November 16, 2009 13:23 ET

Milberg LLP Announces the Filing of a Class Action Against Wells Fargo Bank, N.A. and Bank of New York Mellon on Behalf of Investors in Medical Capital Holdings, Inc.

NEW YORK, NY--(Marketwire - November 16, 2009) - A class action litigation was filed on November 2, 2009 against Wells Fargo Bank, N.A. ("Wells Fargo") and Bank of New York Mellon ("BNYM") on behalf of investors in five Special Purpose Corporations ("SPC"), MP II, MP III, MP IV, and MP VI, which were created by Medical Capital Holdings, Inc. to raise capital through the offering of promissory notes for its healthcare receivables financing business. The action alleges that Wells Fargo and BNYM, which served as the SPCs' trustees, breached the fiduciary duty owed to investors, or were at least negligent in their actions, by failing, among other things to properly safeguard investor assets. The lawsuit, brought in the United States District Court for the Central District of California, is captioned Michel Rapoport v. Wells Fargo Bank, National Association et. al. and is numbered SACV09-1267.

As alleged in the complaint filed by Milberg LLP, this action arises from a breach of fiduciary duties and/or negligence by the trustees Wells Fargo and/or BNYM which were charged with representing and protecting the financial interests of investors in Medical Capital's investment vehicles. The complaint alleges that instead of safeguarding investor assets, however, Wells Fargo and BNYM, at least negligently, breached their duties to investors by rubber-stamping Medical Capital's grossly excessive fee requests and failing to properly monitor the use of investor funds, which were diverted to an array of nonmedical investments, improperly commingled and transferred amongst the funds, and used by newer SPCs to pay principal and interest to earlier SPC investors in a Ponzi-like scheme. Due to the trustees' failures, according to the complaint, the five SPCs are now in default to investors having failed to make interest and principal payments on approximately $1 billion worth of notes.

The complaint has been filed as a class action on behalf of all persons who invested in and suffered damages related to secured promissory notes issued by five of Medical Capital Holdings' Special Purpose Corporations, which include Medical Provider Funding Corporation II through VI. No class has yet been certified, and there can be no guarantee that a class will be certified.

Milberg LLP has been representing individual and institutional investors for nearly 40 years and serves as lead counsel in federal and state courts throughout the United States. Please visit the Milberg website ( for more information about the firm. If you wish to discuss this matter with us, please contact the following attorneys:

Contact Information

  • Andrei Rado
    Ted Swiecichowski
    Milberg LLP
    One Pennsylvania Plaza, 49th Fl.
    New York, NY 10119-0165
    Phone number: (800) 320-5081

    Attorney Advertising. Prior Results Do Not Guarantee A Similar Outcome.