Donald H. Ayers, Roger
S. Faulkenberry, Randolph H. Speer, James E. Dierker Sentenced in $3B
NCFE Securities Fraud Scheme
August 8, 2008
former National Century Financial Enterprises (NCFE) executives have
been sentenced for their roles in a scheme to deceive investors about
the financial health of NCFE. 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.
Donald H. Ayers, 72, of Fort Myers, Fla., an NCFE vice chairman, chief
operating officer, director and owner of the company, was sentenced on
Aug. 6, 2008, to 15 years in prison for conspiracy, securities fraud and
Randolph H. Speer, 57, of Peachtree City, Ga., NCFE’s chief financial
officer, was sentenced on Aug. 6, 2008, to 12 years in prison for
conspiracy, securities fraud, wire fraud and money laundering.
Roger S. Faulkenberry, 47, of Dublin, a senior executive responsible for
raising money from investors, was sentenced on Aug. 7, 2008, to ten
years in prison for conspiracy, securities fraud, wire fraud and money
James E. Dierker, 40, of Powell, Ohio, associate director of marketing
and vice president of client development, was sentenced on Aug. 7, 2008,
to five years in prison for conspiracy and money laundering.
Rebecca S. Parrett, 59, of Carefree, Ariz., an NCFE vice chairman,
secretary, treasurer, director and owner of the company, became a
fugitive following the March 2008 jury verdict. She faces a maximum
penalty of 75 years in prison and $2.5 million in fines.
U.S. District Court Judge Algenon Marbley also ordered the defendants to
forfeit $1.7 billion of property representing the proceeds of the
conspiracy and to pay restitution of $2.3 billion.
"In a scheme which lasted for years, these defendants purposely misled
the investing public about National Century, its financial health, and
the way in which it did business," said Acting Assistant Attorney
General Matthew Friedrich. "When the facade collapsed and National
Century filed for bankruptcy, investors were left holding the bag for
billions of dollars in losses. The sentences handed down in this case
justly reflect the gravity of the offenses."
"These sentences mark the end of a nearly six-year march to justice for
the architects of the financial house of cards known as National
Century," said Gregory G. Lockhart, U.S. Attorney for the Southern
District of Ohio. "These crimes touched hundreds of thousands of
Americans if they participated in a pension that invested in National
Century, or had money in any of the financial institutions who bought
securities from National Century."
"Unfortunately today’s sentencing does not immediately restore investor
confidence or offer complete financial restitution for the victims of
one of the largest corporate fraud investigations," said Assistant
Director Kenneth W. Kaiser of the FBI Criminal Investigative Division.
"The FBI and our law enforcement and regulatory partners will do
whatever it takes so that no company, in small town America or major
metropolitan cities alike, misrepresents their financial health and
"The IRS, along with our law enforcement partners, will vigorously
pursue corporate officers who victimize their investors and violate the
public trust," said Internal Revenue Service (IRS) Chief of the Criminal
Investigation Division Eileen Mayer. "Today's sentence demonstrates the
government's determination to restore and ensure that trust."
Evidence was presented at trial in February 2008 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 a combined
value of $4.4 billion, which evidence showed were actually worth
approximately six cents on the dollar at the time of NCFE’s bankruptcy
in November 2002.
documents show that 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. Evidence at
trial 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.
Ayers, Speer, Faulkenberry, Dierker and Parrett were five of eight
individuals indicted in the case in July 2007. Lance K. Poulsen was
severed from the other defendants following his arrest on obstruction of
justice charges on Oct. 18, 2007. He will be sentenced on the
obstruction of justice charges on Aug. 8, 2008. Poulsen’s trial on
conspiracy, securities fraud, wire fraud, mail fraud and money
laundering charges is scheduled to begin Oct. 1, 2008. James K. Happ, a
certified public accountant and former executive vice president for
servicer operations will face charges of conspiracy and wire fraud at
trial scheduled to begin Dec. 1, 2008. Jon A. Beacham, who was
responsible for raising money from investors through the sale of notes,
pleaded guilty to conspiracy and securities fraud on July 13, 2007, and