Federal prosecutors have opened a criminal investigation into the top executives of Medical Capital Holdings, CEO Sidney M. Field and President Joseph J. "Joey" Lampariello. The former Medical Capital executives requested that the court lift an asset freeze so that the men could use Medical Capital assets to pay their legal bills. The court denied the request.
The Orange County Register reported on March 22 that Field and Lampariello each asked for $75,000 per month for legal fees. According to their request, they planned to use the money to pay lawyers to defend a lawsuit filed against them by the SEC, as well as for criminal defense counsel to defend them in a parallel criminal investigation being conducted by the United States Department of Justice.
The SEC lawsuit and criminal investigation stem from a massive investment fraud that Field and Lampariello allegedly orchestrated involving the sale of investment notes that purportedly were backed by medical receivables. It has been discovered that more than $500 million of the medical receivables were fake. As a result of the alleged Ponzi scheme and other wrongdoing, investors have lost approximately $1 billion.