Plaintiffs v Trustees of Medical Capital Holdings
Notice to All Medical Capital Holdings, Inc. Investors Regarding the Class Action Filed Against Trustees of the Medical Capital Holdings Inc.
Class action filed against trustees of Medical Capital Holdings special purpose corporations. The class action alleges the trustees failed to adequately monitor Medical Capital and the special purpose corporations.
The Law Firm of Tramont Guerra & Nunez, PA (TGN) makes an announcement to all investors in Medical Capital Holdings, Inc. (MCH) concerning the class action lawsuit (Case No. SACV09-1048) filed on September 11, 2009, in the United States District Court, Central District of California. The class action lawsuit was filed on behalf of investors in the five Special Purpose Corporations, MP II, MP III, MP IV, MP V, and MP VI, (SPCs) created by MCH to raise capital through the offering of promissory notes. The lawsuit alleges the SPCs trustees breached the fiduciary duty owed to investors, or were negligent in their actions, by failing to uncover that the Private Placement Memorandums (PPMs) distributed for each of the SPCs were not accurate. Each of the PPMs distributed by MCH stated that investor funds would be segregated and used only to purchase accounts receivable from medical providers. The pending Securities and Exchange Commission (SEC) investigation has revealed, through reports issued by the Court-appointed receiver, that MCH paid themselves large administrative fees from the investment capital, totaling nearly $325 million. According to the lawsuit, the SEC further found evidence showing MCH repeatedly obtained the [trustees permission to pay themselves fees based on a formula that blatantly violated the PPMs mandate that fees not come from investor funds. In addition, the class action lawsuit alleges that although the trustees were paid substantial fees to represent the interest of MCH investors, they failed to uncover investments in areas other than accounts receivable from medical providers. Investments were made in, among other things, an 118-foot yacht, mobile phones and movie ventures.
Investors should consider whether an individual securities arbitration claim filed with the Financial Industry Regulatory Authority (FINRA) is a more effective method (than a class action) to recover their investment losses. The brokerage firms who distributed the securities issued by MCH and its affiliated entities were obligated to conduct due diligence of facts concerning the risks associated with the investments. Financial advisors told many investors that these securities were suitable for current income investment objectives. Brokerage firms are obligated to give, and investors are entitled to rely upon brokerage firms for, competent, suitable investment advice in accordance with FINRA Rules and Regulations. Recommendations of unsuitable investments and/or failure to conduct adequate due diligence are both causes of action that form the basis for individual securities arbitration claims filed with FINRA.
For more information contact:
The Law Firm of Tramont Guerra & Nunez, PA
Benjamin Fernandez, Esquire.
Call toll free at (800) 578-0137
