The Bank of New York Mellon Corp., one of two trustees of the failed Medical Capital Holdings Inc. private placements, has agreed to pay $114 million to investors. Medical Capital Holdings was a medical-receivables company that issued $2.2 billion in notes from 2003-2009. However, in 2009 the SEC charged it with fraud and it collapsed.
After Medical Capital failed, investors took numerous legal actions. In lawsuits against Wells Fargo and Bank of New York, plaintiffs alleged that executives with Medical Capital “used the trustee-controlled accounts as their personal piggy banks” and that the banks “were paid substantial fees” for their service.
Investors and Bank of New York reached an agreement to the settlement in December, but it was not revealed until last Thursday in documents filed in U.S. District Court in Santa Ana, Calif. The settlement requires court approval. Bank of New York spokesman Kevin Heine said, “We are pleased to be putting this matter behind us.”
The Medical Capital receiver so far has come up with $157.5 million for investors.
Jason Doss is the owner of The Doss Firm, LLC, an Atlanta-based law firm devoted to representing consumers across the country in a variety of areas including investment disputes and consumer class action litigation. Mr. Doss earned his J.D. from Florida State University in 2002 and his B.A. from the University of Florida in 1997.