Bank Settles Ponzi-Scheme-Related Lawsuit Tied to Gun-Planting Case

Categories: Crime-iny
Nathan Santistevan
Business writer Ronald Campbell at the Orange County Register has done a good job of tracking the fallout that continues to unfold involving a roughly $1 billion Ponzi scheme tied to a gun-planting case first exposed by the Weekly. Last week, we reported that a jury awarded Dr. Michael Fitzbiggons $5.7 million in damages after he sued the hospital chain he worked for, alleging that the company's chief executive officer had hired someone to plant a gun in his car in an attempt to frame him for a June 2006 road rage incident.

Fitzgibbons had allegedly earned the wrath of his imployer, Integrated HealthCare Holdings, Inc., because he'd sent an email questioning the company's relationship with the Tustin-based medical lender, Medical Capital Holdings, or MedCap. As it turns out, Fitzgibbons was right to worry: MedCap was really a Ponzi scheme that took millions in administrative fees while selling investors mostly bogus accounts, a scheme that led the IRS to seize the company in 2009. In today's Register, Campbell reports that one of the two big banks that backed up MedCap, the Bank of New York, has agreed to cough up $114 million to help repay investors who were ripped off.

So if MedCap wasn't really selling investors legitimate medical accounts--bills for actual hospital visits and other actual medical bills--what was MedCap doing with the money?

Some of it went to purchase failing hospitals around the country and other real estate deals, a chunk helped finance a money-losing film about a Mexican little league team, and $5 million went to a company called EMark that supposedly specialized in internet porn, although there's no real evidence the company really existed.  (The names on the firm's board of directors all appeared to be fake individuals, and the address listed as EMark's global headquarters turned out to be a ramshackle house in El Sereno, a working-class neighborhood in East Los Angeles). And then there was the 100-foot party yacht that executives purchased for $4.5 million.

Of all the executives involved in the fraud, only MedCap's president, Joey Lampariello, faced criminal charges. He pled guilty last year to wire fraud and will be sentenced this August. Another bank, Wells Fargo, is still haggling over how much it will pay. As recently as Feb. 11, Campbell reports, the receiver handling the case on behalf of investors stated that he's collected $157.5 million in the past three years, which translates to only 19 cents for every dollar lost.

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