An Error in Judgment

By Christopher Zoukis

Some time ago, I came across short filler-article in the business section of the San Francisco Chronicle.  The title of the article indicated that five executives had been found guilty and would soon be sentenced.  Aha!  White collar crime, I thought.  And since I find white collar crime to be simultaneously fascinating and ludicrous, I read the article.  I am fascinated by what drives people to embezzlement, how they commit the crime and how it’s usually arrogance that trips them up.

The article named the five executives who had been convicted.  Then it went on and compared the fall of their company, NCFE, to the fall of Enron.  That’s quite a comparison, since Enron was the epitome of corporate greed, fraudulent business practices and financial collapse.  The shockwaves from the disintegration of Enron are still being felt today.  If it was comparable to Enron, why hadn’t I heard about it?  I was intrigued, so I did some digging.  My excavations turned up the following interesting information.

There’s a small town in Ohio, named Dublin, after the famous city in Ireland.  Commonly depicted as ‘gentrified modern,’ which is a quaint way of describing gold courses, strip malls and multi-plex theaters, Dublin – the one in Ohio, not the other one – is headquarters for Wendy’s International.  Most people have heard of the hamburger chain.  What they haven’t heard of is another big firm in the same city.

National Century Financial Enterprises.  Started in 1991, this outfit soon became the nation’s largest purchaser of hospital, physician and other health care receivables.  The buying up of receivables works like this.  NCFE buys the accounts receivable of small hospitals, medical clinics and nursing homes.  Because of their small sizes, all of these health-care providers are having money problems.  They are desperate because they have no money with which to operate, because they have to wait for payment from insurance companies.

Read More


Book Proposal: Bad Company

By Christopher Zoukis

There’s a small town in Ohio.  The town’s name is Dublin, after the famous city in Ireland.  Commonly described as ‘rustic,’ which is a quaint way of saying ‘countrified’ and ‘unsophisticated,’ Dublin – the one in Ohio, not the other one – is headquarters for Wendy’s International.  Most people have heard of the hamburger chain.  What they haven’t heard of is another big firm in the same city.

National Century Financial Services.  Started in 1991, this outfit soon became the nation’s largest purchaser of hospital, physician and other health care receivables.  It works like this.  NCFE buys the accounts receivable of small hospitals, medical clinics and nursing homes.  Because of their small sizes, all of these health-care providers are having money problems.  They are desperate.

National Century steps in, giving them cash to cover their expenses so they can stay in business.  The health-care providers win because they don’t have to wait for insurance companies to pay them.  They get most of their money now, and don’t have to mess with the frustrating job of dealing with stingy insurance companies.

National Century wins because they keep a fee or percentage of any money they collect from the insurance companies.  Then NCFE puts all the accounts they bought into a kitty and sells them in the form of asset-backed securities to huge institutional investors like money market funds, or retirement funds. 

Read More