Medical Capital’s Records Reveal Massive, Wide-Spread Fraud
After reviewing Medical Capital’s financial records, the SEC receiver discovered that Medical Capital transferred approximately $1 billion in assets among different Medical Capital investment vehicles, namely Medical Provider Funding Corporation I, II, III, IV, V, and VI. The receiver further determined that the purpose of the transfers was to use newer Medical Capital investors’ funds to pay investment returns to earlier Medical Capital investors.This is a classic example of an illegal Ponzi scheme.
In addition, the Medical Capital receiver found that many of the medical receivables that allegedly were the assets behind the Medical Capital notes either did not even exist or were wildly overvalued. And many of the receivables that existed were very old, very risky, and unlikely to be collected. Medical Capital also took administrative fees in excess of $323 million, which means that $323 million of the $2.2 billion in investor funds raised by Medical Capital went straight into Medical Capital’s pockets. Finally, the receiver learned that Medical Capital spent lavishly on assets that had nothing to do with medical receivables, including $20 million on a Hollywood movie, $7 million on a mobile-phone application that consisted of a live video feed of a hamster in a cage, and an unspecified amount for a 118-foot yacht.
Dimond Kaplan & Rothstein, P.A.’s lawyers believe that brokerage firms should have reviewed Medical Capital’s financial records and should not have ignored warning signs about Medical Capital that were told to them by third-party due diligence companies. Our Los Angeles, New York City and Miami lawyers believe that any investor who purchased Medical Capital notes was victimized and should be able to recover their losses from the brokerage firms that sold the securities.
