Medical Capital Corporation raised over $2.2 billion with notes from investors for Medical Provider Funding Corporation and related companies over the last six years. The funds were raised to be used to buy and factor medical accounts receivable. The Securities and Exchange Commission (SEC) filed a lawsuit to take over Medical Capital’s operations when the executives allegedly violated the securities laws. Securities and Exchange Comm'n v. Medical Capital Holdings, Inc., No. SACV09-818DOC (C.D. California 7-16-09).

The brokerage firms alledgedly responsible for marketing and selling investments in Medical Capital Holdings are accused of making untrue statements about the products and, specifically, their risks. In addition, investors allege that certain broker/dealers failed to make “reasonable and diligent” inquiries regarding information about accounting irregularities at Medical Capital and the six offerings issued between 2003 to 2008. As it turns out, the information was seriously flawed. Among the possible broker/dealers selling these investments were Securities America, QA 3 Financial, Cullum & Burks Securities, Ameriprise, and NEXT Financial Group.

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.

Since then, documents filed in the case allege the following: Some of the investors’ money was used to pay unauthorized “administrative fees” to the executives of Medical Capital and related companies. In addition, the Medical Capital group of companies attempted to hide from investors the fact that they were in dire financial straights. And, one of the related Medical Capital companies purchased a 118' yacht with investor funds and was paying a full time crew of three. The yacht served no known business purpose. To add to the bad news, $548 million of receivable accounts on the books of Medical Capital are due from companies that apparently no longer even exist.

File a FINRA securities arbitration claim to recover Medical Capital losses. Investors, especially later investors, may have valid claims against the brokerage and investment advisory firms such as Securities America, Cap West, and Ameriprise that recommended the Medical Capital investments, if they were misled into believing that the investment was safer than it was. Such claims will have to be brought as FINRA securities arbitrations. Depending on how and when the Medical Capital investment was sold. Call 888-760-6552 or local 954-760-6552 or visit www.stockmarketlawsuit.com for a free case evaluation.