MEDICAL CAPITAL PRESIDENT DEFENDS NEW FRAUD ALLEGATIONS
Federal regulators are still figuring out exactly what happened leading up to the collapse of Medical Capital Holdings. In August 2009 the SEC charged Medical Capital with fraud following an attempted $77 million offering, because the firm had defaulted on over $1 billion to investors just one year prior.
Medical Capital president Sidney M. Field is no stranger to defending fraud allegations.
The OC Register learned that California auto-insurance regulators sued Field in 1991, after revoking his license. Lt. Governor John Garamendi, who was the California’s elected insurance commissioner in the early 1990’s, pursued Field while he was the owner of FGS, an insurance broker that sold auto insurance to unqualified drivers.
Regulators believed Field masterminded a plan for his FGS employees to alter accident records of questionable drivers and falsify car information so unqualified applicants could receive insurance. In return for their fraudulent insurance policies, FGS customers were allegedly duped into paying high interest rates – sometimes has high as 40 percent – when paying for their premiums.
This deceptive practice is called “sliming,” according to the Register.
State insurance regulators revoked Field’s insurance license in August 1987, and warned they would not license FGS if Field remained at the helm. Nevertheless, Field allegedly continued as a “de facto” president of the company.
The Department of Insurance sued Field for racketeering in August 1990, and fraud three years later. Field told the Register in September 2001 he was quitting the insurance business for good, following bankruptcy.
Less than a decade later, Field is again charged with fraud-but on a much larger scale. The SEC has a pending civil suit against Field and his partner, Joseph J. “Joey” Lampariello. The two cheated investors personally cheated investors out of $18.5 million, according to the SEC.
For anyone following the current Medical Capital scandal, these two stories might sound familiar. Unfortunately, many investors in Medical Capital Notes learned of Field’s disciplinary past after investing, or losing money.
The Register asked investors if they “knew nothing of Field’s prior run-in with regulators – and would not have invested if they had known.” The responses may not surprise:
“Absolutely not,” said Carol Marini, 64, of Fairfield. She invested her life savings, $145,000, in Medical Capital.
“If I would have known, forget about it,” said Jim Palladino, 73, of Palm Desert, who invested $160,000.
“Good Lord, what a record,” said Bill Balogh, 75 of Mission Viejo. He and his wife Norma invested “a large sum” in Medical Capital.
Retired toy factory operator Jim Palladino was convinced by his broker to invest most of his retirement money in Medical Capital after being told, “Jimmy, this company is as solid as a rock.”
Unable to make mortgage payments, Palladino was forced to put his house up for sale, and is seeking part-time work.
“My biggest problem is I can’t look at my wife,” Palladino said.
Investors, customers and clients would all be better served if different regulators could combine disciplinary records.
Field was essentially thrown out of the insurance industry in 1991, according to Lt. Governor Garamendi. But he was also permitted to start fresh in a new industry, and his investors were none the wiser. Now that Medical Capital is under siege, where will Field go next?
If you have been victimized by your investment in Medical Capital Holdings, or any private holding or security, we recommend you speak with one of our attorneys immediately.
Rather than relying on restrictions and censures from regulators, investors must take action against any broker causing financial harm.