The U. S. Securities and Exchange Commission Receiver overseeing the Medical Capital investment fraud recently filed his Fourth Report to the Court on November 10, 2009. This report provides the status of receivership estate and its assets. While the Receiver appears to have successfully increased the funds in the estate, such recoveries continue to fall far short of the funds needed to pay back all investors.

According to the Receiver’s report, the largest inflow of cash has come from the sale of an assisted living facility to which Medical Capital had taken title in lieu of foreclosure. The sale of that property netted nearly $14 million for the Medical Capital receivership estate. In total, the Receiver has been able to collect cash of nearly $19.8 million. But because professional fees and operating expenses are paid from such funds, as of November 10th, the receivership estate held funds of only $17 million. Moreover, the Receiver has been able to verify only $80 million of the $625 million in medical accounts receivables that were stated in Medical Capital accounts. And more than 90% of those verified receivables are aged more than 180 days, thereby decreasing the likelihood of full collection. Finally, the Receiver has identified as “non-existent” nearly $543 million (or 87%) of the $625 million in accounts receivables listed in Medical Capital records.

The Receiver expects to produce additional incoming cash through the sale of other properties and facilities. But, due to the $1 billion or so that investors appear to be owed, the present state of the Medical Capital receivership estate does not give much hope to investors who seek to recover their entire principal investments directly from Medical Capital. Unless the Receiver is able to recover nearly $1 billion more for the Medical Capital estate, investors in Medical Capital notes appear very likely to lose all of the money that they invested in the notes. This would leave investors who wish to recover their losses with the option of, among other things, pursuing claims against the brokerage firms that sold the investments to the investors.

Dimond Kaplan & Rothstein, P.A. currently represents numerous Medical Capital investors who appear to have lost millions of dollars. The crux of the claims that Dimond Kaplan & Rothstein is bringing on behalf of investors is that the brokerage firms failed to perform adequate due diligence before recommending and selling the Medical Capital investments or turned a blind eye toward obvious red flags that reflected the fraudulent nature of the Medical Capital entities, and then the brokerage firms recommended and sold the investments without disclosing the fraudulent nature of the investments.

To determine if some or all or your Medical Capital investment losses can be recovered, please contact attorney Jeffrey B. Kaplan of Dimond Kaplan & Rothstein, P.A. at (888) 578-6255 or for a free case evaluation. You also may visit the firm on the web at [] or [].

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