Prosecutors Call it a Bribe but NCFE’s Poulsen Insists Entrapment

At first, the former chief executive of National Century Financial Enterprises denied that he plotted with his friend Karl A. Demmler to try and persuade a key government witness in his upcoming trial to forget her dealings with the company.

Then, Lance K. Poulsen admitted that transcripts a federal prosecutor played back yesterday in U.S. District Court in Columbus were accurate, the Columbus Dispatch reported. Poulsen’s admission came during testimony at his trial on charges of witness tampering and obstruction of justice. He and Demmler are accused of trying to pay former NCFE vice president Sherry Gibson to change her testimony in Poulsen’s August 2007 trial on fraud charges related to the collapse of NCFE.

The Dublin, Ohio-based healthcare financing company when bankrupt in 2002, investors lost nearly $2 billion and at least 275 companies went out of business. Prosecutors convicted five NCFE executives earlier this month on fraud and money laundering charges ("Jury Decides Fate of Execs that Bought ARs from Struggling Hospitals," March 13). NCFE promised to invest in high quality accounts receivables but instead bought debt from struggling health care providers. NCFE never collected on the receivables and ended up owning, in whole or part, many of the healthcare providers it invested in, thus creating shortfalls in its account balances.

According to the Dispatch, Poulsen tried to discredit Gibson by painting a mixed picture of her contributions to NCFE. He referred to her as “one of the puppies who grew up with us,” and said she did “outstanding work.” But he also described her as difficult to work with and “abusive sexually and physically.”

Poulsen said he thought Gibson had been “shafted” when she pled guilty to fraud charges and served three years in prison. He said he wanted to help her get a new attorney to have her plea overturned. His attorneys advised him not to talk with Gibson, so he used Demmler as a middleman, Poulsen testified.

Gibson, having done her time, agreed to meet with Demmler, suspecting he might offer a bribe to influence her testimony. Gibson contacted the FBI, agreed to wear a wire to the meeting, and recorded Demmler suggesting he could get her some “moolah” to forget details about her dealings with NCFE. The FBI also conducted wiretaps of Poulsen and Demmler’s phone conversations.

Poulsen insisted in his testimony yesterday that he "wanted (Gibson) to tell the truth and set the record straight.” But prosecutors offered taped conversations where Poulsen agreed with Demmler that they should bribe Gibson with a $5,000 upfront payment and installments of $5,000.

Poulsen’s attorney’s argued that Gibson had entrapped Poulsen. According to the Dispatch, closing arguments are expected to begin today.