Attorneys for MedCap CEO Sidney M. Field and President Joseph J. “Joey” Lampariello revealed the probe last week in an emergency request to use $150,000 per month in frozen assets for legal bills. U.S. District Judge David O. Carter denied the request, saying there was no emergency.
The Securities and Exchange Commission sued Field and Lampariello last summer, alleging a garden-variety securities fraud: failure to disclose $18.5 million in fees to investors. But the case has mushroomed since then into one of the largest alleged Ponzi schemes in Orange County history.
MedCap provided cash up front to financially troubled hospitals and health-care facilities, secured by the hospitals’ unpaid bills, or receivables. It then sold interests in those receivables to 20,000 investors.
Court-appointed receiver Thomas A. Seaman has reported that the company had $543 million in phony receivables on its books, that it had lost $316 million on supposedly profitable loans and collected $323 million in fees for managing those loans. In addition, it allegedly sold receivables at a markup among the six funds it controlled, using money from newer investors to pay investors in the older funds.
In addition to its money-losing loans, MedCap sank $4.5 million into a 118-foot yacht, the Home Stretch, and $18.1 million into an unreleased movie about a Mexican Little League team, “The Perfect Game,” the receiver said.
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