The Financial Industry Regulatory Authority (FINRA) ruled on behalf of Marilyn Hazell, of Florida, on May 10, determining the Peak Securities Corporation, her former brokerage, violated federal securities laws by investing in Medical Capital Notes. Medical Capital, which provided the notes, is under investigation by the federal financial regulators for fraud.

In her Medical Capital stockbroker arbitration claim, Hazell charged Peak Securities Corporation with breach of contract, breach of fiduciary duty, negligence and common law fraud. According to a report by Investment News, Peak Securities never answered the claim, and lost its FINRA registration as a broker in November. FINRA issued a default decision in Hazell’s favor, agreeing on every count, and awarding her the full amount of her claim, which is rare.

Medical Capital was set up to purchase accounts receivables of medical providers and package them as private investments. The firm raised $2.2 billion from 20,000 investors over a six-year period, but has been charged with defrauding investors.

In July, the Securities Exchange Commission (SEC) filed charges against Medical Capital, indicating that it conducting a number of questionable transactions with itself, some of which appeared to include receivables that did not actually exist. The SEC also indicated that the company made investments that had nothing to do with medical receivables, such as investing $7 million into a mobile phone application consisting of live video feed of a hamster in a cage, and $20 million into a movie.

The SEC claims that Medical Capital took $25 million in administrative fees from one of its funds, Medical Provider VI. However, the fund only brought in about $5 million in medical receivables.

It is estimated that about $1 billion in investor money was wiped out by Medical Capital’s actions. In November, a Medical Capital class action lawsuit was filed on behalf of all persons or entities who purchased investment notes issued by Medical Provider Financial Corp. III, Medical Provider Financial Corp. IV, Medical Provider Funding Corp V or Medical Provider Funding Corp VI, commonly referred to as Medical Capital Notes, from Capital Financial Services, National Securities Corp., Cullum & Burks, Securities America, Ameriprise Financial or CapWest Securities on or after September 18, 2006.

The class action lawsuit over Medical Capital Notes alleges the brokerage firms violated federal securities laws by selling notes that were not registered with the SEC. The lawsuit also alleges that Medical Capital investments were misrepresented due to false and misleading information given out about the track records, the qualifications of those managing the company and the overall risks of the investments.

A number of investors, like Hazell,  have filed individual Medical Capital lawsuit arbitration claims against their brokers through the Financial Industry Regulatory Authority (FINRA) to recoup their losses. The claims allege that through basic due diligence, brokerage firms should have discovered the Medical Capital fraud and irregularities.

The Medical Capital class action lawsuit was filed on behalf of all persons or entities who purchased investment notes issued by Medical Provider Financial Corp. III, Medical Provider Financial Corp. IV, Medical Provider Funding Corp V or Medical Provider Funding Corp VI, commonly referred to as Medical Capital Notes, from Capital Financial Services, National Securities Corp., Cullum & Burks, Securities America, Ameriprise Financial or CapWest Securities on or after September 18, 2006.

Medical Capital was set up to purchase accounts receivables of medical providers and package them as private investments. The firm raised $2.2 billion from 20,000 investors over a six-year period, but has been charged with defrauding investors.

In July, the Securities Exchange Commission (SEC) filed charges against Medical Capital, indicating that it conducting a number of questionable transactions with itself, some of which appeared to include receivables that did not actually exist. The SEC also indicated that the company made investments that had nothing to do with medical receivables, such as investing $7 million into a mobile phone application consisting of live video feed of a hamster in a cage, and $20 million into a movie.

The class action lawsuit over Medical Capital Notes alleges the brokerage firms violated federal securities laws by selling notes that were not registered with the SEC. The lawsuit also alleges that Medical Capital investments were misrepresented due to false and misleading information given out about the track records, the qualifications of those managing the company and the overall risks of the investments.

A number of investors have also filed individual Medical Capital lawsuit arbitration claims against their brokers through the Financial Industry Regulatory Authority (FINRA) to recoup their losses. The claims allege that through basic due diligence, brokerage firms should have discovered the Medical Capital fraud and irregularities.

MEDICAL CAPITAL LAWSUIT STATUS: A class action lawsuit has been filed against several brokerage firms for selling Medical Capital Notes under false and misleading prospectuses. A number of investors have also elected to retain their own securities fraud attorney to pursue an individual arbitration claim through the Financial Industry Regulatory Authority (FINRA).

>>HAVE A POTENTIAL CLAIM FOR LOSSES REVIEWED BY A MEDICAL CAPITAL NOTES ATTORNEY<<

OVERVIEW: Medical Capital was set up to purchase accounts receivables of medical providers and package them as private investments. The firm raised $2.2 billion from thousands of investors over a six-year period.

In July 2009, the Securities Exchange Commission (SEC) leveled charges of fraud against Medical Capital, saying it defrauded investors of millions of dollars. According to a report filed in August 2009, as part of the SEC Medical Capital Notes lawsuit by a court-appointed receiver, the company conducted a number of questionable transactions with itself, some of which appeared to have included receivables that did not actually exist. The report also indicated that the company swapped old receivables to new investment entities, despite the fact that receivables lose value with age, and accused the company of overstating the value of some of its receivables.

In addition, the company allegedly made a number of investments into things that had nothing to do with medical receivables, such as investing $7 million into a mobile phone application consisting of live video feed of a hamster in a cage, and $20 million into a movie about the first Mexican team to win the Little League World Series.

MEDICAL CAPITAL CLASS ACTION LAWSUIT: A number of brokerage firms have been named in lawsuits filed over Medical Capital Notes sold on or after September 18, 2006. The complaints allege that the firms violated federal securities laws by selling notes that were not registered with the SEC and under false and misleading prospectuses.

The Medical Capital investments were allegedly misrepresented due to false and misleading information given out about the track records, the qualifications of those managing the company and the overall risks of the investments.

MEDICAL CAPITAL NOTES ARBITRATION CLAIMS: Although investors may be able to eventually recover some of their losses through the class action lawsuits, individuals who lost more than $50,000.00 may be in a better position to recoup their investment loss through a Medical Capital Notes arbitration claim.

As opposed to class action lawsuits where all investor claims are presented through a class representative, which can take 4 to 5 years, most Medical Capital Notes lawyers who represent individual investors indicate that presenting a claim through FINRA arbitration generally allows for a much quicker and complete recovery, as individual circumstances of the investment decision may be considered and an arbitration hearing could occur in about one year.

Investor claims filed with the Financial Industry Regulatory Authority (FINRA) allege that through basic due diligence, brokerage firms should have discovered the Medical Capital fraud and irregularities that are now being investigated.

Medical Capital was set up to purchase accounts receivables of medical providers and package them as private investments. The firm raised $2.2 billion from 20,000 investors over a six year period.

In July, the Securities Exchange Commission leveled charges of fraud against Medical Capitol, saying it has defrauded investors of millions of dollars. In a report filed earlier this month as part of the SEC Medical Capital lawsuit by a court-appointed receiver, Medical Capital conducted a number of questionable transactions with itself, some of which appeared to have included receivables that did not actually exist.

The report also indicated that the company swapped old receivables to new investment entities, despite the fact that receivables lose value with age, and also accused the company of overstating the value of some of its receivables.

In addition, the company allegedly made a number of investments into things which had nothing to do with medical receivables, such as investing $7 million into a mobile phone application consisting of live video feed of a hamster in a cage, and $20 million into the movie “The Perfect Game” about the first Mexican team to win the Little League World Series.

An Illinois couple who filed a FINRA arbitration claim against their brokerage, QA3 Financial Corp, is seeking to recoup $500,000 in Medical Capital losses and losses from other private placements. The claimants say that QA3 should have been able to discover that there were problems with Medical Capital by performing even the most basic investigation, and the statement of claim alleges fraud, deceptive practices, negligence and misrepresentations and omissions led to the losses.

The claim is one of several Medical Capital related lawsuits that are being investigated throughout the country by stock fraud lawyers against brokerage firms, which were receiving a due diligence fee in addition to their commissions when selling Medical Capital notes.