2/21/08 Investors were misled for years, former exec testifies
False information was given to investors in National Century Financial Enterprises dating back to 1995, a former company executive testified today in federal court.
National Century established two subsidiaries to sell bonds to investors and began falsifying reports when the companies were formed in 1995 and 1999, Sherry Gibson said.
Gibson, who created investor reports for National Century, testified that company president Lance K. Poulsen told her to falsify reports.
“We were not to issue an investor report that was not in compliance,” Gibson said Poulsen told her. But the reports were based on false financial information, she said.
The subsidiaries were National Premiere Finance VI and XII.
National Century used the money from the bond sales to advance money to health-care providers and in turn collected on the providers’ accounts receivable for a share of the funds.The company began having financial troubles because it was advancing more money to health-care providers than they could collect, Gibson said. The company also kept trying to collect on accounts receivable that were more than six months old – at which point such debts were to be classified as uncollectable.
“I added receivables. I changed the aging categories. I added payor information. I manipulated the reserve accounts,” Gibson told jurors.
Problems with using false data became so bad that in 1999, National Century created a separate compliance department, housed in a different building from the rest of the company, she said. The compliance department was in charge of creating reports that were given to investors, auditors and rating agencies.
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http://www.columbusdispatch.com/live/content/local_news/stories/2008/02/21/nat_cen.html?sid=1012/22/08 Books falsified, former officer testifies
There were two sets of books at National Century Financial Enterprises.
One set, the actual books, showed that the company had been short on cash since 1995. Only a few executives of that Dublin-based company were privy to those.
The other set, the financials the rest of the world saw, included numbers that were dreamt up and plugged in monthly, Sherry Gibson, a former executive vice president of the company, testified yesterday.
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http://www.columbusdispatch.com/live/content/business/stories/2008/02/22/NatCen22.ART_ART_02-22-08_C10_299E3PF.html?sid=101 links to previous articles...
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3189726&mesg_id=3189894