Corporate & Securities Law
: FinancialCounselFollowing SEC's Halting Of $77 Million Offering Fraud By Medical Capital, SNSFE Launches Investigation Of Brokerage Firms That Introduced Investors To Medical Capital
By James Eccleston (all)
SNSFE lawyers are investigating whether brokers inappropriately referred investors to Medical Capital Corporation following what it calls a $77 million offering fraud. On August 3, the Securities and Exchange Commission obtained an emergency court order halting the $77 million offering fraud perpetrated by defendants Medical Capital Holdings, Medical Capital Corporation, Medical Provider Funding Corporation VI, Sidney Field, and Joseph Lampariello. The SEC's complaint, filed in federal court in Orange County, alleges that the defendants defrauded 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 on principal and/or interest.
The SEC's complaint alleges that since 2003, these defendants have raised over $2.2 billion through offerings of notes in various offerings. As alleged in the SEC's complaint, the defendants defrauded investors by misappropriating approximately $18.5 million of the $76.9 million raised through the sale of MP VI notes to pay administrative fees to another entity. The complaint alleges that these fee payments were contrary to representations made in the original offering documents which stated that administrative fees would not be paid out of proceeds from the sale of notes.
In addition, the SEC's complaint alleges that defendants defrauded investors by misrepresenting in the offering documents that none of the affiliated entities had defaulted on or been late in making payments of principal and/or interest to their respective investors. In fact, two of the entities did begin defaulting on interest and/or principal payments in the same month that the offering began to be sold to investors. And recently, two other entities have defaulted or been late in making interest payments.
Brokerage firms have a duty to investigate investments before they recommend them to investors. We are investigating whether brokerage firms breached this duty. Investors who would like to contact us to provide information and/or consider pursuing an action against their brokerage firms, please contact attorneys at SNSFE.
Source: SEC Litigation Release 21165
Full post as published by FinancialCounsel on August 21, 2009 (boomark / email).
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