Tom Hargett and Mark Maddox both mistakenly mentioned J.P. Turner in recent blog postings concerning Medical Capital Holdings.  We have learned that these posts were inaccurate, and we apologize to J.P. Turner and retract the statements made about the firm.

Federal regulators are suing Charles C. Slowey, Jr. and the companies he controls – Endeavor Partners, LLC and Endeavor Capital Management Group, LLC – along with Advanced Planning Securities (APS), Oldham Harris and brokers Edward Puttick, Gregory Oldham and Glenn Harris for allegedly swindling retirees and senior citizens out of nearly $12 million. The Securities and Exchange Commission’s complaint, filed Oct. 22, alleges that the individuals gained investors’ trust via free lunch seminars and then convinced them to invest in four questionable real estate securities known as the Endeavor Funds.

According to the SEC’s complaint, investors have lost most of the money they invested in the funds as a result of “false statements and omissions made by Slowey, misappropriation of investor funds by Slowey, large fees and commissions paid to Slowey, Advanced Planning Securities, Oldham Harris, and the failure of the highly risky investments made by the Endeavor Funds.”

The SEC also alleges that Advanced Planning Securities failed to conduct sufficient due diligence into the private placement securities its agents were selling and looked the other way regarding numerous red flags concerning Slowey and the Endeavor funds.

Information in the SEC’s complaint alleges that investors were promised a return of more than 50% on the sale of some properties in which they were investing. In addition, the SEC accuses Slowey of misappropriating more than $1 million of investor funds by charging excessive management fees and taking out an interest-free personal loan to purchase his own home.

Many of the investors to whom the investments were sold had limited financial means, according to the SEC, and few had previously invested in private placement securities or securities based on distressed or subprime mortgages.

When the funds began to experience obvious financial problems, the SEC alleges that Slowey continued to make false statements to investors. For example, the SEC says he specifically told one senior investor in Florida that his investment was safe, when in fact the funds had little money left at that time. Slowey told another senior investor that the funds would recover by the following year, even though he had no basis for making the prediction.

On other occasions, the SEC says Slowey asked investors to reinvest their maturing interest in the Endeavor Funds even though he knew that the funds had lost substantial sums of money and owned only a handful of properties that were worth far less than the $10 million initially deposited by investors.

The SEC’s complaint can be viewed here.

Our lawyers are actively advising individual and institutional investors in evaluating their legal options when confronted Endeavor investments. Leave a message below or via the Contact Us form. We want to counsel you on your legal options.

Ralph Cioffi and Matthew Tannin, the two former Bear Stearns executives who are on trial for allegedly lying to investors about the fiscal health of two hedge funds, will soon find out their fates. On Nov. 9, the month-long trial comes to a close, and a jury will begin deliberations on the charges of securities fraud, wire fraud, conspiracy and insider trading brought by the Office of the United States Attorney for the Eastern District of New York against the two men.

The charges against Cioffi and Tannin are tied to the management – and eventual implosion – of two Bear Stearns hedge funds known as the Bear Stearns High Grade Structured Credit Strategies Fund and the Bear Stearns High Grade Structured Credit Strategies Enhanced Leverage Fund.  Prosecutors contend Cioffi and Tannin told “black and white lies” to investors about the financial state of the two funds despite the fact they were seeing some of the worst market conditions on record.

Over the course of the past few days, prosecutors and defense counsel have presented their closing statements to the jury – and the differences in their approach are notable.

Assistant United States Attorney Ilene Jaroslaw provided the jury with a methodical chapter and verse of the mountain of lies and web of deception that resulted in more than $1.5 billion of investors’ capital being wiped out.  Meanwhile, counsel for Cioffi and Tannin responded in a way that can best be summarized as the “you should believe us and trust our interpretation of the facts because we’re Wall Street” defense.

Whether such a defense will resonate with members of the jury remains to be seen – as does the obvious question as to why Cioffi and Tannin chose not to testify in their own defense if, in fact, they had a plausible explanation for the explosive emails that are at the core of the government’s case.

We may never know that answer. But if we’ve learned one thing from the recent crisis on Wall Street, it’s this: When Wall Street tells us – either directly or through its hired guns – that we can and should trust it about anything, it’s a sure sign we need to button the pockets on the back of our pants and secure our wallets.  And fast.

Our affiliation of lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted with subprime and other mortgage-related investment losses.

Individual arbitration claims filed with the Financial Industry Regulatory Authority (FINRA) totaled 5,545 through Sept. 30 – up 60% from the same period last year. Linda Fienberg, who serves as president of dispute resolution for FINRA, told Barron’s last month that she expects to see 7,500 cases filed by the end of the year.

The record of cases filed was set in 2003, with 8,945 cases filed.

In other investor news, the proposed Investor Protection Act of 2009 is up for a vote on Nov. 4. The bill, among other things, would give the Securities and Exchange Commission (SEC) the ability to ban mandatory arbitration.

Separately, FINRA has expanded a pilot program that allows investors who are filing eligible claims the opportunity to select an arbitration panel composed of three public arbitrators instead of two public and one non-public.

In its second year, the program will expand from 11 to 14 broker/dealers, and the number of eligible cases will increase from 276 to 411, a rise of nearly 50%. Only the investor filing the claim can elect to participate in the program and the firms cannot choose which cases are eligible.

LPL Financial Corp. (LPL) will pay nearly $1.3 million in restitution to Montana investors plus a fine of $150,000 to the State of Montana under a settlement reached with the Montana Commissioner of Securities and Insurance. The restitution and fine are tied to alleged illegal activity on the part of a former LPL registered representative, Donald Chouinard, who is accused of operating a Ponzi scheme and the alleged failure of LPL to supervise him.

The settlement with LPL did not resolve any claims against Chouinard individually or his companies, which the Montana Department of Securities continues to pursue.

In September, the state of Montana issued a Temporary Cease and Desist Order against Chouinard and filed a Notice of Proposed Agency Action against him and his companies, DC Wealth Management and DC Associates. The action alleges that Chouinard and his companies committed securities fraud and conducted a Ponzi scheme involving Montana and Idaho investors who invested in what they thought was a “day-trading” program. In reality, however, the investors received proceeds taken from money contributed by newer investors.

Specifically, the Department’s action alleges Chouinard convinced one investor to obtain a $100,000 loan and invest with him because he could guarantee a high return in 30 days. Instead of investing the $100,000 in the “day-trading” program, Chouinard used $50,000 to pay off a previous investor, deposited $25,000 into his personal joint-checking account, and gave the other $25,000 to his attorney.

The Department also alleges that Chouinard traded investors’ accounts without their authorization, forged investors’ signatures to authorize certain trades, and failed to provide investors with statements or tax documents for their “day-trading” investments. Chouinard routinely informed the investors about the values of their investments orally or via email. The investors allege Chouinard misrepresented the values of their investments – in one case by as much as 10,000%.

The excessive trades resulted in thousands of dollars in commissions for Chouinard.

If you have suffered losses in LPL Financial and wish to discuss your situation, please leaving a message in the Comment Box below or via the Contact Us form. We want to counsel you on your legal options.

Medical Capital Holdings is mired in legal issues these days, facing arbitration claims and a recently filed class action lawsuit over sales of Medical Capital Notes. In July, the Securities and Exchange Commission (SEC) entered the picture, as well, announcing fraud charges against Medical Capital Holdings and related Medical Capital entities. In its complaint, the SEC accuses Medical Capital Holdings of defrauding investors, misappropriating millions of dollars of investor funds and failing to disclose information about soured investments.

According to the SEC, Medical Capital 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 (SPCs) named Medical Provider Funding Corp. I, II, III, IV and V. Today, all five SPCs are in default to investors after failing to make interest and principal payments.

Investors got another dose of bad news following a recent report by Thomas Seaman, the receiver assigned to inventory Medical Capital Holdings’ assets. In his report, Seaman wrote that Medical Capital had placed investors’ cash into investments completely unrelated to the medical receivables business. When those investments soured, Medical Capital defaulted.

Among the investments:

• An unreleased movie, The Perfect Game. Medical Capital poured at least $20 million into the project.
• Vivavision Inc., a maker of cell phone applications. Its sole product, the receiver wrote, “was a live video feed of a hamster in a cage.” Medical Capital spent $7 million on this “investment.”
• A yacht named “The Homestretch.” The receiver said a Medical Capital subsidiary occasionally employed a captain and crew for sailing excursions aboard the yacht, primarily for Medical Capital’s CEO Sidney M. Field and President Joseph Lampariello.

Medical Capital also had serious problems in its core business, according to the receiver.  On at least 301 occasions, investor funds run by Medical Capital sold some of their receivables to other Medical Capital funds – sometimes years after the due date. This information – which was never revealed to investors – is significant because receivables lose value with age.

Moreover, an additional $543 million – 87% of all the accounts receivable on MedCap’s books – are “non-existent,” according to the receiver’s report.

If you have suffered losses in Medical Capital Notes and wish to discuss filing an individual arbitration claim with the Financial Industry Regulatory Authority (FINRA) or have questions about your Medical Capital investments, please leaving a message in the Comment Box below or via the Contact Us form. We want to counsel you on your legal options.

Arbitration claims involving Medical Capital Holdings are expected to escalate in the coming months, as investors take certain broker/dealers to task over allegations of misrepresentation and omission of material facts in connection to sales of Medical Capital Notes.

On Sept. 18, 2009, a class action lawsuit – Case No. 09-CV-1084 – was filed in the United States District Court for the Central District of California on behalf of investors who purchased securities issued by Medical Provider Financial Corp. III, Medical Provider Financial Corp. IV, Medical Provider Funding Corp. V and/or Medical Provider Funding Corp. VI. In the lawsuit, broker/dealer Cullum & Burks Securities, as well as other broker/dealers, is named as a defendant. Among the allegations cited in the complaint are violations of Sections 12(a)(1) and 12(a)(2) of the Securities Act of 1933.

Specifically, the defendants are accused of failing to exert due diligence and properly investigate certain securities issued by Medical Capital. In July, the Securities and Exchange Commission (SEC) filed fraud charges against Medical Capital Holdings and related Medical Capital entities. In the SEC’s complaint, Medical Capital is accused of defrauding investors by misappropriating about $18.5 million of investor funds and by misrepresenting to investors that no prior offerings had defaulted on or been late in making payments to investors of principal and/or interest.

According to the SEC, Medical Capital 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 (SPCs) named Medical Provider Funding Corp. I, II, III, IV and V. Today, all five SPCs are in default to investors after failing to make interest and principal payments.

The brokerage firms that marketed and sold Medical Capital Notes are alleged to have made untrue statements about the investments, including their risks. In addition, many of the broker/dealers failed to make “reasonable and diligent” inquiries regarding information about Medical Capital and its offerings. As it turns out, the information was seriously flawed. And investors are now paying dearly for this breach of fiduciary duty.

If you have suffered losses in Medical Capital Notes and wish to discuss filing an individual arbitration claim with the Financial Industry Regulatory Authority (FINRA) or have questions about your Medical Capital investments, please contact us by leaving a message in the Comment Box below or on the Contact Us form.

Securities America, a subsidiary of Ameriprise Financial, is becoming the target of more investor claims filed with the Financial Industry Regulatory Authority (FINRA) over allegations it falsely misrepresented private placement offerings associated with Medical Capital Holdings – the same company that the Securities and Exchange Commission (SEC) has charged in a $2 billion Ponzi scheme.

In a federal lawsuit filed in Omaha, Nebraska, a Sarasota woman alleges that Securities America sold hundreds of millions of dollars worth of securities in the form of notes for Medical Capital Holdings, a medical receivables financing company based in Tustin, California.

In August, Medical Capital was sued by the SEC for investor fraud. Among the charges, the SEC alleges that Med Cap and various subsidiaries raised more than $2.2 billion since 2003 through the offering of notes. As of August 2008, five of the “Special Purpose Corporations” were in default or late in paying nearly $1 billion in principal and interest to investors.

The lawsuit contends Securities America violated Nebraska securities law and was negligent for failing to investigate accounting irregularities at Medical Capital. It seeks class action status to represent investors who bought the Medical Capital notes from Nov. 21, 2007, through July 31, 2008.

“Securities America did not care; instead, in favor of millions in commissions and fees, it turned a blind eye to the truth, which is that the medical receivables company’s accounting records and practices strongly pointed towards the existence of a Ponzi scheme,” the lawsuit says.

If Securities America or another brokerage has sold you Medical Capital notes, please contact us by leaving a message in the Comment Box below or on the Contact Usform.

Medical Capital Holdings, based in Tustin, California, is a medical receivables financing company that purchases accounts receivable from healthcare providers at a discount and then collects the debts owed on the accounts. Since 2003, the company has raised more than $2 billion from investors via offerings of notes issued by five Special Purpose Corporations (SPCs). Today, all five SPCs are in default to investors after failing to make interest and principal payments on almost $1 billion worth of Med Cap Notes.

In July, the Securities and Exchange Commission (SEC) filed securities fraud charges against Medical Capital. One month later, on Aug. 3, Thomas Seaman was appointed as the permanent receiver of Medical Capital. On Oct. 9, in a third report regarding Medical Capital’s financial status, Seaman concluded that of the $625 million of medical accounts receivable on the SPCs’ collective books, $80 million is verifiable. The remaining accounts – totaling $542 million – no longer exist.

For investors holding Medical Capital Notes, the news undoubtedly translates into substantial financial losses.

A class action lawsuit is now pending against Medical Capital. Filed Sept. 11 on behalf of investors in the five Special Purpose Corporations, the lawsuit alleges that the trustees of the SPCs repeatedly breached their fiduciary duty to investors. In addition, the class action states that while the trustees were paid “substantial fees” to represent the interests of MCH investors, they failed to uncover investments in areas other than accounts receivable from medical providers. Among other things, the lawsuit alleges that investments were made in a 118-foot yacht, mobile phones and movie ventures.

Medical Capital investors should consider carefully whether they wish to remain in the class action or file an individual securities arbitration claim with the Financial Industry Regulatory Authority (FINRA) to recover their investment losses. Among the facts to consider:

• Investors with significant losses are unlikely ever to be made
  whole in a class action.
• Class actions can sometimes take years before a resolution is reached. The FINRA arbitration process typically is completed in a much shorter period of time, often 15 months.
• Class action members are bound by the results of the class action decision.
• Many investors may have viable claims based on the
  unsuitability of their investments. Because a suitability claim is dependent on an
  individual’s circumstances, this claim cannot be prosecuted on a
  classwide basis.

If you are a Medical Capital investor and wish to discuss filing an individual arbitration claim with FINRA or have questions about your investment losses in Medical Capital notes, please contact us by leaving a message in the Comment Box below or via the Contact Us form.

Yield Plus and the words, Charles Schwab lawsuit, are becoming one and the same these days. Hundreds of investors have filed arbitration claims with the Financial Industry Regulatory Authority (FINRA) over charges the San Francisco brokerage made false and misleading statements about the Yield Plus Funds and the extent to which investments were made in high-risk, speculative mortgage-backed securities.

Last week, Charles Schwab announced it had received a Wells notice from the Securities and Exchange Commission (SEC), in which the regulator outlined plans to recommend civil enforcement charges against the company over two Schwab bond funds.

Adding to the Schwab’s legal troubles: In August, a federal court in San Francisco certified a class action lawsuit on behalf of about 250,000 Yield Plus shareholders.

The Schwab Yield Plus Funds – the Schwab Yield Plus Funds Investor Shares (SWYSX) and the Schwab Yield Plus Funds Select Shares (SWYPX) – were initially offered as an safe, conservative investment alternative to money market accounts. Contrary to those representations, however, Schwab managers invested more than 45% of the funds’ assets in the mortgage industry. When the housing market crashed, so, too, did the value of the funds.

In May 2007, Yield Plus had more than $13 billion in assets. By March 2008, it was down to $2.5 billion. Today it has about $210 million.

Our lawyers are actively advising individual and institutional investors concerning the Schwab Yield Plus Funds. We have created an alliance with other experienced securities arbitration lawyers. Learn more about your  Schwab Yield Plus Funds. Tell us about your Schwab Yield Plus investments by leaving a message in the comment box, or the Contact Us page. We will counsel you on your options.