Investors who suffered huge financial losses from Medical Capital Holdings are now taking legal action against Wells Fargo & Co. and The Bank of New York Mellon Corp., charging that the two banks, which served as trustees for five of Medical Capital’s special-purpose corporations, failed to protect MedCap investors. All five of special-purpose corporations are now in default after failing to make interest and principal payments on almost $1 billion in notes.
As reported Sept. 15 by Investment News, the new lawsuit claims executives with Medical Capital “used the trustee-controlled accounts as their personal piggy banks,” siphoning off fees of nearly $325 million to spend on such lavish perks as an 118-foot yacht.
Read the lawsuit here.
In July, the Securities and Exchange Commission (SEC) charged Medical Capital, which has raised $2.2 billion in private placements from investors since 2003, with fraud. Two of MedCap’s top executives, Sidney M. Field and Joseph Lampariello, also are being sued by the SEC. Later that same month, the Financial Industry Regulatory Authority (FINRA) began probing for information about sales of private placements from broker/dealers who sold Medical Capital offerings to investors.
Questions continue to abound about the quality of Medical Capital’s assets. The court-appointed receiver for Medical Capital recently revealed that some $543 million, or about 87% of all the accounts receivables controlled by Medical Capital, are “nonexistent.”
Tustin, California-based Medical Capital is a medical-receivables financing company that purchased account receivables from health care providers at a discount and then collected on the debts.
Seven investor plaintiffs in Butte and Santa Cruz counties are seeking class-action status on behalf of all MedCap investors. Other lawyers are launching or preparing legal action against securities brokers who sold MedCap funds.
January 28th, 2010 at 2:22 pm
I have invested $185,000 plus interest in Medical Capital and have received nothing but grief. I am very upset and distraught about this. Please send me more information this suit and others. Thanks,
Marian