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Home > Blog > Medical Capital Losses Devastate Duped Investors

Medical Capital Losses Devastate Duped Investors

Medical Capital losses tied to ill-fated deals involving private placements have investors on edge – and with good reason. Investors are owed upwards of $1 billion, according to the court-appointed receiver in charge of inventorying Medical Capital’s assets.

Medical Capital is accused of operating a Ponzi scheme. In July 2009, the company was charged with securities fraud by the Securities and Exchange Commission (SEC). Among the SEC’s allegations: Medical Capital Holdings lied to financial backers when it raised and allegedly misappropriated millions of dollars without revealing the fact that $1.2 billion in notes were outstanding and that $992.5 million in notes had entered into default or resulted in late payment of both principal and interest.

The SEC’s complaint went on to state that Medical Capital and its subsidiaries – Medical Capital Corp. and Medical Provider Funding Corp. VI – raised more than $2.2 billion through offerings of notes in Medical Provider Funding Corp. VI and earlier offerings made by five other wholly owned special-purpose corporations named Medical Provider Funding Corp. I, II, III, IV and V.

Now it turns out that many of the receivables never existed or were highly overvalued. For investors, that means they bought non-existent investments.

One of those investors is Dr. Douglas Armbrust of Greeley, Colorado. As reported in a March 28 story by The Greeley Tribune, Armbrust’s broker allegedly told him that he was getting a “slam-dunk investment” with the Medical Capital’s private placement offerings. Armburst, a retired radiologist, believed him, and he got his 94-year-old mother involved and then some friends.

“She was more cautious than I,” Armbrust said of his mother, who lives in Ohio. “She said, ‘Doug, you’re going to lose all your money on this.’ ”

According to the story, Armbrust estimates he has lost $750,000 in the investments.

Armburst is one of many Greeley, Colorado, residents who apparently lost money in Medical Capital, which were sold by at least two local investment firms, Elite Investments and CapWest Securities.

Thousands of other Medical Capital investors are facing a similar predicament. Maddox Hargett & Caruso P.C. is investigating a number of complaints from investors regarding Medical Capital Holdings and the broker/dealers that sold them the investments. If you have investment losses related to Medical Capital, please contact us. A member of our securities fraud team will evaluate your situation to determine if you have a viable claim for recovery.

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