Category Archives: Securities America

Securities America and financial adviser Bradley Hofhines have been sued in a potential class action tied to Provident Royalties and oil-and-gas private placements that the Securities and Exchange Commission (SEC) alleged in July were fraudulent. Securities America has been named in at least two other related potential class actions; however, this may be the first time an adviser and his individual practice are cited.

As reported Dec. 1 by Investment News, a lawsuit filed Nov. 25 in an Idaho federal court alleges that Bradley K. Hofhines and his firm, Summit Retirement Advisors LLC, failed to disclose to clients that returns from investments in Provident Royalties LLC securities did not come from revenue generated by actual investments in oil-and-gas properties.

“Rather, investor funds were commingled, and funds raised from later offerings were used to pay so called dividends or “returns of capital” to earlier Provident investors,” the article says.

Hofhines is affiliated with Securities America, an independent broker/dealer subsidiary of Ameriprise Financial. Securities America and Ameriprise are named in the latest lawsuit.

The complaint alleges that the defendants violated federal securities laws and the Idaho Uniform Securities Act, as well as provided investors with materially untrue and misleading offering materials regarding Provident Securities.

In July, the SEC charged Dallas-based Provident of allegedly committing fraud in connection to the sale of $485 million of preferred stock and limited partnership offerings in oil and gas deals. Since then, many investors have begun legal action to get their money back by filing individual arbitration claims with the Financial Industry Regulatory Authority (FINRA).

If you have suffered investment losses and wish to discuss filing an individual arbitration claim with FINRA or have questions about these investments, please contact us.

Various independent broker-dealers that sold Medical Capital securities to investors are the subject of ongoing investigations, as well as class-action lawsuits and arbitration claims filed with the Financial Industry Regulatory Authority (FINRA). The cases themselves focus on the sales practices and due diligence of the broker/dealers that marketed and sold private securities known as Medical Capital Notes.

On July 16, 2009, the Securities and Exchange Commission (SEC) filed fraud charges against Medical Capital Holdings in connection to the sale of $77 million of private securities. On that same day, FINRA issued a “sweep notice” to obtain information from an undisclosed number of broker/dealers about sales of Medical Capital securities.

The SEC’s complaint alleges that Medical Capital and others defrauded investors by misappropriating about $18.5 million of investor funds and misrepresenting to investors that no prior offerings had defaulted or were late in making payments of principal and/or interest.

Based in Tustin, California, Medical Capital purchases accounts receivables of medical providers and then packages them as private investments. Over a six-year period, the firm raised approximately $2.2 billion from 20,000 investors through offerings of notes in Medical Provider Funding Corp. VI and earlier offerings made by five other wholly owned special-purpose corporations (SPCs). Those SPCs include Medical Provider Funding Corp. I, II, III, IV and V.

Today, all five SPCs are in default after failing to make interest and principal payments to investors.

On Sept. 18, 2009, a class action lawsuit – Case No: SACV 09-1084 – was filed in 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 complaint, broker/dealers Cullum & Burks Securities, Securities America, Ameriprise Financial and CapWest Securities are named as defendants. Among the allegations cited, the firms are accused of failing to properly investigate the securities and the track record of Medical Capital and its related entities

Currently, Maddox Hargett & Caruso P.C. is investigating potential claims to recover investor losses against various broker/dealers that sold Medical Capital securities. If you 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.

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.

The list of brokerage firms facing arbitration claims from investors who suffered losses from investments in

The basis of the lawsuits against concerns breach of fiduciary duty, with claimants alleging that brokerages like Based in Tustin, California, Medical Capital purchases accounts receivables of medical providers and then packages them as private investments. Over a six-year period, the firm raised $2.2 billion from 20,000 investors.

In addition, the SEC says Medical Capital made a number of multimillion-dollar investments that had nothing to do with its core business of medical receivables. Among those investments:

• $20 million for “The Perfect Game,” a film about a group of Mexican youths who became the first non-U.S. team to win the Little League World Series in 1957;

• $7 million in a company that marketed a mobile phone application, which consisted of a live video feed of a hamster in a cage; and

• An unspecified amount for a 118-foot yacht called The Home Stretch.

If you have questions about your Medical Capital investments, please contact us. If Securities America, QA3 Financial Corp. or another brokerage has sold you Medical Capital notes, tell us your story by leaving a message in the Comment Box below or on the Contact Us form. We want to advise you on your legal options.

Securities America, a subsidiary of Ameriprise Financial, has been sued by Ilene Grossbard of Sarasota, Florida, over allegations that the Omaha-based brokerage failed to warn her and other investors about what she says was a multibillion-dollar Ponzi scheme involving sales of notes in Medical Capital Holdings. According to the complaint, Grossbard bought two promissory notes from Securities America last year for $112,000. The notes were issued by Medical Provider Funding Corp. V, a subsidiary of Tustin, Calif.-based Medical Capital Holdings – the same company that the Securities and Exchange Commission (SEC) charged with securities fraud in July.

Since December 2003, Medical Capital Holdings has raised more than $2 billion from selling the notes to some 20,000 investors. The notes included those issued by Medical Provider Funding Corp. V, which as of March 2009 had more than $400 million in outstanding notes to 4,270 investors.

Grossbard’s lawsuit against Securities America alleges that it failed to detect, probe or make investors aware of the numerous red flags that pointed to the alleged Ponzi scheme at Medical Capital Holdings.

Grossbard is seeking class-action status in her lawsuit.

On Sept. 14, 2006, a National Association of Securities Dealers arbitration panel (now the Financial Industry Regulatory Authority) fined Securities America $2.5 million for failing to adequately supervise one of its brokers, David L. McFadden, who had been charged with securities fraud for allegedly luring long-term employees of Exxon Corporation into retiring prematurely with unreasonable and exaggerated promises of high returns from reinvested funds from their company retirement plans.

In addition to the fines, the arbitration panel ordered Securities America to pay $13.8 million in restitution to 32 former Exxon employees.

Tell us about your situation with Securities America by leaving a message in the Comment Box below or via the Contact Us form. We want to consult with you about possible legal options.