The U.S. Securities and Exchange Commission (SEC) has intensified its investigation into Coral Gables-based MSP Recovery Inc., now known as LifeWallet, by issuing subpoenas to four of the company’s officers this summer. The subpoenas, issued in June and July, request “additional documentation” as part of an ongoing probe into the insurance claims recovery firm’s practices and potential securities violations that have been under scrutiny since 2022.
SEC’s Deepening Inquiry Targets Company Officers
The latest subpoenas signal a more granular phase of the federal investigation into MSP Recovery Inc. The company, which operates under the LifeWallet brand, confirmed in its recent quarterly filings that the SEC requested further records from four unnamed officers. This action follows earlier subpoenas issued by the SEC in 2023 and parallel investigations by the U.S. Attorney’s Office for the Southern District of Florida, which have been examining the company’s financial projections, investor agreements, and the proprietary data analytics platforms and algorithms that form the core of its business model.
MSP Recovery’s business centers on identifying and recovering improperly paid insurance claims, often where a different insurer should have been primary payer, particularly concerning Medicare secondary payer issues. The company aims to recoup funds for healthcare providers and insurers.
A History of Regulatory Pressure and Financial Struggles
MSP Recovery, founded by attorney and entrepreneur John H. Ruiz, went public in May 2022 through a Special Purpose Acquisition Company (SPAC) merger with Lionheart Acquisition Corporation II. At the time, the company boasted a valuation of over $32 billion, briefly placing Ruiz on the Forbes list of billionaires. However, since its public debut, the company’s stock has experienced a dramatic decline, and its financial performance has fallen significantly short of ambitious projections.
In recent filings, MSP Recovery has acknowledged considerable financial distress, admitting to “substantial doubt” about its ability to continue as a going concern. The company reported minimal revenue in recent quarters, including just over $300,000 between March and June of a recent year, alongside net losses exceeding $211 million. These financial woes have coincided with the escalating federal investigations.
The SEC’s interest reportedly focuses on the company’s funding sources prior to its public listing and various statements and disclosures made in connection with and following the business combination. The company has also faced scrutiny over accounting issues, with some of its financial statements previously deemed unreliable.
John Ruiz: A Prominent Miami Entrepreneur
John H. Ruiz, a notable attorney and businessman in Miami, has been a prominent figure in various sectors, including sports and healthcare technology. He gained significant public attention as a University of Miami booster and for his substantial investments in Name, Image, and Likeness (NIL) deals for student athletes. Despite his public profile and past financial successes, the investigations into his flagship company, MSP Recovery/LifeWallet, have cast a long shadow.
Ruiz has previously stated that neither he nor the company are targets of a criminal investigation and has publicly contested the framing of the news reports. He has also initiated legal action against the Miami Herald, alleging defamation over its coverage of the federal probes.
Broader Implications for Private Companies and Investors
The SEC’s heightened focus on MSP Recovery underscores a broader trend of increased regulatory scrutiny on companies, regardless of their public or private status, particularly concerning financial disclosures and business practices. Investigations by the SEC can lead to significant financial penalties, restrictions on business activities, and reputational damage. For investors, the ongoing probe and the company’s financial instability raise serious concerns about the value and future prospects of their holdings.
The fact that the SEC is now subpoenaing company officers suggests a deepening investigation, potentially examining individual responsibilities and specific corporate actions. The agency’s enforcement actions often aim to ensure transparency and accountability in financial markets, protecting investors from potential fraud or misrepresentation.
Continued Uncertainty for MSP Recovery
As the SEC and the U.S. Attorney’s Office continue their investigations, the future of MSP Recovery Inc. (LifeWallet) remains uncertain. The company’s admission of doubt about its operational continuity, coupled with the ongoing federal scrutiny, paints a challenging picture for its stakeholders. The outcome of these investigations will likely have significant repercussions for John Ruiz, his associated businesses, and the broader landscape of corporate accountability.
The current developments represent a critical juncture for the Miami-based company, as regulators seek to ensure compliance with securities laws amid allegations of misrepresentation and financial irregularities. This news is a significant development in the ongoing saga surrounding one of South Florida’s most prominent business figures and his ventures.
