Medical Capital Investors File Lawsuits and Win First Arbitration Award
Submitted by: Shareholders Foundation, Inc.
2010-12-28 00:06:32
Investors in Medical Capital Notes file lawsuit and win arbitration awards - Investors in Medical Capital Notes should contact the Shareholders Foundation
(OPENPRESS) December 28, 2010 -- Investors in Medical Capital Notes filed lawsuits against a number of brokerage firms on behalf of all individuals who were sold Medical Capital notes by National Securities Corp., Cullum & Burks Securities, Inc., Securities America, Inc., Capital Financial Services, Ameriprise Financial, Inc., and CapWest Securities, Inc. Another investor who filed a securities arbitration claim just recently obtained the first award in the amount of $400,000 in a Finra arbitration claim for the total amount of their claim against Peak Securities Corp.
Those who are investors in Medical Capital notes, still have certain options and are encouraged to contact the Shareholders Foundation, Inc. by email at mail(at)shareholdersfoundation.com or call at (858) 779-1554. Medical Capital was set up to purchase accounts receivables of medical providers and package them as private investments. Medical Capital raised $2.2 billion from 20,000 investors over a six-year period. Medical Capital was run by Sidney M. Field, who had owned and controlled automobile insurance companies until insurance regulators forced him from the industry, accusing him of engaging in sleazy and deceptive practices. Sidney M. Field has been also twice sued by the State of California charged among other things, which engaging in racketeering and fraud. Field paid a six-figure amount to settle the state's claims.
GFS, Sidney M. Field company, allegedly engaged in a deceptive practice known as "sliming," altering accident records and falsifying information so bad drivers could qualify for insurance, and also allegedly duped customers into paying interest rates of 21 percent to 40 percent when they financed their premiums.
On December 10, 2010, the court-appointed receiver for the Medical Capital Holdings, Inc, Medical Capital Corporation, Medical Provider Funding Corporation VI and their subsidiaries and affiliates filed his seventeenth status report. According to the report as of November 30, 2010, the court-appointed receiver in the Medical Capital case has collected cash in the amount of approximately $119million and disbursed funds in the amount of more than $20million, leaving funds on hand in the amount of almost $99million.
However, with investors owed principal of $1.079billion, less the $119 million collected and $20million disbursed, still leaves investor's approximately $960million short.
Other interesting details found in latest report include that Medical Capital requested and was paid administrative fees in excess of $323 million, no Medical Provider Funding Corporation ever generated enough profit to pay investors' principal and interest, Medical Capital's lending activities were unprofitable and resulted in losses in excess of $316million, Medical Capital transferred loans and other assets valued at just under $1 billion between eight money-raising Medical Provider Funding Corporations, which facilitated payments of earlier investors' principal from new investors' funds.
At least three lawsuits have been filed by investors in Medical Capital Notes. One lawsuit was filed against Cullum & Burks Securities, Inc., Securities America, Inc., Ameriprise Financial, Inc., and CapWest Securities, Inc on behalf of all persons or entities who purchased notes issued by Medical Provider Financial Corp. III, Medical Provider Financial Corp. IV, Medical Provider Funding Corp. V and/or Medical Provider Funding Corp. VI on or after September 18, 2006.
Another lawsuit was filed against National Securities Corporation on behalf of all persons or entities who purchased notes issued by Medical Provider Financial Corp. III, Medical Provider Financial Corp. IV, Medical Provider Funding Corp. V and/or Medical Provider Funding Corp. VI from National Securities Corporation on or after September 18, 2006.
The third lawsuit was filed against Capital Financial Services, Inc. on behalf of all persons or entities who purchased notes issued by Medical Provider Financial Corp. III, Medical Provider Financial Corp. IV, Medical Provider Funding Corp. V and/or Medical Provider Funding Corp. VI from Capital Financial Services on or after September 18, 2006.
According to complaint the plaintiff alleges that the private placement memoranda issued for the Medical Capital Notes misrepresented and omitted material facts related to terms of the offerings, the use of the investors' funds, the track record of various Medical Capital entities, the backgrounds and qualifications of the executives responsible for running the companies, and the overall risks of an investment in the Medical Capital Notes. In addition, it is alleged that the Medical Capital Notes should have been registered with the SEC, but were not. According to the Complaint, the defendants violated federal securities laws by offering and selling the unregistered Medical Capital Notes pursuant to materially false and misleading prospectuses.
On July 16, 2009, the U.S. Securities and Exchange Commission ("SEC") filed fraud charges against Medical Capital Holdings in connection with the sale of $77 million of private securities. Among the charges, the SEC accuses the medical receivables firm of lying to backers as it allegedly raised and misappropriated millions of dollars of investors' money while failing to disclose information about $1.2 billion in outstanding notes and $993 million in notes that had entered default. On the same day, FINRA issued a sweep notice to obtain information from several brokerage firms regarding the sale of Medical Capital securities.
But according to a law firm the lawsuits filed on behalf of all individuals who were sold Medical Capital notes will not consider the individual circumstances of each investment and thus the law firm said one of the benefits of filing an individual securities arbitration claim, as opposed to participating in a class action, is that the lawsuit could take years longer than an arbitration claim and generally class actions result in smaller recoveries for individual investors. The ongoing investigation by the law firm focuses on Medical Capital Notes arbitration claims, which for many investors, who experienced significant losses in Medical Capital Notes, through a FINRA panel will be a be more beneficial option and could potentially allow an investor to recover more, if not all, of their losses, and the process can sometimes resolve in less than a year. A study from 2003 concluded that investors who file a securities arbitration claim traditionally obtain an overall higher rate of recovery as opposed to participating in a class action lawsuit.
As recently as May 2010, an investor won a $400,000 securities arbitration claim for the total amount of their claim against Peak Securities Corp., claiming breach of contract, breach of fiduciary duty, negligence and fraud stemming from the purchase of notes offered by Medical Provider Funding Corp. VI.
Contact Info
Shareholders Foundation, Inc.
Phone: +1 (858) 779 - 1554
Website: http://www.ShareholdersFoundation.com
3111 Camino Del Rio North
Suite 423
San Diego, CA 92108
