Posts tagged ‘Medical Capital losses’

Medical Capital class action against Hantz Financial

According to reports, Hantz Financial is still contending with the fallout from Medical Capital, the $2.2 billion Ponzi scheme built on shaky medical receivable that the Securities and Exchange Commission shut down in July 2009.  These reports indicate that Hantz Financial Services Inc. is still facing the potential of class action lawsuit over the sale of the notes and that a judge in Oakland County could soon decide on what could be a final attempt to certify the class of investors.

If the class is certified, it appears that the class has a little more than $20 million in combined damages against the firm.

Hantz Financial is a mid-sized brokerage firm based in Michigan that has 260 affiliated financial advisers.

It would appear that the class investors are attempting to hold Hantz Financial responsible for its due diligence requirements.  Brokerage firms and financial advisors have a fiduciary duty to perform adequate due diligence on any investment they recommend and to ensure that such recommendations are appropriate for their client in light of that particular clients’ age, income, investment experience, investment objectives, and net worth.

Investors in Medical Capital could also attempt to recover their losses with a FINRA arbitration claim.  The White Law Group has represented numerous Medical Capital investors in claims against the brokerage firm that recommended the investment.

To speak with a securities attorney experienced in Medical Capital related claims, please call The White Law Group at 312/239-9650 for a free consultation.

The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Boca Raton, Florida.

For more information on The White Law Group, visit http://www.whitesecuritieslaw.com.

More Fall Out Relating to Medical Capital

According to the Investment News, a former stockbroker in Colorado has been criminally charged with securities fraud for selling Medical Capital notes. The nine counts of securities fraud filed last Thursday by the Weld County District Attorney’s Office against John Brady Guyette are believed to be the first such charges against a broker stemming from the collapse of Medical Capital Holdings Inc.

Medical Capital was a medical receivables firm that raised $2.2 billion from investors from 2003 to 2008 and allegedly operated as a Ponzi scheme.  The Securities and Exchange Commission charged Medical Capital and its two founders, CEO Sidney Field and president Joseph Lampariello, with fraud in July 2008, but the SEC brings only civil claims.

According to the Weld County complaint and information, Mr. Guyette sold $1.3 million of MedCap notes to eight investors between August and December 2008. During that time, Medical Capital was beginning to unravel and had missed some payments to investors in previous note offerings.

At the center of the Weld County complaint against Mr. Guyette is the allegation that he sold Medical Capital notes to investors after the company began having trouble making payments to some investors.

The nine securities fraud charges include allegations of untrue statements or omissions by Mr. Guyette.

Dozens of broker-dealers with independent-contractor representatives sold the Medical Capital notes and The White Law Group continues to review the liability that financial professionals and broker-dealers have for such sales.

Brokerage firms have a fiduciary duty to perform due diligence on any investment before offering it for sale to its clients.  Obviously, given what is known now about Medical Capital it appears clear that the firms that sold Medical Capital failed to perform the necessary due diligence on the investment.

If you have questions about a medical capital investment, contact the securities attorneys of The White Law Group for a free consultation.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.

For more information on The White Law Group, visit http://www.whitesecuritieslaw.com.

Expert Says Some Brokerage Firms Performed Poor Private Placement Due Diligence

A recent article by Bruce Kelly of the investmentnews.com reported the opinion of Gordon Yale, a forensic accountant, who has served as an expert for dozens of investors who have brought claims against brokerage firms related to the sale of failed private placement investments issued by companies like DBSI, Inc., Medical Capital Financial Corp., and Shale (Provident) Royalties. In Mr. Yale’s expert opinion, “Broker-dealers that sold billions of dollars in allegedly fraudulent private placements failed massively in their due-diligence responsibilities to investors.”

Yale likened the due diligence failures of firms that sold these private placements to the failures of large banks to perform due diligence on bad mortgage backed securities that led to the mortgage crisis. He said, “It was basically the same recklessness…but it was done by middle- or lower-tier firms and [with] a different set of products.”

Certainly, firms that sold these investments contend that they did do adequate due diligence. However, recent arbitration awards as well as fines and sanctions issued by securities regulators like the Financial Industry Regulatory Association (FINRA) indicate that they are at least skeptical of the due diligence work performed. Kelly notes that FINRA recently fined the former president of Capital Financial Services $10,000 related to the sale of Medical Capital and Provident Royalties. He also noted that only one of the cases that Yale has worked on necessitated his testimony in arbitration (many settled in advance of arbitration) and in that case a $1.2 million award was ordered to be given to an investor by Securities America Inc. and a broker.

In the investmentnews.com piece Yale indicated his opinion that firms too often relied on 3rd party due diligence reports, he said, “They viewed those reports as the end of the process, rather than the beginning. There’s a notice to [Finra] members, 05-48, that basically says you can outsource any function, but you can’t outsource your responsibility for compliance with federal securities laws or regulations.” Yale feels like firms, especially one’s like Securities America who sold $700 million in Medical Capital notes, should have hired an independent CPA to conduct financial due diligence on the investments.

The White Law Group is all too familiar with the difficulties investors have had over the last several years with failed private placements. The firm has represented and currently represents many investors who have suffered damages as a result of the recommendation of their financial professional to purchase private placement investments from companies like DBSI, Medical Capital, and Shale (Provident) Royalties. We have found that in many cases the FINRA registered firms failed in their fiduciary duty to perform adequate due diligence and to disclose the risks involved with these investments. Brokerage firms that fail in this fiduciary duty may be liable in FINRA dispute resolution claims to recover investment losses.

If you are concerned about an investment you made in a private placement like those from DBSI, Medical Capital, and Shale (Provident) Royalties and would like to speak to an attorney about your potential to recover investment losses through a FINRA claim please call out Chicago office at 312-238-9650.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.

For more information on The White Law Group, please visit our website at http://www.whitesecuritieslaw.com.

Securities Fraud Investigation Involving Oil and Gas Partnerships and Private Placements

The White Law Group is investigating potential securities fraud claims on behalf of investors involving broker-dealers recommending that investors invest in inappropriate oil and gas / energy partnerships and highly speculative private placement investments.

Oil and gas partnerships and private placements are generally risky ventures that are only appropriate for sophisticated investors.  Unfortunately, because of the high commissions these products pay to brokers, they are often sold to unsophisticated and retired investors.

The White Law Group’s investigation into the improper sales of oil and gas partnerships and private placements includes, but is not limited to, recommendations to invest in the following: DBSI, Medical Capital, Waveland Oil and Gas, Bradford Energy, Ridgewood Oil and Gas fund, and Black Diamond Energy

If you have any information that may assist The White Law Group in its investigation or are concerned about your investments in oil and gas partnerships or private placements like DBSI, Medical Capital, Waveland Oil and Gas, Bradford Energy, Ridgewood Oil and Gas fund, and Black Diamond Energy, please contact the firm’s Chicago, Illinois office at 312-238-9650.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.

For more information on The White Law Group, please visit our website at http://www.whitesecuritieslaw.com.

Ameriprise Setting Aside Reserves for Securities America Legal Claims

According to the Investment News, Ameriprise Financial Inc. has announced that it is setting aside $40 million in legal reserves for class actions and legal claims arising from the sale of allegedly bogus private placements by its independent broker-dealer subsidiary, Securities America Inc.

The reserves relate to sales of Medical Capital Holdings Inc. and Provident Royalties LLC.

“With respect to potential resolution of such actions and claims subsequent to year-end, the company has recognized an additional provision of approximately $40 million in legal reserves,” Ameriprise said in its annual report.

The amount is about 10% of the total that clients have lost in the two series of investments, Ameriprise said. “Approximately $400 million of Medical Capital and Provident Shale investments made by (Securities America) clients are outstanding and currently in default,” the company said.

Just this month, a federal judge in Dallas put a halt to all arbitration claims relating to Securities America clients buying Medical Capital and Provident investments.

That move was made so a preliminary class action settlement could be heard in the U.S. District Court for the Northern District of Texas. As part of Judge W. Royal Furgeson Jr.’s restraining order, Securities America agreed to contribute about $21 million to the pot of money available to investors.

A preliminary approval hearing for that settlement has been set for March 18.

A spokesman for Ameriprise did not immediately return a call seeking comment on this story.

But plaintiffs’ attorneys who represent individual investors who purchased the private placements say they will strongly oppose any class action settlement that prevents their clients from suing Securities America in private arbitration through the Financial Industry Regulatory Authority Inc.

In 2009, the Securities and Exchange Commission charged both Medical Capital and Provident Royalties with fraud. Dozens of independent broker-dealers sold the high-risk products, with some closing down because of the costs arising from crippling litigation.

If you have questions about investments you made through Ameriprise or Securities America, the securities attorneys of The White Law Group may be able to help.  For a free consultation, call the firm’s Chicago office at 312-238-9650.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida. With over 30 years of securities law experience, including experience working at FINRA (f/k/a the NASD) and the SEC, The White Law Group has the expertise to help investors defrauded in securities, investment and financial business transactions.

For more information on The White Law Group, please visit our website at http://www.whitesecuritieslaw.com.