The Troubled Past of Medical Capital's Sidney Field

The head of troubled Tustin lender Medical Capital Holdings is a one-time "bad actor" in the auto insurance industry, interviews and documents show.

California insurance regulators sued Sidney M. Field for fraud in the early 1990s after revoking his license.

Last month the Securities and Exchange Commission filed a civil fraud suit against Medical Capital, Villa Park resident Field, 63, and his partner, Joseph J. "Joey" Lampariello, 55, of Newport Beach and Huntington Station, N.Y. The SEC alleged that Field and Lampariello cheated investors of $18.5 million. A receiver has taken over the business.

Medical Capital raised $2.2 billion from 20,000 investors over the past six years. It put investors' money primarily into unpaid bills, or receivables, from hospitals and doctors.

A brief biography contained in a March 2003 SEC filing says that Field "was the founder, past president and chairman of FGS, one of the largest insurance brokers in the United States with annual sales of over $200,000,000. Mr. Field sold his interest in that firm in 1990."

The Department of Insurance's lawsuit and news releases paint a much grimmer picture of Field's insurance career:

In February 1987, Field and several others allegedly arranged for Coastal Insurance Inc., which they controlled, to pay Field $17.5 million for FGS. Two years later, just before it slipped into insolvency, Coastal sold FGS back to Field for $206,000. Regulators called the deal a "sham transaction" that diverted cash from an ailing insurer to Field.

State insurance regulators revoked Field's insurance license in August 1987. Regulators warned both Field and Coastal that they would not license FGS if Field remained involved. Despite that warning, he allegedly continued to control FGS and to serve as a "de facto" director of Coastal, which sold auto insurance to bad drivers.

Under Field's supervision, FGS agents allegedly used a deceptive practice known as "sliming" to sell Coastal auto policies. They would alter the accident records of questionable drivers and falsify information about car values and commute mileage so applicants could qualify for insurance.

FGS also allegedly duped customers into paying interest rates of 21 percent to 40 percent when they financed their premiums.

The Department of Insurance sued Field for civil racketeering in August 1990 and again three years later, this time for fraud, after he filed bankruptcy. He paid $100,000 to settle the second lawsuit.

A few years later Field's new company, Medical Capital Holdings, was selling investments in medical receivables.

Under SEC rules, only people with at least $1 million in net assets or $200,000 in annual income could invest in Medical Capital. That should have limited the damage when the company began defaulting on principal payments a year ago and stopped paying interest in June.