Colorado securities regulators have accused Colorado broker John B. Guyette of violating the Colorado Securities Act by offering and selling Medical Provider Funding Corp. private notes, which were marketed by Medical Capital. Specifically, Colorado regulators have alleged that Guyette sold those private placements to investors with whom he did not have a substantial prior relationship, in violation of Regulation D, which is the federal securities law under which private placements are commonly offered.
The Medical Capital and its related entities are in an SEC receivership after being accused of various fraudulent conducts, including running a Ponzi scheme. Medical Capital investors have lost more than $1 billion in the fraudulent Medical Capital investments.
Guyette sold the Medical Capital notes through FINRA brokerage firm Community Bankers Securities LLC. Many brokerage firms, including Securities America, collectively sold approximately $2.2 billion of the fraudulent investments. It is believed that investors would not have bought these investment or suffered losses if the brokerage firms had performed adequate due diligence and otherwise had paid attention to various warning signs that Medical Capital was a fraud. Many Medical Capital lawyers believe that if brokerage firms had done their homework, they never would have sold Medical Capital notes.
Guyette claims to have surrendered his license and retired rather than fight any regulatory proceedings against him.
Dimond Kaplan & Rothstein has spoken to a number of Guyette’s clients and has filed at least one FINRA securities arbitration claim against Community Bankers Securities in an attempt to recover Medical Capital investment losses.