WASHINGTON, D.C. – Today, the Consumer Financial Protection Bureau (CFPB) took action against Loan Doctor to resolve the CFPB’s claims that the company and its founder, Edgar Radjabli, broke the law by deceiving consumers into thinking they were depositing funds into a guaranteed return savings product within a commercial bank. Loan Doctor and Radjabli falsely represented that deposited funds would be used to originate loans for healthcare professionals, would be held in insured accounts or backed by cash alternatives, and would yield interest rates between 5% and 6.25%. If approved by the court, the proposed settlement would require the defendants to refund all the deposits made, including all interest due to consumers. The defendants would also pay a civil money penalty, and be permanently banned from engaging or assisting others in any deposit taking activities. Radjabli has been separately charged by the Securities and Exchange Commission (SEC).
“Loan Doctor and its founder masqueraded as a traditional bank to open accounts for people seeking a high-yield savings product,” said CFPB Director Rohit Chopra. “In reality, this outfit and its ringleader were using customer funds for risky investments.”
My Loan Doctor, which does business as Loan Doctor, is a Delaware financial services company operating in West Palm Beach, Florida, and New York City. Loan Doctor purported to offer customers a Healthcare Finance Savings CD account that would yield, according to the company, “the highest return of any savings product in the US.” In addition to being its founder, Edgar Radjabli, was an officer of Loan Doctor and responsible for its management.
The CFPB alleges that Loan Doctor and Radjabli made several false, misleading, and inaccurate marketing representations in advertising Loan Doctor’s Healthcare Finance Savings CD account. Starting in August 2019, Loan Doctor took millions of dollars from at least 400 individuals who opened and deposited money into Loan Doctor’s deceptively advertised savings product. Specifically, Loan Doctor and Radjabli falsely represented that:
- Customer deposits would originate loans for healthcare professionals: Loan Doctor and Radjabli told depositors that when it originated a loan, it would have an investor lined up to purchase it. In fact, Loan Doctor never used the deposits to originate loans for healthcare professionals, and it never entered into a contract with a buyer or investor to purchase a loan.
- Customer deposits would be secure: Loan Doctor represented that when not being used to originate loans, deposited funds would be held in an FDIC-insured account or an account insured by Lloyd’s of London, or backed by a “cash alternative” or “cash equivalent.” Loan Doctor also stated that it maintained a cash reserve in an amount equivalent to the amount customers deposited. CFPB’s investigation found that Radjabli instead placed funds in a hedge fund he controlled and in crypto-assets, such as Celsius Network. Deposited funds were also invested in actively traded securities or loaned, through a third party, to investors using individual stock portfolios as collateral.
- Loan Doctor was a commercial bank: Loan Doctor misled customers to believe they were depositing their funds into accounts like traditional savings accounts that had guaranteed returns. In fact, Loan Doctor was not a commercial bank, and depositors’ funds were invested in volatile securities or securities-backed investments.
- Healthcare Finance High-Yield CD accounts had a record of paying high interest rates: Loan Doctor stated that the accounts paid interest at rates between 5% and 6.25% in years prior to 2019. In fact, Loan Doctor did not begin taking consumer deposits until August 2019.
Under the Consumer Financial Protection Act, the CFPB has the authority to take action against institutions violating consumer financial protection laws, including engaging in unfair, deceptive, or abusive acts or practices. The proposed settlement, if approved by the court, would require Loan Doctor and Radjabli to:
- Refund approximately $19 million to approximately 400 depositors: The defendants would have to return the money that each affected person deposited into a Loan Doctor Healthcare Finance High Yield CD account, and in a manner consistent with the advertised terms of the product – namely, the principal along with an average per year interest rate of about 6%.
- Stop engaging in deposit taking activities: The defendants would be permanently banned from engaging or assisting others in any deposit taking activities.
- Pay a $391,530 fine: The order would require defendants to pay a civil money penalty to the CFPB in the amount of $391,530. A portion of that penalty, $241,530, will be remitted because the defendants paid that amount in penalties to the SEC due to a similar action brought by that agency. The remainder of the penalty would be deposited into the CFPB’s victims relief fund.
Consumers can submit complaints about financial products or services by visiting the CFPB’s website or by calling (855) 411-CFPB (2372).
Employees of companies who they believe their company has violated federal consumer financial laws are encouraged to send information about what they know to [email protected].
The Consumer Financial Protection Bureau (CFPB) is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit www.consumerfinance.gov.