Medical Capital Lawsuits

Investors who were sold investments in Medical Capital Notes may be entitled to recover their investment losses through an individual arbitration claim or Medical Capital class action lawsuit.

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).

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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.