TAMPA – LAWFUEL – The Law News Network – Paul I. Perez, United States Attorney for the Middle District of Florida, announced today that James Lamar McMichael pled guilty in the United States District Court to a charge of securities fraud. A sentencing date has not been set. McMichael is facing a maximum penalty of imprisonment of up to 20 years and a fine of $5 million.
McMichael, age 55, is a resident of Tavares, Florida, and is the former President
and CEO of PhyMed Partners, Inc., which owned PhyMed Pain and Rehabilitation Centers, L.L.C. (collectively “PhyMed”). PhyMed conducted business from 1998 until early 2003, and at one time operated four chronic pain management clinics, all of which were located in Florida.
McMichael pled guilty to making false representations of material facts and
engaging in fraudulent practices and acts in connection with the offering and sale of
PhyMed securities to investors. A written plea agreement, signed by McMichael and filed with the court, indicates that between September 1998 and January 2003, PhyMed raised more than $30 million from investors who were never told that PhyMeds clinics had a negative cash flow through October 31, 2000, in excess of $9.3 million. Instead, investors were told that PhyMed forecasted a positive cash flow within nine months of operation, reaching a net profit before taxes of 32% to 37% and annual growth thereafter to exceed 10%. Investors were also told that a substantial portion of their investments would be used for operating costs for existing clinics and the opening of new clinics, when, in fact, their investments were used primarily to pay existing obligations owed to previous investors.
None of the pain clinics ever made a profit and the losses to investors were between $15- $20 million.
The case was investigated by the Maitland Office of the Federal Bureau of
Investigation and the Florida Office of Financial Regulations. The case is being prosecuted by Assistant United States Attorney Dennis I. Moore.