On April 12, 2010, the court-appointed SEC receiver for the Medical Capital investment fraud filed his ninth monthly status report. While the Receiver has worked diligently to preserve Medical Capital’s estate, to collect outstanding medical receivables that actually exist, and to sell certain assets in order to bring more cash into Medical Capital, the outlook for Medical Capital investors continues to look grim.
Medical Capital investors are still owed more than $1 billion. Yet, the Receiver has only been able to collect cash in the amount of approximately $27 million. And approximately $7 million of that amount already has been spent on operating expenses, leaving only $20 million that could possibly be distributed to Medical Capital investors. But additional money from the Medical Capital estate is expected to be used to pay the Receiver and lawyers and accountants working with the Receiver. And while approximately $125 million in additional cash is expected to come into the Medical Capital receivership estate in the near future as a result of sale of certain assets, the money available to pay back investment losses to Medical Capital investors would remain short by hundreds of millions of dollars.
The Receiver continues to believe, and the evidence supports, that Medical Capital was a Ponzi scheme. The end result is that anyone who bought a Medical Capital note appears to have bought a fraudulent investment product. Dimond Kaplan &Rothstein, P.A. continues to believe that the best opportunity to recover Medical Capital investment losses is to file a FINRA arbitration claim against the brokerage firm that sold the Medical Capital notes due to the brokerage firms’ failure to perform adequate due diligence before selling the securities. These brokerage firms include Securities America and QA3 Financial. The law firm’s Medical Capital lawyers have filed dozens of FINRA arbitration claims against brokerage firms on behalf of Medical Capital investors. The firm expects that documents acquired as a result of a lawsuit filed by the Commonwealth of Massachusetts in a regulatory proceeding against Securities America will assist the firm in helping investors recover their Medical Capital investment losses.