The Banksters

0x3…6f4

ERC721

This case concerns negligent conduct by Bank One, N.A. (“Bank One”) and JPMorgan Chase Bank, N.A. (“JPMorgan Chase”) as asset-backed indenture trustees (the “indenture trustees” or “asset-backed indenture trustees”) for certain special-purpose subsidiaries (“program” or “programs”) of National Century Financial Enterprises, Inc. (“NCFE”), formerly a Dublin, Ohio healthcare financing company, during the approximate period 1999-2002 (the “relevant period”). 6. During the relevant period, the NCFE programs offered and sold nearly $3.5 billion in asset-backed notes to qualified institutional buyers. NCFE and the programs collapsed in November 2002 when investors and others discovered that NCFE had made large improper transfers among program accounts and caused collateral shortfalls. The collapse caused investor losses of approximately $2.6 billion. 7. The NCFE programs purchased medical account receivables from health-care providers and issued asset-backed notes that securitized those receivables. In private placement memoranda (“PPMs”) through which the NCFE programs offered the notes, NCFE represented to investors that NCFE would use the proceeds from the note offerings primarily for the purchase of healthcare account receivables and that the programs would maintain specified balances (“Specified Balances”) for two separate reserve accounts and an Equity Account (“Reserve Accounts”) that would be held by the indenture trustees. While NCFE used some investor funds to purchase healthcare account receivables, NCFE used a substantial portion of the private 2 placement proceeds and Reserve Account funds to make either unsecured loans or loans secured by collateral other than healthcare account receivables, contrary to NCFE’s representations to investors and contrary to the requirements of the master trust indentures (“indentures”) that governed NCFE’s note offerings. 8. A principal feature of the scheme that allowed NCFE to hide investor losses was the transfer of huge amounts of Reserve Account funds on or around the first and last business day of every month (“Month-End Transfers”). The indentures required that the programs maintain Specified Balances in the Reserve Accounts totaling approximately 17% of the value of the outstanding notes issued by the program. However, even though the indenture trustees for the NCFE programs had the ability to look at the balances in the Reserve Accounts at any time, the indentures only required the programs to report on the balances in Reserve Accounts as of one day of the month, called the “Monthly Payment Date.” The largest program for which JPMorgan Chase served as asset-backed indenture trustee was reported on by NCFE and tested by JPMorgan Chase as of the last business day of the month. The largest program for which Bank One served as asset-backed indenture trustee was reported on by NCFE and tested by Bank One as of the first business day of the month. As a result of this structure, NCFE was able to kite large amounts of funds back and forth between the programs to make it appear that the programs were maintaining the Specified Balances. In fact, NCFE was consistently and severely depleting the balances in these Reserve Accounts without telling investors. 9. At the instruction of NCFE, Bank One and JPMorgan Chase made Reserve Account transfers that contradicted NCFE’s representations to investors about how the Reserve Accounts would be used and contravened the requirements of the indentures regarding the Reserve Accounts. Among other things, pursuant to NCFE’s instructions, Bank One and JPMorgan Chase made the Month-End Transfers that helped NCFE mask substantial and growing Reserve Account shortfalls. 10. The Month-End Transfers were large, recurring, and contrary to the requirements of the indentures. In participating in the Month-End Transfers that were contrary to the requirements of the indentures, Bank One and JPMorgan Chase were negligent and should have known that NCFE was misusing the Month-End Transfers.

Name

1153

Owner

0xD4D2B38106E40f2693B617314Ba5f406985864eb

ID#1153

Rarity

LO:56%