2010-10-25 07:50:00

www.digital-preservation.com

http://sify.com/finance/exec-s-10-year-sentence-upheld-in-1-9b-ohio-fraud-news-international-kkzhOndccbe.html

A federal judge on Friday decided not to reduce the sentence of a former health care financing executive convicted in a $1.9 billion corporate fraud case.

Roger Faulkenberry of suburban Columbus had asked that his sentence be cut from 10 years to five years after a federal appeals court in Cincinnati said the government hadn't proved money laundering charges.

A shorter sentence would meet the goals of rehabilitation and deterrence while allowing Faulkenberry, 49, to rejoin his family, said his attorney, David Greer.

Faulkenberry, scheduled for release in 2016, is serving his sentence in Gilmer federal prison in West Virginia.

"If he serves a 10-year sentence, he'll be past the point where he can be a productive member of society, past the hope of being able to make restitution, past the point of age where his children need a father's attention," Greer said.

U.S. District Court Judge Algenon Marbley said he considered the impact of Faulkenberry's sentence on his family but couldn't ignore the magnitude of the fraud. The 2002 bankruptcy of National Century Financial Enterprises harmed thousands of people, he said.

"I don't see them in this court," Marbley said. "I have no idea of the pain and devastation that has been wrought in their lives."

The case was often likened to the Enron and WorldCom scandals, and Marbley called it the worst fraud case involving a privately held U.S. corporation.

The judge also is considering a similar sentence-reduction request from co-defendant Donald Ayers. Because of a late filing Friday, U.S. District Court Judge Algenon Marbley rescheduled Ayers' new sentencing for Dec. 3.

Federal prosecutor Doug Squires urged Marbley to keep the original sentence. "This was a massive fraud with an extensive cover-up," he said.

In a long statement, Faulkenberry said all parties in the case, including investors, may have been "overly optimistic and aggressive" where the company's tactic of advancing money was concerned.

"Even in the final days, I honestly believed there was something worth saving," Faulkenberry told Marbley.

"And the magnitude of this, the losses, stagger me," he said. "I don't have enough words to tell you how sorry I am these investors lost money with this company. That wasn't supposed to happen."

National Century, based in Dublin in suburban Columbus, offered financing to small hospitals, nursing homes and other health care providers by buying their accounts receivable, usually for 80 or 90 cents on the dollar, so the providers wouldn't have to wait for insurance payments. National Century then collected the full amount of the payments.

Prosecutors said executives authorized millions in unsecured loans to the health care providers, then misled investors about the loans.

As the money owed to the company mounted, National Century declared bankruptcy in November 2002.

Ayers, of Fort Myers, Fla., was National Century's vice chairman, chief operating officer, director and owner.

Faulkenberry was National Century's director and vice president of securitizations and later executive vice president for client development.

Another company executive convicted at the same time, Rebecca Parrett, fled before sentencing and remains a fugitive.

Parrett's disappearance has been a sore point for Marbley, who allowed her to stay free after her conviction.

In an aside, he noted Friday that she "hasn't begun to serve her time. Yet."