National Medical Funding -
Palmieri
The corporate offices of C. J. Palmieri Enterprises, Inc., known as
National Medical Funding (NMF), were served with a search warrant in connection
with sale of viatical investments that are suspected of being fraudulent.
Palmieri's corporate offices at other locations in San Diego County
(one of which is Sierra Funding Group) also were served with search warrants on March 28, 2002.
The companies were shut down, assets and bank accounts seized and frozen, and a receiver installed at Palmieri's businesses.
The investigation began when a San Diego Police Financial
Crimes investigator followed up on bad checks written by Palmieri, who was
attempting to settle some investor claims. The investigator contacted James K.
Openshaw, the attorney recently appointed by the Dept. of Corporations to head
the Enforcement and Legal Services Division.
Openshaw, who is in charge of securities fraud, discovered
that the Dept. of Insurance had begun an investigation based on complaints
filed with that agency. Openshaw organized the joint task force "freeze and
seize" effort, which included the California Dept. of Insurance Criminal
Investigations Branch's Investigations Bureau, the San Diego County District
Attorney's Office, and the California Dept. of Corporations.
The Arizona Corporate Commission also is pursuing these
entities. Many seniors in Arizona were
victims of National Medical Funding viatical contracts, marketed by Robert Shearburn, Sr., and Robert Shearburn, Jr.
through their company, Innovative Financial Services, Inc. (IFS). The Shearburns
and IFS join Palmieri and National Medical Funding as defendants in the suit
filed by the State. The suit seeks injunctive relief, disgorgement, restitution,
and civil penalties for the sale of unregistered securities.
Previous to this effort,
Arizona had earned an outstanding reputation for its aggressive pursuit of fraudulent
viatical investment sales, whereas California's passivity created a fertile
climate for schemers and con artists. California's joint task force, a first in
the state, is expected to be the beginning of a pattern in which the Department
of Corporations, which regulates investments, will "aggressively pursue this
type of action in the future, particularly with viatical companies and where
there are assets to attach."
In 1995 and 1996 Palmieri's National Medical Funding was searched by the
Department of Insurance, which found evidence that the company served as a front
for Life Partners, Inc., a Waco, Texas-based viatical broker that solicited
policies from viators. That led to cease and desist orders served to Life
Partners, Inc., in August 1996.
Investors and other interested parties are encouraged to direct inquiries to
attorney Openshaw at the Department of Corporations (916) 324-5216. (Do not
contact the California Dept. of Insurance. CDI does not have information on the
current status of the receivership.)
The above information was posted April 4, 2002 and updated April 11, 2002
May 18, 2002 Update:
