James Lamar McMichael and Nancy A. McMichael
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19434 / October 19, 2005
Securities and Exchange Commission v. James Lamar McMichael and Nancy A. McMichael, U.S. D.C., M.D. Fla., Tampa Division, Civil Action No. 8:05-cv-01937-RAL-TGW
SEC CHARGES TWO FLORIDA EXECUTIVES WITH OFFERING FRAUD
The Securities and Exchange Commission announced that on October 17, 2005 it filed a civil complaint in the United States District Court for the Middle District of Florida, Tampa Division, against James Lamar McMichael and his wife, Nancy McMichael, arising out of their roles in connection with the unregistered and fraudulent securities offerings by PhyMed Partners, Inc. and Healthcare Preferred Capital, Inc.
According to the Commission's complaint, the McMichaels orchestrated, directed, and controlled the fraudulent and unregistered offer and sale of approximately $33 million of securities issued by PhyMed and Healthcare Preferred from October 1998 until at least May 2003. The complaint alleges that PhyMed and Healthcare Preferred, at the direction of the McMichaels, offered and sold the securities to more than 500 investors in at least 23 states. The complaint alleges that PhyMed developed and operated pain management clinics and Healthcare Preferred claimed to be a financial services consultant.
The Commission's complaint alleges that in connection with the PhyMed securities offerings, the McMichaels made misrepresentations and omissions of material fact to investors concerning, among other things, the likely investment returns, the use of investor funds, and risks of the investment. The complaint also alleges that in connection with the related Healthcare Preferred securities offerings, the McMichaels made misrepresentations and omissions of material fact to investors concerning, among other things, Healthcare Preferred's misuse of investor funds by transferring the funds to PhyMed and the McMichaels. According to the complaint, both PhyMed and Healthcare Preferred are now defunct and investors collectively have lost over $20 million.
The Commission's complaint seeks permanent injunctions, an order of disgorgement of ill-gotten gains, and an order of civil money penalties against the McMichaels for violating the antifraud and registration provisions of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
