The Securities and Exchange Commission has charged Medical Capital Holdings, Tustin, Calif., with fraud and asked a federal judge to freeze the healthcare financing company's assets.
Regulators allege that Medical Capital Holdings, a subsidiary, Medical Capital Corp., and its special holding company Medical Provider Funding Corporation VI misappropriated $18.5 million of $77 million raised from roughly 700 investors for administrative fees—despite offering documents that said money would not be spent on such fees, according to a complaint filed in federal court in Santa Ana, Calif. Further offering documents said less than $4 million had been used for purposes other buying accounts receivables, according to the complaint.
Sidney Field, 63, CEO of Medical Capital Holdings, Medical Capital Corp. and Medical Provider Funding Corporation VI, and Joseph J. Lampariello, 55, president and chief operating officer for the organizations, were also named in the complaint.
An attorney representing the defendants did not respond to requests for comment.
The complaint also alleges the defendants misrepresented in offering documents stated that no special holding companies affiliated with Medical Provider Funding Corporation VI had defaulted or fallen behind on principal and/or interest payments to investors. The month that Medical Provider Funding made its offering, two affiliated special holding companies began to default on payments and another two have since defaulted or fallen behind in interest payments.
U.S. District Court Judge David Carter granted a restraining order to freeze the defendants' assets but reversed the decision after agreeing to give the defendants until July 23 to respond to the restraining order request, according to court documents.
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