Sedgwick LLP has reached a tentative settlement to resolve a lawsuit over its role in a $1 billion Ponzi scheme in California, the National Law Journal reported today. Sedgwick spokesman Christopher Carter said that the law firm denies all liability in the case. The case against Sedgwick, brought in 2011, alleges that the firm caused $210 million in investor losses when it failed to alert its client, Medical Capital Holdings Inc., a purported medical receivables purchasing firm, about unauthorized loans its officers were making. Individual Sedgwick attorneys were not named as defendants. Thomas Seaman, appointed receiver in 2009 as part of a U.S. Securities and Exchange Commission case, claimed that Sedgwick failed to disclose conflicts or obtain the necessary waivers on the loans and that it aided and abetted Medical Capital’s officers in breaching a fiduciary duty to its client. The receiver claimed that Medical Capital raised about $1.7 billion from 20,000 investors between 2003 and 2009. In 2011, former Medical Capital president Joseph Lampariello pleaded guilty to wire fraud in connection with his role in the Ponzi scheme. He is scheduled to be sentenced on May 4. The Sedgwick case focused on 22 allegedly fraudulent loans.
