The court-appointed receiver for the Medical Capital fraud filed his sixth status report on January 11, 2010. As with the receiver’s earlier reports, this report outlines the various fraudulent aspects of the Medical Capital entities. The report also reveals the unchanging fact that investors are unlikely to recover much money from the receivership. Specifically, the report discloses that Medical Capital investors are owed $1.7 billion, which is far greater than the assets available to pay the investors. The receiver’s report further states that Medical Capital’s lending activities were unprofitable beginning with the creation of its first notes, which purportedly were backed by medical receivables.
The report also reveals that Medical Capital was paid administrative fees of more than of $323 million. In other words, more than $323 million of investors’ money went straight into Medical Capital’s coffers. The receiver also reported that: (a) none of the Medical Capital entities ever generated enough profit to pay investors’ principal and interest, and (b) just under $1 billion in loans and assets were transferred among various Medical Capital entities in order to make payments to earlier investors using new investors’ funds. This is a classic example of a Ponzi scheme.
Between the use of new investors’ money to pay earlier investors, “faking” receivables, and fraudulently marking up the value of aged receivables, it appears that investors have lost more than $1 billion and that investors are highly unlikely to recover much of that loss from the receivership. Dimond Kaplan & Rothstein, P.A. continues to file FINRA arbitration claims against the brokerage firms that sold Medical Capital notes to investors. Please contact attorney Jeffrey Kaplan at Dimond Kaplan & Rothstein, P.A. if you would like to discuss claims that you may have against the brokerage firm that sold Medical Capital investments to you.