Breaking from the bare-knuckle New York Senate race: Republican/Teabagger candidate Joe DioGuardi has a bit of a problem with the Securities and Exchange Commission, the Federal agency that provides oversight over the nation's capital markets.
That problem is a Madoff-style Ponzi scheme.
Daily News:
U.S. Senate hopeful Joe DioGuardi prides himself on his accounting expertise - but he has a history with a firm the feds say ran a $1.7 billion Ponzi scheme.
Medical Capital Holdings and its subsidiaries bilked investors out of $1 billion while sinking millions into a mega-yacht and Hollywood flop, a complaint filed last year by the Securities and Exchange Commission said.
From 2007 to 2009, the former Westchester Republican congressman was paid $5,000 a month as a consultant for the subsidiary Medical Capital Corp. - and also got $16,000 a year to sit on boards of various other MCH subsidiaries.
Oops.
MCH moved last year to have DioGuardi replace a court-appointed manager of its assets, which include the $3.2 million yacht Home Stretch and the $18.1 million movie rights to the recent flick "The Perfect Game." [...]
Since the managers didn't tell the court about DioGuardi's background with the company, the SEC said their "attempt to hide their connections to so-called 'new' management shows that there is a genuine danger that 'new' management is connected to the original fraudulent scheme."
The substance of the case is open and shut: Medical Capital Holdings, a California-based firm, is currentlybeing sued by the SEC for defrauding investors. The firm is presentlyin receivership, its assets frozen pending the Federal court case and a related action by the Commonwealth of Massachusetts. The damage done to investors is a cool $1bn, for $700m of private placement notes ostensibly intended to buy medical receivables and not luxury yachts.
DioGuardi, a former Republican congressman challenging Democratic Sen. Kirsten Gillibrand, once sat on the boards of three wholly-owned subsidiaries of Medical Capital Holdings, according to court documents. And defendants in the lawsuit last year tried to have him replace a court-appointed manager of Medical Capital Holdings and its subsidiary, Medical Capital Corp., according to court filings first reported on Tuesday in the New York Daily News.
DioGuardi, a certified public accountant, is not a defendant in the case.
SEC lawyers responded sharply to the request, saying in a court filing that DioGuardi was an "old crony" of the firms' directors and had been on their payroll since at least 2004. They said DioGuardi received $5,000 a month from MCC for consulting from January 2007 through at least March 2009, in addition to director fees of $4,000 per quarter.
This country has become sadly accustomed to fraud and graft in high places, and we've paid an absolutely ruinous price for it. What's not discussed often enough, however, is the role played by accomplices like Joe DioGuardi in covering up and enabling outright fraud.
And it doesn't get closer to enabling a cover-up than sitting on the audit committee of a Ponzi scheme, does it?
This is a story that needs to be spread. Team Gillibrand - do these people ever sleep? - is on it like mustard on a hot dog, with a hard-hitting attack site and a killer new web ad.
Ponzi Joe
Nice, eh?
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