Pinstripes to Prison Stripes

A fraud case that prosecutors described as "the Enron of health-care financing" has ended with a federal jury in Ohio convicting five former executives of conspiracy, fraud and money laundering.

The five — Donald H. Ayers, 71, of Fort Meyers, Florida; Rebecca S. Parrett, 59, of Carefree, Arizona; Randolph H. Speer, 58, of Peachtree City, Georgia; Roger S. Faulkenberry, 46, of Dublin, Ohio; and James E. Dierker, 40, of Powell, Ohio — were found guilty of deceiving investors and rating agencies about the financial health of their company, National Century Financial Enterprises.

N.C.F.E. was the nation's largest health-care financing company before its 2002 bankruptcy.

Prosecutors said that between May 1998 and May 2001, the company sold $4.4 billion worth of notes to investors, pledging to use the capital to buy accounts receivable from hospitals and other healthcare providers.

Instead, the authorities said, N.C.F.E. executives advanced money to healthcare providers — often companies owned by the defendants themselves — without requiring the accounts receivable as collateral. The executives then lied to investors and rating agencies in order to cover up their actions.

By the time the house of cards collapsed in bankruptcy court in 2002, the company's notes were worth about six cents on the dollar, prosecutors said.

Ayers, a vice chairman and the chief operating officer, faces 55 years in prison and $2.25 million in fines for his role in the scheme. Parrett, another vice chairman and the treasurer, faces 75 years in prison and $2.5 million in fines. Speer, chief financial officer, could be sentenced to 140 years in prison and fined $4.25 million.

Faulkenberry, whom the authorities described as a senior executive responsible for raising money from investors, could be sent to prison for 85 years and fined $2.5 million. Dierker, the associate director of marketing and vice president of client development, faces 65 years in prison and $1.75 million in fines.

by Mark Stein