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Home > Blog > Did Securities America Advisers Ignore Warnings About Medical Capital Note Sales?

Did Securities America Advisers Ignore Warnings About Medical Capital Note Sales?

A recently filed lawsuit claims advisers with Securities America chose to ignore obvious red flags in an effort to sell hundreds of millions of dollars’ worth of securities notes in Medical Capital Holdings, a California medical receivables company that now faces securities fraud charges from the Securities and Exchange Commission (SEC).

According to the lawsuit filed last week on behalf of Ilene Grossbard, an investor in Florida who invested $112,000 in a Medical Capital deal, Securities America sold offerings of Medical Capital as late as October 2008. Several months earlier, however, W. Thomas Cross, an executive with Securities America, wrote to a Medical Capital official expressing fear of “a panicked run on the bank” about Medical Capital. Those fears did not stop Securities America from selling the Medical Capital notes.

“Securities America apparently was not all that alarmed because less than a month later, in August 2008, [the firm] signed on to distribute, promote, offer and sell still more Med Cap securities, this time on behalf of the sixth and final offering by Med Cap, Medical Provider Funding Corp. VI,” the lawsuit says.

As reported Oct. 5 by Investment News, in addition to selling the sixth deal through October, Securities America continued selling Medical Capital’s previous offering, Medical Provider Financial Corp. V. The firm also allegedly neglected to warn investors of the potential dangers in the Medical Capital notes.

IIn July, the SEC charged Medical Capital Holdings with fraud in connection to the sale of $77 million worth of private securities. Since then, a court-appointed receiver, Thomas Seaman, has conducted an inventory of MedCap’s assets and reveals that of $80 million in verified accounts receivable, $74 million is more than 180 days old. An additional $543 million – 87% of all the accounts receivable on MedCap’s books – are “non-existent.”

Grossbard’s lawsuit is seeking class action status.

The lawsuit also names Securities America’s parent company, Ameriprise Financial, as a defendant.

Tell us about your situation with Securities America by leaving a message in the Comment Box below or via  the Contact Us form. We want to consult with you about possible legal options.

2 thoughts on “Did Securities America Advisers Ignore Warnings About Medical Capital Note Sales?”

  1. James Says:

    I purchased with Medical Capital through Securities America. It was presented as an investment where Med Cap would buy medical accounts receivable from doctors and hospitals at a discount, and then collecto on them at a profit. Medical Capital seems to have done other things with my investment dollars, including buying hospitals, loaning money and buying a large yacht in So. California.

    I got cheated out of my 50K.

    Do you have a class action suit against Securities America that I can become part of?


  2. Dave Says:

    I lost $200,000 in Medical Capital, via my broker with Securities America. I am interested in suing them for fraud.

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