Federal prosecutors have opened a criminal investigation into the top executives of Medical Capital Holdings. The two men, CEO Sidney M. Field and President Joseph J. “Joey” Lampariello, revealed the investigation last week when their attorneys filed an emergency request to use frozen assets of Medical Capital to pay their legal bills. The request was denied.
As reported March 22 by the Orange County Register, Field and Lampariello asked for $75,000 per month each for legal fees. According to their request, the money would be used to defend themselves against a summer 2009 lawsuit filed by the Securities and Exchange Commission (SEC), as well as for “specialized criminal defense counsel necessary to defend them in a parallel criminal investigation initiated by the United States Department of Justice.”
The SEC sued both Field and Lampariello in August 2009 for securities fraud and failing to disclose $18.5 million in administrative fees to investors. A month later, the court appointed Thomas A. Seaman to oversee Medical Capital’s finances.
Medical Capital is a Tustin, California, lender that loaned money to hospitals and health-care facilities, securing the money it loaned via unpaid bills or receivables. Investments in the receivables were then sold to investors through private placements known as Medical Capital Notes.
It’s since been learned that Medical Capital had more than $540 million in fake receivables on its books and lost $316 million on loans. The court-appointed receiver in the case later revealed that Medical Capital had collected $323 million in fees for managing its unprofitable loans.
Maddox Hargett & Caruso P.C. continues to file arbitration claims with the Financial Industry Regulatory Authority (FINRA) on behalf of investors who suffered investment losses in Medical Capital. If you purchased Medical Capital Notes from a broker/dealer and wish to discuss your potential rights for recovery, contact us today.