FBI raids health-care lender office

FBI agents Saturday morning raided the Dublin, Ohio, offices of National Century Financial Enterprises Inc., whose financial implosion has threatened patient care and health industry jobs around the country and billions of dollars in bondholders’ investments.

The arrival of federal agents with search warrants is the latest blow to the company, one of the largest funders of last resort to struggling health-care providers. Two customers, a provider of home health care and one that supplies emergency-room doctors, have filed for bankruptcy.

The FBI agents took away computer equipment and scores of books and records. James Turgal, chief counsel for the FBI’s Cincinnati office, which covers Dublin, said the affidavit supporting the search warrant was filed under seal so the FBI could “continue on with an investigation without certain facts getting out to potential suspects.”

The raid came as accountants hired by bondholders struggled through a morass of financial transactions in a search for hundreds of millions of dollars in unaccounted funds. “They walked in and took all the records,” one person close to the company said of the FBI search. “They’re in control now.” Company officials declined to comment except to say National Century would cooperate fully with the FBI search and investigation.

Controlling owner and founder Lance Poulsen resigned as chief executive last week after a credit agency withdrew ratings on some of the company’s bonds. National Century said it is considering bankruptcy as well.

National Century long touted itself in its literature as the “genius” of its business, a leader in the giant market for bonds backed by the assets of borrowers. By lending money to health-care companies in exchange for control of their receipts from private and government insurers, Poulsen’s creation claimed dazzling returns. He said its net income was $40 million last year on revenue of more than $300 million.

Hundreds of businesses came to rely on regular cash infusions from National Century – paying large fees and interest, and sometimes giving up control of their stock – to remain afloat. The company then sold bonds linked to those receivables and used the influx of cash, more than $15 billion over the years, to make more deals.

The precise reasons for National Century’s swift tumble remain a mystery, even to the outside accountants examining its books. One person familiar with that review said the accountants have discovered a maze of transactions that has been nearly impenetrable so far.

Interviews and the review of hundreds of business records and court documents indicate that Poulsen and his partners have for years engaged in financial deals that have been challenged as questionable. And they have used an array of partnerships to invest personally in some of the health-care providers their company finances.