."

Cox, 56, a former Republican congressman from California, became chairman in mid-2005 and plans to step down early next year before his full five-year term expires. President-elect Barack Obama has nominated Mary L. Schapiro, a former SEC commissioner, to replace him.

In a 90-minute conversation in his 10th-floor corner office last week, Cox said the SEC's emphasis on enforcement is as strong as ever. "We've done everything we can during the last several years in the agency to make sure that people understand there's a strong market cop on the beat," he said.

"That's why Madoff is such a big asterisk," he added. "The case is very troubling for that reason. It's what the SEC's good at. And it's inexplicable."

Cox argued that the agency has carefully defined responsibilities and that it was unfair to blame it for every problem on Wall Street.

"The public might not understand that that wasn't the SEC's job," he said, adding that the agency was not responsible for preventing investment banks from collapsing but rather for sheltering their securities trading units from problems in the broader corporation. "The SEC is not a safety and soundness regulator," he said.

Cox said that when he first took office he emphasized the importance of simplifying the rulemaking process and increasing transparency. Outside experts say he has succeeded.

"He's made it lot easier for the public to get information and made strong attempts at better disclosure," said Lee A. Pickard, a former director of the SEC's division of market regulation. "He unfortunately has had a couple of hurricanes that have evolved on this watch, like the credit crisis and the Bernie Madoff situation. But I'm not sure you can point to him as responsible for either one of those."

But former officials said enforcement has suffered during his tenure. A pilot program begun last year required enforcement staff to meet with the commissioners before beginning settlement talks in certain cases involving non-financial firms. Some former officials said the change was just one example of new bureaucratic impediments that slowed enforcement work. The commissioners also made clear that they thought staff members were being too aggressive in some cases, the officials said.

"I think there has been a sentiment communicated to rank-and-file staff, lawyers and accountants that you don't go after the establishment," said Ross Albert, a former special counsel in the enforcement division.

Another staffing shift was underway at the Office of Risk Assessment, formed by Cox's predecessor, William H. Donaldson, to spot emerging problems in the financial markets. But under Cox, the office, which once had slots for seven people, eventually dwindled to just one. "That office withered away," said Bruce Carton, a former SEC enforcement lawyer. "It died on the vine under Cox."

The agency's overall staff also began to drop during Cox's tenure, to 3,442 full-time employees in fiscal 2008 from 3,773 in fiscal 2005, according to agency data. The agency's budget over that time has increased 2 percent, to $906 million from $888 million, an amount that the National Treasury Employees Union, which represents SEC staff, says is far too small.

"There just hasn't been enough resources or staffing over the years for the SEC to oversee the number of companies it is responsible for," said Colleen M. Kelley, the union's president. "Cox needs to take responsibility that he failed as the leader of the agency to ask for what was needed."

SEC officials said the staffing cuts were required to stay within the constraints of the budgets approved by Congress.

Cox defended his record on enforcement and risk assessment. His aides said that risk assessment is done by staff spread throughout the agency and that the total number focused on it over Cox's tenure has increased from 26 to 37 people. He also said that the 671 enforcement actions brought last year was the second-highest number in the agency's history.

While the statistics look good, former SEC general counsel Ralph Ferrara said, "they put a huge bottleneck in the ability of that enforcement division to function. Cases would linger for months or years because they didn't have the guidance to get the cases done." Ferrara, now a partner with Dewey & LeBouef, added that the enforcement division "was roped to the ground like Gulliver by the Lilliputians."

An analysis by law firm Morgan, Lewis & Bockius, however, showed that the SEC's actions against broker-dealers, who serve as middlemen in financial trades, actually dropped about 33 percent, to 60 cases in fiscal 2008 from about 89 cases in fiscal 2007.

"In one of its core areas -- regulation of Wall Street firms -- its caseload was down significantly," said Ben A. Indek, a securities lawyer at the firm.
Under Cox, the SEC has taken particular heat for its oversight of the five major investment banks -- all finance titans synonymous with Wall Street.

It became the agency's responsibility to monitor them for financial and operational weaknesses under a program set up before Cox's tenure, but under his watch they got into such trouble that today they no longer exist as investment banks. Bear Stearns and Lehman Brothers failed, Merrill Lynch had to be taken over, and Goldman Sachs and Morgan Stanley converted themselves into bank holding companies.

The March collapse of Bear Stearns illustrated an array of agency shortcomings, according to a review by the SEC's inspector general. He concluded that agency officials had been aware of "numerous potential red flags" at Bear Stearns "but did not take actions to limit these risk factors."

"It is undisputable," the inspector general concluded, that the "program failed to carry out its mission in its oversight of Bear Stearns."

The SEC was aware that the firm's exposure to mortgage securities exceeded its internal limits and represented a significant risk, but the agency made no effort to reduce that exposure, the report found. The agency also knew about but failed to adequately address various weaknesses in Bear Stearns's management of mortgage risk, such as a lack of expertise, persistent understaffing and an apparent lack of independence between risk managers and traders. In violation of an SEC rule, agency officials also allowed Bear Stearns and other investment banks to entrust critical checks and balances to internal, rather than outside auditors, the report found.

Cox shut down the oversight program this year. "This voluntary regulation of investment bank holding companies was flawed from the inception," he said. Instead, he went to Congress and asked for the explicit authority to regulate investment bank holding companies. In the interview, he said he wished he had gone to Congress earlier to get the authority.

Outside securities experts and government officials said they were surprised this year to see the SEC and Cox on the sidelines after Bear Stearns collapsed in March and Lehman Brothers failed in September.

Treasury and Fed officials viewed Cox and his staff as nonplayers who had failed to foresee the brewing problems, according to people who were involved in those efforts but spoke on condition of anonymity because of the sensitivity of the matter. They said Cox was often brought in for consultation only after major decisions had been made by Treasury and Fed officials.

Cox said it was natural that the SEC would have less of a role once it became necessary to bail out the firms. "We don't have macroeconomic levers," he said. "That's not what we do."

At the moment, the agency's biggest problem is the Madoff scandal, Cox said. Last week, Cox ordered an internal investigation into the agency's failures to uncover fraud at Madoff's investment advisory firm despite multiple warnings.

Cox has declined to talk about the specifics of the investigation. He has said that concerns about Madoff's activities were never presented to the commissioners.

When Cox was asked whether he should be blamed for a culture of lax enforcement that allowed multiple warnings about the fraud to go undetected, he said: "Absolutely not. In fact, it's in the DNA here that people thrive on bringing big cases."

Staff writers Binyamin Appelbaum and Neil Irwin contributed to this report.

Fortune's 1999 list of the 50 most powerful women.....CREATOR of DIP FInanace

2008-12-22T10:40:00.000-08:00

Moore -- president of the private investment firm Rainwater Inc. -- was recently named to Fortune's 1999 list of the 50 most powerful women. Along the way she has notched three different careers and earned such distinctions as "the queen of DIP" (debtor-in-possession financing, which Moore pioneered during her highly successful tenure at Chemical Bank), "the toughest babe in business" (emblazoned on a Fortune magazine cover story), and "the best investment I ever made" (attributed to husband Richard Rainwater).