Entrepreneurial doctor taking roll-up public.

With a long, successful career behind him, Dr. Jacob Terner could easily spend his days hitting the links or working on his collections of rare coins and modern art.

Instead, the doctor-turned-businessman finds himself holed up in his offices at a small Culver City business park, where he is readying himself at the age of 70 to again run a public company--and a tough play at that.

Terner, who built the HMO Century Medicorp Inc. before selling it off for $150 million in 1992, is awaiting approval to list his latest company, Prospect Medical Holdings Inc., on the American Stock Exchange. It's a twist on the physician management groups that failed a few years ago and few thought were ready for a comeback.

He's also doing it in the new, post-Enron environment, where even the whiff of corporate malfeasance can send investors scurrying away--a problem for Terner, whose career has been marred by an insider trading settlement with the Securities and Exchange Commission related to the Medicorp sale.

At Medicorp, he was associated with Stanley Goldblum, a notorious white-collar criminal convicted in a huge 1970s-era securities fraud case. Goldblum was a principal in a company that Terner purchased, and Terner kept him on for some time before buying him out.

"Lurid things are always more interesting than vanilla things," said Terner. "But against a lifetime of honest and good dealings and service, reasonable people will give it its proper weight and analysis."

So why go through it?

He tried retirement, but he was bored. He would go down to his office at Brotman Medical Center, where he once headed the pathology department, but he felt "totally irrelevant," he said.

"It was not a productive existence. I enjoy what I am doing."

Terner's latest venture dates back to 1996, when publicly traded physicians' groups were drawing huge multiples from investors. He decided to roll up some local independent practice associations and then sell them to the big, publicly traded companies.

He raised about S4.3 million from friends and family members who had made money off the Medicorp sale and got a $12.5 million loan from Imperial Bank, where he had long done business, and went to work.

Three years later, Prospect Medical had acquired over half a dozen groups from Orange County to Santa Barbara. But there was a problem: The publicly traded physician practice management companies were failing.

Prospect itself lost nearly $1 million itself in 1999 and 2000, but earned nearly $1 million in 2003. "I found myself in a position of having to make money the old-fashioned way," he joked. "I had to earn it."

The next step was to take the company public. But that process was complicated by Terner's insider trading settlement and his association with Goldblum.

Terner was accused of tipping the Medicorp sale off to a doctor friend, who scooped up a bunch of stock and made a profit of $225,750 when the company was sold to a predecessor of Health Net Inc. He says he didn't do it, and made no money on the insider transaction, but rather than fight the charges he paid a settlement equivalent to his friend's profit.

Terner also agreed to a permanent injunction against ever violating insider trading laws again--but he wasn't barred from running a public company, a punishment many insider traders receive.

Still, as he and his underwriter sought to close a $12 million private placement over the past year, Terner was forced to explain the circumstances repeatedly to prospective investors.

"It was not an easy situation for us," said Spencer Segura, senior director of investment banking for Spencer Trask Ventures Inc., the underwriter. "Here is this guy with this incredible track record and reputation, yet he had this stupid SEC thing. If he had money on the deal we would have been dead, and we wouldn't have (underwritten) it."

Spencer Segura had known Terner for a decade. Still, the SEC settlement and connection with Goldblum was troubling. The firm decided to bring in a consultant to look over Prospect's business practices.

"What it does do is heighten your radar," Segura said.

Ultimately, Trask considers Terner's involvement with Goldblum simply bad judgment by a businessman who, for all his canniness, appears to have a soft streak. "He is the kind of guy who does not not take your phone call," Segura said.

Terner's settlement with the SEC was disclosed in the prospectus for the private placement, although it wasn't required since it was over five years old. Segura says he also was required to personally explain it to an assemblage of brokers who sold the placement.

However, the association with Goldblum was not disclosed. Spencer Trask decided it was a peripheral matter that did not harm any investors, Segura said.

Terner became a businessman by accident. A native New Yorker, he got his medical degree from the University of Buffalo in 1961 and later studied pathology at Columbia University before being drafted into the army during the Vietnam War.

After leaving the service, Terner headed to the West Coast with his wife and two children, building a successful private practice and becoming chairman of the pathology department of Brotman Medical Center, where he now sits on the board. He also taught obstetrics and gynecology at the USC School of Medicine on a volunteer basis from 1973 to 1993, holding the title of clinical professor.

"He assembled the best pathology staff of any independent hospital in the city," said Dr. Keith Agre, a Bevery Hills internist and friend of Terner. "He is a good businessman, but what he has done in medicine is admirable."

Terner's career veered away from clinical medicine in the 1980s, when his private medical group took over a chain of failing Los Angeles area clinics called Pele Medi-Corp., which serviced Latino patients.

That company formed the backbone of what became Century Medicorp, which later bought East Los Angeles Doctors Hospital and Gardena Hospital and three area HMOs. Century Medicorp had a total of 120,000 enrollees by 1992.

Terner said he could see that the era of managed care was coming--and with it, consolidation. He was right. Foundation Health Corp., the predecessor to Health Net, bought Century in July 1992 in a stock swap valued at over $140 million.

But as much as Century Medicorp has been Terner's greatest business achievement, it's also proved to be his Achilles' heel, starting with his association with Goldblum, who was an executive at Pele.

Goldblum had spent five years in prison after being convicted in 1974 for selling $1 billion of phony insurance policies into the reinsurance market through his Equity Funding Corp. of America, based in Century City. At the time it was considered one of the biggest Wall Street scandals ever.

Terner remembers Goldblum pleading for his job--and Terner relenting. He allowed Goldblum to remain with the company as president.

The decision made it hard to gel a reputable accounting firm to audit Century Medicorp's books. Eventually, Peat Marwick agreed to conduct the audit if Goldblum had much of his responsibilities taken away.

Finally, Terner says he was forced to buy out Goldblum when the state would not give the company a license to run its first HMO in 1988 while the convicted swindler was still aboard.

If Prospect's stock listing is approved, Terner figures a rising share price will help fund about two new acquisitions each year.

Not everyone thinks its such a great idea.

Dr. Marcy Zwelling-Aamot, president of the Los Angeles County Medical Association, says large physician management companies are another layer of bureaucracy between the physician and patient that threatens doctors' financially. "The health care industry is filled with a lot of promised money that seems always to get tied up at higher levels." she said.

Terner says he knows there are doubters out there, but says he relishes the prospect of running a public company.

And if it doesn't work out. he can always go back to coin collecting.