Seven-year MedCap Capital Holdings Ponzi case is over

With bankruptcy case concluded, investors stand to recover $400 million.
NOV 01, 2016
The seven-year unwinding of the billion-dollar Medical Capital Holdings Ponzi scheme is over, with swindled investors receiving more than $400 million. Last Friday in U.S. District Court, Central District of California, Judge David O. Carter issued his final judgment in the case, which began in July 2009 when the Securities and Exchange Commission sued Medical Capital for fraud. That lawsuit proved to be the death knell for dozens of small and mid-sized independent broker-dealers that sold the Medical Capital private placements and other private deals that soured. Swamped by the cost of investor complaints, many of the firms that sold the private placements closed. Mr. Carter ordered that Medical Capital Holdings and other related companies and executives pay disgorgement of $831 million. According to court documents, close to 9,000 Medical Capital investors were owed approximately $1.08 billion, while the cash on hand at the company was $2.9 million. Investors have recovered $432 million, according to the court appointed receiver, Thomas Seaman. That includes $151 million recovered and distributed by the receiver; $180 million from the bond indenture trustees, or banks; and $101 million from broker-dealers. Harmed MedCap investors received about 40 cents on the dollar, according to those figures. Investors in Ponzi schemes historically have gotten back far less, or five to 10 cents on the dollar. From 2003 to 2009, Medical Capital raised almost $2 billion through a network of independent broker-dealers, purportedly to buy discounted medical receivables such as unpaid doctor or hospital bills that Medical Capital would then collect at full price.

Latest News

Mercer Advisors, Osaic deepen AI bets with Arch and Nitrogen deals
Mercer Advisors, Osaic deepen AI bets with Arch and Nitrogen deals

Arch claims 40% operating cost savings for Mercer as Nitrogen unlocks its agentic AI and tech suite to 10,000 Osaic advisors

LPL advisor, South Carolina state senator, elected to U.S. Congress
LPL advisor, South Carolina state senator, elected to U.S. Congress

A happy coincidence: one of LPL Financial’s corporate campuses happens to be based in Rep.-elect Wes Climer’s new district.

Advisor moves: JPMorgan lands $940M Merrill veteran in Los Angeles
Advisor moves: JPMorgan lands $940M Merrill veteran in Los Angeles

Wells Fargo and UBS also add advisors from Morgan Stanley, Edward Jones, Merrill and Fidelity in a fresh round of wirehouse recruiting

Wall Street products, Main Street regulators
Wall Street products, Main Street regulators

How we got here – and what to do about it

Most Americans are OK with AI managing their money - but not how you think
Most Americans are OK with AI managing their money - but not how you think

AI trust gap: Americans want protection, not autonomy, in their finances

SPONSORED Built on insurance experience to deliver on long-term promises

Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.

SPONSORED In the Age of AI, Trust Becomes the Advisor's Greatest Asset

As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor