The CFPB announced last week that it has entered into a proposed settlement of the lawsuit it filed in July 2020 against My Loan Doctor, LLC (“Loan Doctor”) and its founder, Edgar Radjabli, for allegedly making false, misleading, and inaccurate representations in connection with advertising Loan Doctor’s Healthcare Finance Savings CD Accounts. The settlement requires the defendants to pay more than $19 million to approximately 400 depositors and a civil money penalty of $391,530 to the CFPB.
The CFPB’s complaint alleged that Loan Doctor and Radjabli had engaged in deceptive acts or practices in violation of the Consumer Financial Protection Act by making the following misrepresentations:
- Loan Doctor would use consumers’ deposits to originate loans to healthcare professionals and had lined up investors in advance to purchase the loans that Loan Doctor originated. The Bureau claimed that Loan Doctor did not use deposits to originate loans and did not enter into contracts with investors to purchase such loans.
- Customers were depositing funds into accounts similar to traditional savings accounts with guaranteed returns, creating the impression that Loan Doctor was a commercial bank. The Bureau claimed that depositors’ funds were invested in volatile securities or securities-backed investments.
- 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.” The Bureau claimed that Radjabli instead placed funds in a hedge fund he controlled and in crypto-assets and also invested deposited funds in actively traded securities or loaned funds, through a third party, to investors using individual stock portfolios as collateral.
- CD Accounts paid interest at rates between 5-6.25% for years prior to 2019. The Bureau claimed that Loan Doctor did not begin taking consumer deposits until August 2019.
In addition to permanently banning the defendants from engaging or assisting others in any deposit-taking activities, the proposed settlement requires the defendants to:
- Refund to consumers the full amount of deposits accepted by the defendants (which, according to the proposed stipulated judgment, the defendants have represented to the CFPB to be more than $19 million), plus all interest due under Loan Doctor’s advertised terms (and which total obligation, according to the proposed stipulated judgment, the defendants have represented to the CFPB that they have already satisfied); and
- Pay a civil money penalty of $391,530 to the CFPB, with $241,530 of that amount to be remitted because of the defendants’ payment of that amount in penalties to the Securities and Exchange Commission for related conduct in connection with a lawsuit brought by the SEC. (Information about the SEC’s lawsuit against is available here.)