SEC Investigation of Medical Lender Sets Sail for a Party Yacht
They’re On a Boat!
The SEC’s investigation of a local medical-lending company highlights executives’ ties to an opulent party yacht and an Internet-porn company
A Tustin-based medical lender being investigated by the Securities and Exchange Commission (SEC) for illegally skimming cash from investors also allegedly directed millions of dollars to an array of non-medical investments, including an Internet-porn spamming operation, a company that provides downloadable slideshows of bikini-clad women for cell phones, and a Newport Beach party yacht, the Weekly has learned.
On June 6, the SEC sued Medical Capital Holdings (MCH) and two of its top-ranking officials, president Joey Lampariello and CEO Sidney Field, charging them with defrauding investors. That lawsuit, which has the effect of freezing the firm’s assets so that a court-appointed receiver can try to recover millions of dollars in missing cash for the company’s 20,000 investors, has led to some truly bizarre revelations, none of which should surprise anyone who has followed this story for the past four years.
First, some background: Several years ago, MCH lent $50 million to Santa Ana-based hospital company Integrated Healthcare Holdings Inc. (IHHI), which owns Western Medical Center in Santa Ana (the oldest hospital in Orange County), Western Medical Center Anaheim, Coastal Communities Hospital in Santa Ana and Chapman Medical Center in Orange. In 2005, two years after IHHI formed, it sued one of its own doctors, Michael Fitzgibbons, for slander and interfering with company business after he sent an e-mail to colleagues speculating IHHI might default on MCH’s loan. Then, a year later, just days after a judge dismissed that lawsuit, police arrested Fitzgibbons on suspicion of waving a gun in the air during a road-rage incident and confiscated a handgun and a pair of black gloves from his car. Fitzgibbons claimed he was set up by IHHI’s then-CEO, Bruce Mogel; the district attorney’s office declined to file charges in the case (see “Doctored Evidence,” July 31, 2008).
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According to a lawsuit filed by a group of doctors against Mogel and IHHI, Mogel watched Fitzgibbons being arrested and allegedly proclaimed, “Nobody knows how powerful I am.”
Meanwhile, although IHHI never defaulted on its loan from MCH, the medical lender began to divert investor cash into some non-medical places. According to the new SEC complaint, MCH used $4.5 million to purchase a luxury yacht moored in Newport Beach, where Lampariello and other executives allegedly held private parties. In an interview with the Weekly, a former MCH executive who requested anonymity confirmed the company’s use of the boat. “This was a boat with a five-person crew—not cheap,” the source said. “It was mostly for Joey [Lampariello] and Sid [Field], but they had a raffle for other employees to use it. Our Christmas party every year was at the St. Regis [Monarch Beach Resort in Dana Point], where AIG got in trouble for their party. Where was this money coming from? Joey had 18 cars. He would drive a Ferrari every day. . . . It just seemed like there was unlimited money.”
As the Weekly previously reported (see “New Complications in the IHHI Saga,” July 30), both IHHI’s Mogel and MCH’s Lampariello took an interest in securing a $5 million loan for a company called EMark Advertising Inc., which specializes in pornographic website advertising and of which MCH holds a 50 percent ownership interest. In depositions attached to IHHI’s lawsuit against a group of doctors and IHHI shareholders called Orange County Physicians Investment Network (OCPIN), Mogel claimed he had no knowledge of this arrangement. However, his own attorneys later provided copies of e-mails Mogel had sought to delete from his computer that reveal he played a central role in funding EMark. The e-mails are mostly correspondence from Mogel to MCH officials concerning EMark but also include a lengthy list of pornographic websites such as ilovebisexuals.com, www.sadisticbondage.com and www.hotasiangays.com.
It remains unclear why MCH would steer millions of dollars in cash to a company such as EMark. “Most of the [MCH investments] were legit,” insisted the former MCH executive. “There’d be 200 pages of documentation for the underwriting. But for EMark, there was nothing. It was one of just a few accounts that were untouchable.” Corporate records raise more questions about EMark than they answer. The company’s literature includes a series of biographies of company directors. A man named Enrique Salem, who graduated from Stanford University and worked for Sun Microsystems, is described as EMark’s “director of product management.” There is an Enrique Salem who is currently CEO of Internet-security firm Symantec, but according to the company’s website, he never worked for Sun Microsystems and graduated from Dartmouth College, not Stanford. (A Symantec spokesperson had not returned a call seeking comment for this story by press time.) In paperwork it submitted to MCH, EMark also claimed to own high-tech data centers secured with biometric hand-scanning devices and a “man trap” that would prevent thieves from exiting the building. However, the address listed for EMark’s corporate headquarters is actually a ramshackle three-bedroom house in El Sereno, a working-class neighborhood in East Los Angeles where EMark’s CEO, Santiago Lopez, used to live. In a phone interview, Lopez insisted that the biographies of his company’s board of directors were all real. “These are people I work with every day,” he stated, although he refused to make them available for an interview. “You’re getting into an area where I probably need to talk to my lawyer. We got pulled into a very bad situation.”
Lopez claimed his company received $5 million from MCH after he met Lampariello “at a club” where a mutual friend introduced them. (Lampariello stated in a deposition in the suit against OCPIN that he never met Lopez). According to a declaration signed by Lopez on Oct. 23, 2006, which IHHI handed over to OCPIN’s lawyers earlier this year, just five days before EMark received millions from MCH, EMark’s directors held a meeting at the aforementioned house in East LA, and a man named Rolf Hirschmann was appointed vice president. Hirschmann also happens to be CEO of an Internet-consulting company called Form Labs, which received $10,000 from IHHI thanks to the personal intervention of Mogel, despite the fact that IHHI already had another company performing the same work, according to court files. As the Weekly previously reported, there is no evidence, other than an amateurish website and an unnamed “administrator” who gave cryptic answers to e-mails sent to the website, that the company has ever done any business. OCPIN’s lawsuit against IHHI alleged that “Mogel used $10,000 of IHHI’s funds to arrange and pay for the black gloves and gun to be planted in Dr. Fitzgibbons’ vehicle, leading to his arrest.”
Mogel, who resigned from IHHI last year, has denied any wrongdoing; Hirschmann could not be located for an interview. For his part, EMark’s Lopez insists he’s never met Hirschmann and never signed any document naming him as vice president. “I never saw any such piece of paper,” he said of the document bearing his own name. Lopez also claimed he was unaware that a bench warrant was issued for his arrest in February, after he failed to respond to a subpoena demanding he answer questions and provide documents about EMark in IHHI’s lawsuit against OCPIN, which IHHI settled shortly thereafter for $2.7 million. Upon learning this fact, Lopez quickly ended the interview. “My head’s totally spinning here, for real,” he said. “This is not a good thing.”
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