My Loan Doctor LLC and Edgar Radjabli
Documents in this case
Case summary
On July 6, 2020, the Consumer Financial Protection Bureau (Bureau) filed a lawsuit against My Loan Doctor LLC, a Delaware company operating in West Palm Beach, Florida and New York City and doing business as Loan Doctor (Loan Doctor), and its founder, Edgar Radjabli. The Bureau alleged that Loan Doctor and Radjabli made several false, misleading, and inaccurate marketing representations in advertising Loan Doctor’s “Healthcare Finance (HCF) Savings CD Account,” in violation of the Consumer Financial Protection Act of 2010’s prohibition against deceptive acts or practices. The Bureau alleged that, starting in August 2019, Loan Doctor took millions of dollars from at least 400 consumers who opened and deposited money into Loan Doctor’s deceptively advertised product. On December 9, 2022, the court entered a stipulated final judgment and order which requires defendants to pay a civil money penalty of $391,530, of which $241,530 will be remitted because of defendants’ satisfaction of their obligation to pay that amount in penalties to the Securities and Exchange Commission for related conduct in SEC v. Radjabli et al., 2:21-cv-01761. The order also requires redress to consumers in the form of a refund of all the deposits made with defendants, including all interest due to consumers under the advertised terms of the purchased financial products and services. Defendants have represented to the Bureau that they have already satisfied the obligation to provide redress because they already refunded the full amount received from consumers, plus all interest due to consumers under the terms advertised. The Bureau estimates the redress amount to be approximately $19 million, but an exact calculation has not yet been completed. The order also permanently bans the defendants from engaging or assisting others in any deposit-taking activities.
Complaint ()
PDF of this document (15 pages)
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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
Bureau of Consumer Financial Protection,
Plaintiff,
v.
My Loan Doctor LLC d/b/a Loan Doctor and Edgar Radjabli,
Defendants.
CASE NO.
COMPLAINT
The Bureau of Consumer Financial Protection (Bureau) brings this action against My Loan Doctor LLC d/b/a Loan Doctor (Loan Doctor) and Edgar Radjabli and alleges as follows.
INTRODUCTION 1.
The Bureau brings this action against Loan Doctor and Radjabli under § 1054 of the Consumer Financial Protection Act of 2010 (CFPA) to address deceptive acts or practices in connection with offering consumers a “certificate of deposit” (CD), purportedly created to generate capital for Loan Doctor’s healthcareloan-origination business.
Case 1:20-cv-05159 Document 1 Filed 07/06/20 Page 1 of 15
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JURISDICTION AND VENUE
2.
This Court has subject-matter jurisdiction because this action is “brought under Federal consumer financial law,” 12 U.S.C. § 5565(a)(1), presents a federal question, 28 U.S.C. § 1331, and is brought by an agency of the United States, 28 U.S.C. § 1345.
3.
This Court has personal jurisdiction over Defendants because the causes of action arise from Defendants’ conduct in this district. 12 U.S.C. § 5564(f).
4.
Venue is proper in this district because Defendants have done business in this district. 12 U.S.C. § 5564(f).
PARTIES
5.
The Bureau is an agency of the United States charged with regulating the offering and provision of consumer-financial products and services under “Federal consumer financial laws,” 12 U.S.C. § 5491(a), including the CFPA, 12 U.S.C. § 5481(14). The Bureau has independent litigating authority, including the authority to enforce the CFPA. 12 U.S.C. § 5564(a), (b).
6.
Loan Doctor is a Delaware financial-services company operating in West Palm Beach, Florida, and New York, New York.
7.
Because Loan Doctor is a company, it is a “person” as that term is defined in the CFPA. 12 U.S.C. § 5481(19).
8.
At all times relevant to this Complaint, Loan Doctor has been a “covered person” under the CFPA, 12 U.S.C. § 5481(6)(A), because it “engages in offering or providing a consumer financial product or service.” The CFPA defines Case 1:20-cv-05159 Document 1 Filed 07/06/20 Page 2 of 15
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“consumer financial product or service” to include “engaging in deposit-taking activities . . . or otherwise acting as a custodian of funds . . . for use by or on behalf of a consumer” for personal, family, or household purposes. 12 U.S.C. § 5481(5), (15)(A)(iv). Loan Doctor offers to accept deposits from consumers and to act as a custodian of those funds for use by consumers for personal, family, or household purposes.
9.
Radjabli is a “related person” under the CFPA, 12 U.S.C. § 5481(25)(C)(i), because he was an officer of Loan Doctor and was charged with managerial responsibility for Loan Doctor.
10.
As a related person, Radjabli is liable because he is deemed to be a “covered person” under the CFPA, 12 U.S.C. § 5481(25)(B), and because he has engaged in the deceptive acts and practices described below, in violation of § 1036(a)(1)(B) of the CFPA, 12 U.S.C. § 5536(a)(1)(B).
FACTS
11.
Radjabli founded Loan Doctor in July 2019 with the following business plan: Loan Doctor would originate loans for healthcare professionals wanting to purchase or start a new practice; Loan Doctor would then immediately sell those loans for a profit to pre-committed secondary investors.
12.
To purportedly fund these loans before selling them to buyers, in August 2019, Loan Doctor began offering consumers what it dubbed a “Healthcare Finance (HCF) Savings CD Account,” or an “HCF High Yield CD Account,” Case 1:20-cv-05159 Document 1 Filed 07/06/20 Page 3 of 15
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featuring what Loan Doctor referred to in its advertising as “the highest return of any savings product in the US at 6% APY.”
13.
The minimum deposit required from a consumer to open an “HCF High Yield CD Account” was $1,000.
14.
Loan Doctor advertised that any deposit made by a consumer would result in the purchase of a CD that matured monthly and could be withdrawn, with interest, with one month’s notice.
15.
Loan Doctor marketed its HCF High Yield CD Account through a variety of media: its website, targeted Facebook and Google advertisements, press releases, emails to individuals who had expressed interest, and emails to registered investment advisors. Radjabli wrote or edited most of the content for Loan Doctor’s website and marketing materials.
16.
Starting in August 2019, Loan Doctor took more than $15 million from at least 400 consumers who opened and deposited money into an HCF High Yield CD Account.
17.
In its marketing materials, including on its website, Loan Doctor made false and inconsistent representations about both its business model and the stability of the funds deposited in its CDs.
18.
Specifically, Loan Doctor:
a.
falsely represented that it used the money deposited in its HCF High Yield CD Accounts to originate loans for healthcare professionals Case 1:20-cv-05159 Document 1 Filed 07/06/20 Page 4 of 15
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and that it always had a buyer lined up for the loans before each loan’s origination;
b.
falsely represented that, to the extent that money deposited in one of its HCF High Yield CD Accounts was not being used to originate loans, the money would be held in one of the following locations—an FDIC-insured account, a Lloyd’s of London-insured account, or a “cash alternative” or “cash equivalent” account; c.
falsely touted the stability of its HCF High Yield CD Accounts by likening those accounts to various types of savings accounts and falsely describing itself as a “commercial bank”; and d.
falsely represented past returns on its HCF High Yield CD Accounts.
False, Misleading, and Inaccurate Representations that Loan Doctor Would Use Consumers’ Money to Originate Loans for Resale to Pre-Committed Secondary Investors
19.
Loan Doctor claimed that the money deposited in its HCF High Yield CD Accounts would be used to originate loans for healthcare professionals.
20.
According to its website, “[s]imilar to a bank, the funds deposited in the account allow Loan Doctor to fund healthcare lending needs during very short time periods, before the originated loans are securitized and sold to large institutional investors.”
21.
Loan Doctor further claimed that whenever it originated such a loan, it already had an investor lined up to purchase that loan. Case 1:20-cv-05159 Document 1 Filed 07/06/20 Page 5 of 15
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22.
Specifically, Loan Doctor’s website stated that “[w]hen loans are originated, Loan Doctor always has a securitization buyer/investor available.”
23.
Loan Doctor’s website also stated that, “[u]nlike a bank which must account for defaults on the loans it issues, Loan Doctor’s ability to immediately resell the loans ensures that it is not exposed to defaults.”
24.
Loan Doctor’s website further explained that in the current market, there is a “tremendous appetite for highly performing loans such as those made to healthcare professionals,” and “Loan Doctor therefore has only short term financing needs to help generate new lending activity to its high credit grade healthcare clients, as it is guaranteed to resell the debt within the 1 month term of the CD.”
25.
In addition, Loan Doctor’s website made the claim: “The Loan Doctor team has helped over 3500 doctors nationwide, originating over $500MM in loans.”
26.
Finally, Loan Doctor’s website also referred to its “trusted lending partners” and then listed specific banks’ names.
27.
But Loan Doctor never used the money invested in its HCF High Yield CD Accounts to originate loans for healthcare professionals.
28.
In fact, Loan Doctor never originated a loan for a healthcare professional.
29.
Loan Doctor never sold a loan to a bank or secondary-market investor.
30.
Loan Doctor never entered into any contracts to sell at a future date to buyers or investors a loan that it originated.
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False, Misleading, and Inaccurate Representations about the Location and Safety of Consumers’ Deposits
31.
Loan Doctor’s website contained a detailed FAQ section that was dedicated to explaining how Loan Doctor’s business operated and was designed to reassure consumers as to the safety of their deposits.
32.
Loan Doctor specifically stated that, when not being used to originate healthcare loans, consumers’ “idle” money would be held in one of the following places:
a.
“During the times that the funds are idle, they are invested in FDIC insured cash and cash equivalents with our banking partners, where they also earn interest”;
b.
“The funds in the CD account are deposited at either US banks where they are covered by FDIC insurance, or in the case of cash alternatives, by Lloyd’s of London up to $100MM”; and c.
“Loan Doctor maintains a cash reserve equivalent to the amount on deposit, therefore each account is 100% fully collateralized with cash/cash alternatives.”
33.
In fact, most of the money that consumers deposited with Loan Doctor was not held in the types of accounts described on Loan Doctor’s website. Instead, money that consumers deposited with Loan Doctor was placed in a hedge fund owned by Radjabli and then invested in securities, or it was invested with a securities broker-dealer that offered individuals high-interest loans backed by those individuals’ stock holdings.
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34.
Until February 2020, Loan Doctor invested between $100,000 and $200,000 of consumers’ deposits in a fintech company that claimed on its website to have been insured by a $100 million policy from Lloyd’s of London. But Loan Doctor ceased investing in the fintech company in February 2020 and later transferred the money to one of its other investment locations.
35.
Additionally, Loan Doctor was not capitalized by any source apart from consumers who made cash deposits into its HCF High Yield CD Accounts, rendering false the statement that “Loan Doctor maintains a cash reserve equivalent to the amount on deposit.”
36.
Loan Doctor concealed its true business model from consumers.
False, Misleading, and Inaccurate Representations that Loan Doctor’s HCF High Yield CD Accounts were Comparable to a Bank Savings Account
37.
Loan Doctor made several claims that compared its HCF High Yield CD Accounts to a traditional savings account with a guaranteed return, when, in fact, Loan Doctor invested most of the consumers’ money in volatile securities or securities-backed investments. Specifically, Loan Doctor claimed or implied that its HCF High Yield CD Accounts:
a.
provided a “short term savings option for clients looking for a stable, guaranteed and predictable interest income, comparable to a traditional bank savings account or CD”;
b.
had “[t]he highest return of any savings product in the US at 6% APY”;
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c.
provided a guaranteed return, asking in a Facebook advertisement, “Hey Mom and Dad, Are you getting a Guaranteed 6% APY on my college fund?”;
d.
mimicked a bank CD, comparing Loan Doctor’s structure to “Fractional Reserve Banking” and stating: “How does the HCF High Yield CD Account Earn Interest? Similar to a bank, the funds deposited in the account allow Loan Doctor to fund healthcare lending needs during very short time periods, before the originated loans are securitized and sold to large institutional investors”; and e.
functioned like a bank CD, stating: “Can the interest rate change? Yes, just like any bank savings or CD account, the HCF High Yield CD account interest rate could rise or fall, depending on market conditions, such as the federal rate or healthcare lending environment.”
38.
In fact, each representation described in paragraph 37 was false.
39.
Loan Doctor’s Facebook page explicitly stated that it was a “Commercial Bank.”
40.
Loan Doctor was not a commercial bank.
41.
The money that consumers deposited with Loan Doctor was actively traded in the stock market or used to make stock-backed loans.
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False, Misleading, and Inaccurate Representations about Past Performance of its HCF High Yield CD Accounts
42.
Loan Doctor’s Facebook page stated that, for the HCF High Yield CD Accounts it offered, “the principal is guaranteed and insured. The interest is not, but we have paid 6% through all of 2019 and 5% to 6.25% in years prior.”
43.
In fact, Loan Doctor only began offering its CD in August 2019, and consumers’ principal was neither guaranteed nor insured.
Defendants’ Post-Investigation Conduct
44.
On March 20, 2020, the Bureau requested that Loan Doctor cease offering its High Yield CD product to consumers and remove all marketing of the CD product from its website.
45.
On March 26, 2020, Loan Doctor partially heeded the Bureau’s request, removing all new offerings of its CD product from its website. But Loan Doctor did not cease operating.
46.
Instead, Radjabli contacted several financial advisors in an effort to continue to sell Loan Doctor’s High Yield CD product under a different name while still concealing its risks to consumers.
47.
In emails to those advisors, Radjabli made no mention of the Bureau’s request that Loan Doctor cease offering and marketing its CD product and stop taking any new deposits from consumers. Rather, Radjabli explained: “Our lending partners (who are big banks, mostly) have decided they do not like that we have a CD program because it competes with the savings products they offer. . . . So we’ve Case 1:20-cv-05159 Document 1 Filed 07/06/20 Page 10 of 15
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been basically given an ultimatum . . . which is: don’t advertise/call it a CD or they will not work with us on the lending side. . . . [T]he investment has to be called something that does not resemble a banking product.”
48.
Radjabli sought the advisors’ help to find a name for Loan Doctor’s product “that conveys the security, predictable income, imperviousness to stock market volatility etc of the product but without sounding like a bank product.”
VIOLATIONS OF LAW
49.
Under the CFPA, it is unlawful for any covered person to engage in a deceptive act or practice in connection with any transaction with a consumer for a consumer-financial product or service or the offering of a consumer-financial product or service. 12 U.S.C. §§ 5531(a), 5536(a)(1)(B).
50.
A practice is deceptive if (1) there is a representation or omission of information that is likely to mislead consumers acting reasonably under the circumstances and (2) that information is material to consumers.
COUNT 1 Deceptive Representations about Healthcare Lending
51.
The Bureau re-alleges and incorporates by reference paragraphs 1-50.
52.
Defendants represented that the money consumers deposited in HCF High Yield CD Accounts would be used to originate loans for healthcare professionals and that, at the time Loan Doctor would originate such a loan, it would already have an investor lined up to purchase that loan. Case 1:20-cv-05159 Document 1 Filed 07/06/20 Page 11 of 15
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53.
In fact, these representations were false because Defendants never used the money consumers deposited into HCF High Yield CD Accounts to originate loans for healthcare professionals, nor did Defendants enter into a contract with any buyer or investor to purchase a loan.
54.
Defendants’ misrepresentations were likely to mislead consumers acting reasonably under the circumstances.
55.
Defendants’ misrepresentations were material because they were likely to affect the conduct or decisions of consumers regarding whether to deposit money into the HCF High Yield CD Accounts.
56.
Therefore, Defendants engaged in deceptive acts or practices, in violation of the CFPA. 12 U.S.C. §§ 5531(a), 5536(a)(1)(B).
COUNT 2 Deceptive Representations about the Location of Consumers’ Deposits
57.
The Bureau re-alleges and incorporates by reference paragraphs 1-50.
58.
Defendants represented that the money consumers deposited into HCF High Yield CD Accounts, when not being used to originate loans, would be held in an FDIC-insured account, an account that is insured by Lloyd’s of London, or a “cash alternative” or “cash equivalent.”
59.
Defendants represented that Loan Doctor maintained a cash reserve in an amount “equivalent to” the money that consumers had deposited. Case 1:20-cv-05159 Document 1 Filed 07/06/20 Page 12 of 15
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60.
In fact, these representations were false because consumers’ funds were primarily invested in actively traded securities or loaned, through a third party, to investors using their individual-stock portfolios as collateral.
61.
Defendants’ misrepresentations were likely to mislead consumers acting reasonably under the circumstances.
62.
Defendants’ misrepresentations were material because they were likely to affect the conduct or decisions of consumers regarding whether to deposit money in the HCF High Yield CD Accounts.
63.
Therefore, Defendants engaged in deceptive acts or practices, in violation of the CFPA. 12 U.S.C. §§ 5531(a), 5536(a)(1)(B).
COUNT 3 Deceptive Representations Comparing Loan Doctor’s HCF High Yield CD Account to a Savings Account
64.
The Bureau re-alleges and incorporates by reference paragraphs 1-50.
65.
Defendants represented that Loan Doctor was a commercial bank.
66.
In fact, Loan Doctor was not a commercial bank.
67.
Defendants represented that money deposited in Loan Doctor’s HCF High Yield CD Accounts was safe and that the HCF High Yield CD Accounts were comparable to a traditional savings account with a guaranteed return.
68.
In fact, these representations were false because Defendants invested consumers’ money in volatile securities or securities-backed investments.
69.
Defendants’ misrepresentations were likely to mislead consumers acting reasonably under the circumstances. Case 1:20-cv-05159 Document 1 Filed 07/06/20 Page 13 of 15
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70.
Defendants’ misrepresentations were material because they were likely to affect the conduct or decisions of consumers regarding whether to deposit money in Loan Doctor’s HCF High Yield CD Accounts.
71.
Defendants therefore engaged in deceptive acts or practices, in violation of the CFPA. 12 U.S.C. §§ 5531(a), 5536(a)(1)(B).
COUNT 4 Deceptive Representations about Past Performance
72.
The Bureau re-alleges and incorporates by reference paragraphs 1-50.
73.
Defendants’ Facebook page stated that in years before 2019, the HCF High Yield CD Accounts paid interest at rates between 5% and 6.25%.
74.
In fact, this representation was false, as Loan Doctor did not offer its HCF High Yield CD Accounts before August 2019.
75.
Defendants’ misrepresentation was likely to mislead consumers acting reasonably under the circumstances.
76.
Defendants’ misrepresentation was material because the past performance of the HCF High Yield CD Accounts was likely to affect the conduct or decision of consumers regarding whether to deposit money in those accounts.
77.
Defendants therefore engaged in deceptive acts or practices, in violation of the CFPA. 12 U.S.C. §§ 5531(a), 5536(a)(1)(B).
DEMAND FOR RELIEF
The Bureau requests that the Court, as permitted by 12 U.S.C. § 5565: a.
enjoin Defendants from committing future violations of the CFPA; Case 1:20-cv-05159 Document 1 Filed 07/06/20 Page 14 of 15
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b.
award damages or other monetary relief against Defendants; c.
order Defendants to pay redress to consumers; d.
order disgorgement of Defendants’ ill-gotten gains; e.
impose civil money penalties on Defendants; f.
order Defendants to pay the costs incurred in connection with prosecuting this action; and g.
award additional relief as the Court may determine to be just and proper.
Respectfully submitted,
THOMAS G. WARD
Enforcement Director
JEFFREY PAUL EHRLICH
Deputy Enforcement Director
KARA K. MILLER
Assistant Litigation Deputy
s/Stefanie Isser Goldblatt STEFANIE ISSER GOLDBLATT (NY Bar No. 2750594) Senior Litigation Counsel Telephone: 212-328-7009 e-mail: [email protected] BENJAMIN KONOP (OH Bar No. 0073458) Senior Litigation Counsel Telephone: 202-435-7265 e-mail: [email protected] STEPHANIE DUFF-O’BRYAN (NY Bar No. 5026224; TX Bar No. 24087448) Senior Litigation Counsel Telephone: 202-435-9358 e-mail: [email protected]
Bureau of Consumer Financial Protection 1700 G Street, NW Washington, D.C. 20552 Case 1:20-cv-05159 Document 1 Filed 07/06/20 Page 15 of 15
Order ()
PDF of this document (23 pages)
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In the United States District Court for the Southern District of New York Bureau of Consumer Financial Protection, Case No. 1:20-cv-05159-ALC Plaintiff, v.
My Loan Doctor, LLC d/b/a Loan Doctor and Edgar Radjabli, Defendants.
Stipulated Final Judgment and Order The Bureau of Consumer Financial Protection (Bureau) commenced this civil action against Loan Doctor, LLC and Edgar Radjabli (Defendants) on July 6, 2020, to obtain injunctive and other relief. The Complaint alleges deceptive acts and practices in violation of § 1036(a)(1)(B) of the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. § 5536(a)(1)(B) in connection with Defendants’ Deposit-Taking Activities. The Bureau and Defendants agree to entry of this Stipulated Final Judgment and Order (“Order”), without adjudication of any issue of fact or law, to settle and resolve all matters in dispute arising from the conduct alleged in the Complaint. Introduction 1.
This Court has jurisdiction over the parties and the subject matter of this action.
2.
The Bureau and Defendants agree to entry of this Order, without adjudication of any issue of fact or law, to settle and resolve all matters in this dispute arising from the conduct alleged in the Complaint. 3.
Defendants neither admit nor deny any allegations in the Complaint, Dec. 9, 2022 Case 1:20-cv-05159-ALC-BCM Document 46 Filed 12/09/22 Page 1 of 23
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5.
Entry of this Order is in the public interest. Definitions 6.
The following definitions apply to this Order: a.
“Affected Consumer” includes consumers who deposited money with Loan Doctor, LLC between July 1, 2019 and the Effective Date, excluding Edgar Radjabli, Elizabeth White, and Apis Capital Management, LLC. b.
“Assisting Others” includes, but is not limited to: i.
consulting in any form whatsoever;
ii.
performing customer-service functions, including but not limited to receiving or responding to consumer complaints; iii.
formulating or providing, or arranging for the formulation or provision of, any advertising or marketing material, including but not limited to web or Internet Protocol addresses or domain-name registration for any internet websites, affiliatemarketing services, or media-placement services; iv.
providing names of, or assisting in the generation of, potential except as specifically stated in this Order. For purposes of this Order, Defendants admit the facts necessary to establish the court’s jurisdiction over them and the subject matter of this action.
4.
Defendants waive all rights to seek judicial review or otherwise challenge or contest the validity of this Order. Defendants also waive any claim they may have under the Equal Access to Justice Act, 28 U.S.C. § 2412, concerning the prosecution of this action to the date of this Order. Each party will bear its own costs and expenses, including without limitation attorneys’ fees. Case 1:20-cv-05159-ALC-BCM Document 46 Filed 12/09/22 Page 2 of 23
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customers;
v.
performing marketing, billing, or payment services of any kind; and vi.
acting or serving as an owner, officer, director, manager, or principal of any entity.
c.
“Complaint” means the Complaint filed in this action. d.
“Consumer Financial Product or Service” is synonymous in meaning and equal in scope to the definition of the term in the CFPA, 12 U.S.C. § 5481(5), and, subject to applicable restrictions contained in the CFPA, includes but is not limited to:
i.
providing financial-advisory services to consumers on individual consumer-financial matters or relating to proprietary financial products or services; and ii.
engaging in deposit-taking activities, transmitting, or exchanging funds, or otherwise acting as a custodian of funds or any financial instrument for use by or on behalf of a consumer. e.
“Defendants” means Loan Doctor, LLC and Edgar Radjabli. f.
“Deposit-Taking Activity” is synonymous in meaning and equal in scope to the definition of the term in the CFPA, 12 U.S.C. § 5481(8), and, subject to applicable restrictions contained in the CFPA, including § 1027(i) & (j) of the CFPA, 12 U.S.C. § 5517(i) & (j), includes but is not limited to: i.
the acceptance of deposits, maintenance of deposit accounts, or the provision of services related to the acceptance of deposits or the maintenance of deposit accounts; and Case 1:20-cv-05159-ALC-BCM Document 46 Filed 12/09/22 Page 3 of 23
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ii.
the acceptance of funds, the provision of services related to the acceptance of funds, or the maintenance of member share accounts by a credit union.
g.
“Effective Date” means the date on which the Order is entered on the docket.
h.
“Enforcement Director” means the Assistant Director of the Office of Enforcement for the Bureau of Consumer Financial Protection, or his or her delegate.
i.
“Loan Doctor, LLC” means Loan Doctor, LLC and its successors and assigns.
j.
“Related Consumer Action” means a private action by or on behalf of one or more consumers or an enforcement action by another governmental agency brought against Defendants based on substantially the same facts as described in this Order or the Complaint, excluding Securities and Exchange Commission v. Edgar M. Radjabli, Apis Capital Management, LLC, and My Loan Doctor, LLC, Civil Action No. 2:21-cv-01761 (D.S.C. June 11, 2021). k.
“Service Provider” is synonymous in meaning and equal in scope to the definition of the term in the CFPA, 12 U.S.C. § 5481(26), and, subject to applicable restrictions contained in the CFPA, includes but is not limited to any person that provides a material service to a covered person, in connection with the offering or provision by such covered person of a consumer-financial product or service, including a person that: (i) participates in designing, operating, or maintaining the consumer-financial product or service; or (ii) processes transactions relating to the consumer-financial product or service (other than Case 1:20-cv-05159-ALC-BCM Document 46 Filed 12/09/22 Page 4 of 23
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unknowingly or incidentally transmitting or processing financial data in a manner that such data is undifferentiated from other types of data of the same form as the person transmits or processes). “Service provider” does not include a person solely by virtue of such person offering or providing to a covered person: (i) a support service of a type provided to businesses generally or a similar ministerial service; or (ii) time or space for an advertisement for a consumerfinancial product or service through print, newspaper, or electronic media. Conduct Provisions I.
Permanent Ban on Deposit-Taking Activity IT IS ORDERED that:
7.
Defendants, whether acting directly or indirectly, are permanently banned from, and from Assisting Others in, offering, providing, participating in, advertising, marketing, promoting, offering for sale, or selling, any Deposit-Taking Activity. II.
Prohibition on Deceptive Practices IT IS FURTHER ORDERED that:
8.
Defendants and their officers, agents, servants, employees, and attorneys, and all other persons in active concert or participation with them who have actual notice of this Order, whether acting directly or indirectly, may not: a.
violate §§ 1031 and 1036(a)(1)(B) of the CFPA, 12 U.S.C. §§ 5531, 5536(a)(1)(B); and b.
in connection with the advertising, marketing, promotion, offering for sale, sale, or performance of any Consumer Financial Product or Service, may Case 1:20-cv-05159-ALC-BCM Document 46 Filed 12/09/22 Page 5 of 23
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not misrepresent, or Assist Others in misrepresenting, expressly or impliedly, any fact material to consumers, including but not limited to total costs and any material restrictions, limitations, or conditions. Monetary Provisions III.
Order to Provide Redress IT IS FURTHER ORDERED that:
9.
Defendants are ordered to provide Affected Consumers redress in the full amount Defendants received from consumers who purchased Defendants’ advertised Consumer Financial Products and Services, plus all interest due to consumers under the terms of the advertised Consumer Financial Product or Service purchased. 10.
Defendants have represented to the Bureau that they accepted from consumers more than $19 million for Defendants’ Consumer Financial Products and Services. Defendants have further represented to the Bureau that they have already satisfied the obligation to provide redress under Paragraph 9 of this Order because they have already refunded the full amount received from consumers, plus all interest due to consumers under the advertised terms of those Consumer Financial Products and Services.
11.
Payment of redress to any Affected Consumer under this Order may not be conditioned on that Affected Consumer waiving any right. IV.
Redress Plan IT IS FURTHER ORDERED that:
12.
Within 30 days of the Effective Date, Defendants must submit to the Case 1:20-cv-05159-ALC-BCM Document 46 Filed 12/09/22 Page 6 of 23
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Enforcement Director for review and non-objection a comprehensive written plan for providing the redress ordered in Paragraph 9 (“Redress Plan”). The Enforcement Director will have the discretion to make a determination of non-objection to the Redress Plan or direct Defendants to revise it. If the Enforcement Director directs Defendants to revise the Redress Plan, Defendants must make the revisions and resubmit the Redress Plan to the Enforcement Director within 30 days. After receiving notification that the Enforcement Director has made a determination of non-objection to the Redress Plan, Defendants must implement and adhere to the steps, recommendations, deadlines, and timeframes set forth in the Redress Plan. 13.
The Redress Plan must state:
a.
the total amount of all money Loan Doctor, LLC received to date from all Affected Consumers for the Consumer Financial Products and Services Defendants offered, including any associated fees; b.
the total amount of deposits Loan Doctor, LLC received from all Affected Consumers;
c.
the total amount of interest Loan Doctor, LLC contractually owed to all Affected Consumers for those deposits;
d.
the total amount of any fees Loan Doctor, LLC received from all Affected Consumers;
e.
the deposit amount Loan Doctor, LLC received from each individual Affected Consumer;
f.
the total interest Loan Doctor, LLC contractually owed to each individual Affected Consumer for his or her deposit; and g.
the total amount of any fees Loan Doctor, LLC received from each Case 1:20-cv-05159-ALC-BCM Document 46 Filed 12/09/22 Page 7 of 23
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individual Affected Consumer.
14.
For any redress made before the Effective Date of this Order, Defendants must state:
a.
the total amount of all money Loan Doctor, LLC refunded to all Affected Consumers for the Consumer Financial Products and Services Defendants offered, including any associated fees and payment of any interest owed;
b.
the total amount of deposits Loan Doctor, LLC refunded to all Affected Consumers;
c.
the total amount of interest owed to consumers that Loan Doctor, LLC refunded to all Affected Consumers;
d.
the total amount of any fees Loan Doctor, LLC refunded to Affected Consumers;
e.
the deposit amount Loan Doctor, LLC refunded to each individual Affected Consumer and the date the refund was sent; f.
the interest amount Loan Doctor, LLC refunded to each individual Affected Consumer for his or her deposit and the date the refund was sent; and g.
the total amount of any fees Loan Doctor, LLC refunded each individual Affected Consumer and the date the refund was sent. 15.
For any redress not made before the Effective Date of this Order, Defendants must also state:
a.
the total amount of all money Loan Doctor, LLC will refund to Affected Consumers, pursuant to Paragraph 9 of this Order, for the Consumer Financial Products and Services Defendants offered, including any associated Case 1:20-cv-05159-ALC-BCM Document 46 Filed 12/09/22 Page 8 of 23
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fees and payment of any interest owed;
b.
the total amount of deposits Loan Doctor, LLC will refund to all Affected Consumers pursuant to Paragraph 9 of this Order; c.
the total amount of interest Loan Doctor, LLC will refund to all Affected Consumers pursuant to Paragraph 9 of this Order; d.
the total amount of any fees Loan Doctor, LLC will refund to all Affected Consumers pursuant to Paragraph 9 of this Order; e.
the deposit amount Loan Doctor, LLC will refund to each individual Affected Consumer pursuant to Paragraph 9 of this Order; f.
the interest amount Loan Doctor, LLC will refund to each individual Affected Consumer pursuant to Paragraph 9 of this Order; and g.
the total amount of any fees Loan Doctor, LLC will refund each individual Affected Consumer pursuant to Paragraph 9 of this Order. 16.
For any redress made before the Effective Date of this Order, Defendants must state the manner in which the redress was made and include with their Redress Plan: (1) the template of the communication (“Prior Redress Notification Letter”) that was sent notifying Affected Consumers of the redress; (2) if the communication was mailed, the form of the envelope that contained the Prior Redress Notification Letter; (3) the forms of any other documents already sent to Affected Consumers relating to redress; and (4) appropriate proof of such redress, including documentation of payments made (such as but not limited to bank records, wire transfer receipts, and copies of checks) and the Redress Report required in Paragraph 26 of this Order. 17.
With respect to any redress not made before the Effective Date of this Order, the Redress Plan must include: (1) the template of the communication (“Redress Case 1:20-cv-05159-ALC-BCM Document 46 Filed 12/09/22 Page 9 of 23
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19.
The Redress Plan must include a description of the following: a.
methods used and the time necessary to compile a list of potential Affected Consumers;
b.
methods used to calculate the amount of redress to be paid to each Affected Consumer as required herein;
c.
procedures for issuance and tracking of redress to Affected Consumers;
d.
procedures for monitoring compliance with the Redress Plan; and e.
the process for providing redress to Affected Consumers. Notification Letter”) that will be sent notifying Affected Consumers of the redress; and (2) if the communication will be mailed, the form of the envelope that will contain the Redress Notification Letter. The Redress Notification Letter must include language explaining the manner in which the amount of redress was calculated, including interest and a statement that the refund payment is being made in accordance with the terms of this Order. Defendants must not include in any envelope or with any email containing a Redress Notification Letter any materials other than the approved letters and redress checks, unless Defendants have obtained written confirmation from the Enforcement Director that the Bureau does not object to the inclusion of such additional materials. 18.
Defendants will provide to the Enforcement Director a template of the follow-up communication (“Follow-Up Redress Notification Letter”) that will be sent to Affected Consumers. The Follow-Up Redress Notification Letter must include language explaining the manner in which the amount of redress was calculated, including interest and a statement that the refund payment is being made in accordance with the terms of this Order.
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13.c of this Order.
22.
The Bureau may use any remaining funds, including those collected under Paragraph 21, to pay additional redress to Affected Consumers. If the Bureau determines, in its sole discretion, that additional redress is wholly or partially impracticable or otherwise inappropriate, or if funds remain after the additional redress is completed, the Bureau will deposit any remaining funds in the U.S. Treasury. Defendants will have no right to challenge any actions that the Bureau or its representatives may take under this Section.
23.
Defendants must not condition the payment of any redress to any Affected Consumer under this Order on that person’s agreement to any condition, such as the waiver of any right. If any redress already made was conditioned on any waivers, those waivers are void and unenforceable.
20.
Defendants must make reasonable attempts to obtain a current physical address and email address for any Affected Consumer for a period of 360 days from the date the redress was sent, during which period such amount may be claimed by such Affected Consumer upon appropriate proof of identity. After such time those monies will be deposited into the U.S. Treasury.
21.
If the amount of redress that Defendants provided to Affected Consumers before the Effective Date of this Order is less than the sum total of the amounts stated in the Redress Plan in response to Paragraphs 13.a and 13.c of this Order, then within 30 days of the completion of the Redress Plan, Defendants must pay to the Bureau, by wire transfer to the Bureau or to the Bureau’s agent, and according to the Bureau’s wiring instructions, the difference between the redress paid before the Effective Date and the sum total of the amounts stated in the Redress Plan in response to Paragraphs 13.a and Case 1:20-cv-05159-ALC-BCM Document 46 Filed 12/09/22 Page 11 of 23
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V.
Assessment of Redress IT IS FURTHER ORDERED that:
24.
Defendants must retain, at their own expense, the services of an independent certified accounting firm (“Firm”), within 15 days after the Enforcement Director’s non-objection pursuant to Paragraph 12, to determine compliance with the Redress Plan. The Firm shall determine compliance in accordance with the attestation standards established by the American Institute of Certified Public Accountants for agreed-upon procedures for engagements.
25.
Before retaining the Firm described in Paragraph 24, and no later than 60 days from the Effective Date, Defendants must submit the name and qualifications of the Firm, together with the proposed engagement letter with the Firm and the proposed agreed-upon procedures, to the Enforcement Director for non-objection. Within 15 days after submission of the Firm’s name, the Enforcement Director must notify the Defendants in writing of the Bureau’s objection or non-objection thereto. 26.
The Firm must prepare a detailed written report of its assessment of the Defendant’s compliance with the terms of the Redress Plan (“Redress Report”). The Redress Report must include an assessment of the Redress Plan and the methodology used to determine the population of Affected Consumers, the amount of redress for each Affected Consumer and the overall amount of redress provided to all Affected Consumers, the procedures used to issue and track redress payments, and the work of any independent consultants that Defendants have used to assist and review their execution of the Redress Plan.
27.
The Firm must submit the Redress Report to the Enforcement Director Case 1:20-cv-05159-ALC-BCM Document 46 Filed 12/09/22 Page 12 of 23
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a.
claim, assert, or apply for a tax deduction, tax credit, or any other tax benefit for any civil money penalty paid under this Order; or b.
seek or accept, directly or indirectly, reimbursement or and the Board within 90 days after Defendants complete implementation of the Redress Plan.
VI.
Order to Pay Civil Money Penalty IT IS FURTHER ORDERED that:
28.
Under § 1055(c) of the CFPA, 12 U.S.C. § 5565(c), by reason of the violations of law alleged in the Complaint, and taking into account the factors in 12 U.S.C. § 5565(c)(3), a judgment for a civil money penalty is entered in favor of the Bureau and against Defendants Loan Doctor, LLC and Edgar Radjabli, jointly and severally, in the amount of $391,530. Under 12 U.S.C. § 5565(c)(4), the amount Defendants must pay will be remitted by $241,530 because of Defendants’ satisfaction of their obligation to pay that amount in penalties to the Securities and Exchange Commission for related conduct in SEC v. Radjabli et al., Civil Action No. 2:21-cv-01761 (D.S.C.).
29.
Within 10 days of the Effective Date, Defendants must pay the civil money penalty by wire transfer to the Bureau or the Bureau’s agent in compliance with the Bureau’s wiring instructions.
30.
The civil money penalty paid under this Order will be deposited in the Civil Penalty Fund of the Bureau as required by § 1017(d) of the CFPA, 12 U.S.C. § 5497(d). 31.
Defendants must treat the civil money penalty paid under this Order as a penalty paid to the government for all purposes. Defendants may not: Case 1:20-cv-05159-ALC-BCM Document 46 Filed 12/09/22 Page 13 of 23
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indemnification from any source, including but not limited to payment made under any insurance policy, with regard to any civil money penalty paid under this Order.
32.
Defendant Radjabli agrees that the civil penalty imposed by the Order represents a civil penalty owed to the United States Government, is not compensation for actual pecuniary loss, and, thus, is not subject to discharge under the Bankruptcy Code under 11 U.S.C. § 523(a)(7).
VII.
Additional Monetary Provisions IT IS FURTHER ORDERED that:
33.
In the event of any default on Defendants’ obligations to make payments under this Order, interest, computed under 28 U.S.C. § 1961, as amended, will accrue on any outstanding amounts not paid from the date of default to the date of payment and will immediately become due and payable.
34.
Defendants relinquish all dominion, control, and title to the funds paid under this Order to the fullest extent permitted by law, and no part of the funds may be returned to Defendants.
35.
In any proceeding based on the entry of the Order, or in any subsequent civil litigation by or on behalf of the Bureau, including in a proceeding to enforce the Bureau’s rights to any payment or monetary judgment under this Order, such as a nondischargeability complaint in any bankruptcy case, the facts alleged in the Complaint will be taken as true and be given collateral estoppel effect, without further proof.
36.
For the purpose of supporting an action by the Bureau under Case 1:20-cv-05159-ALC-BCM Document 46 Filed 12/09/22 Page 14 of 23
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§ 523(a)(2)(A) of the Bankruptcy Code, 11 U.S.C. § 523(a)(2)(A), the facts alleged in the Complaint establish all elements necessary to sustain such an action, and for such purposes this Order will have collateral estoppel effect against each Defendant, even in such Defendant’s capacity as debtor-in-possession.
37.
Under 31 U.S.C. § 7701, Defendants, unless they have already done so, must furnish to the Bureau their taxpayer-identification numbers, which may be used for purposes of collecting and reporting on any delinquent amount arising out of this Order.
38.
Within 30 days of the entry of a final judgment, consent order, or settlement in a Related Consumer Action, Defendants must notify the Enforcement Director of the final judgment, consent order, or settlement in writing. That notification must indicate the amount of redress, if any, that Defendants paid or are required to pay to consumers and describe the consumers or classes of consumers to whom that redress has been or will be paid. To preserve the deterrent effect of the civil money penalty in any Related Consumer Action, Defendants may not argue that Defendants are entitled to, nor may Defendants benefit by, any offset or reduction of any monetary remedies imposed in the Related Consumer Action because of the civil money penalty paid in this action or because of any payment that the Bureau makes from the Civil Penalty Fund. If the court in any Related Consumer Action offsets or otherwise reduces the amount of compensatory monetary remedies imposed against Defendants based on the civil money penalty paid in this action or based on any payment that the Bureau makes from the Civil Penalty Fund, Defendants must, within 30 days after entry of a final order granting such offset or reduction, notify the Bureau and pay the amount of the offset or reduction to the U.S. Treasury. Such a payment will not be considered an additional civil money Case 1:20-cv-05159-ALC-BCM Document 46 Filed 12/09/22 Page 15 of 23
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penalty and will not change the amount of the civil money penalty imposed in this action.
39.
Upon written request, any consumer-reporting agency must furnish consumer reports to the Bureau concerning Defendant Radjabli under § 604(a)(1) of the Fair Credit Reporting Act, 15 U.S.C.§ 168l b(a)(1), which may be used for purposes of collecting and reporting on any delinquent amount arising out of this Order. Compliance Provisions VIII.
Reporting Requirements IT IS FUTHER ORDERED that:
40.
Defendants must notify the Bureau of any development that may affect compliance obligations arising under this Order, including but not limited to a dissolution, assignment, sale, merger, or other action that would result in the emergence of a successor company; the creation or dissolution of a subsidiary, parent, or affiliate that engages in any acts or practices subject to this Order; the filing of any bankruptcy or insolvency proceeding by or against Defendants; or a change in Defendants’ name or address. Defendants must provide this notice at least 30 days before the development or as soon as practicable after learning about the development, whichever is sooner. 41.
Within 10 days of the Effective Date, each Defendant must: a.
designate at least one telephone number and email, physical, and postal addresses as points of contact that the Bureau may use to communicate with Defendant;
b.
identify all businesses for which Defendant is the majority owner, or that Defendant directly or indirectly controls, by all of their names, telephone Case 1:20-cv-05159-ALC-BCM Document 46 Filed 12/09/22 Page 16 of 23
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numbers, and physical, postal, email, and Internet addresses; c.
describe the activities of each such business, including the products and services offered, and the means of advertising, marketing, and sales. 42.
Within 10 days of the Effective Date, Defendant Radjabli must: a.
identify his telephone numbers and all email, Internet, physical, and postal addresses, including all residences; and b.
describe in detail his involvement in any business for which he performs services in any capacity or which he wholly or partially owns, including his title, role, responsibilities, participation, authority, control, and ownership. 43.
Defendants must report any change in information required to be submitted under Paragraphs 41 and 42 at least 30 days before the change or as soon as practicable after learning about the change, whichever is sooner. 44.
One year after the Effective Date, each Defendant must submit to the Enforcement Director an accurate written compliance progress report sworn to under penalty of perjury (Compliance Report), which, at a minimum: a.
lists each applicable paragraph and subparagraph of the Order and describes in detail the manner and form in which Defendant has complied with each such paragraph and subparagraph of this Order; b.
Describes in detail the manner and form in which Defendant has complied with the Redress Plan; and c.
attaches a copy of each Order Acknowledgment obtained under Section IX (Order Distribution and Acknowledgment), unless previously submitted to the Bureau.
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IX.
Order Distribution and Acknowledgment IT IS FURTHER ORDERED that:
45.
Within 7 days of the Effective Date, each Defendant must submit to the Enforcement Director an acknowledgment of receipt of this Order, sworn under penalty of perjury.
46.
Within 30 days of the Effective Date, Defendant Loan Doctor, LLC and Defendant Radjabli, for any business for which he is the majority owner or which he directly or indirectly controls, must deliver a copy of this Order to each of its executive officers, as well as to any managers, employees, Service Providers, or other agents and representatives who have responsibilities related to the subject matter of the Order. 47.
For 5 years from the Effective Date, Defendant Loan Doctor, LLC and Defendant Radjabli, for any business for which he is the majority owner or which he directly or indirectly controls, must deliver a copy of this Order to any business entity resulting from any change in structure referred to in Section VIII (Reporting Requirements), any future board members and executive officers, as well as to any managers, employees, Service Providers, or other agents and representatives who will have responsibilities related to the subject matter of the Order, before they assume their responsibilities.
48.
Defendants must secure a signed and dated statement acknowledging receipt of a copy of this Order, ensuring that any electronic signatures comply with the requirements of the E-Sign Act, 15 U.S.C. §§ 7001-7006, within 30 days of delivery, from all persons receiving a copy of this Order under this Section. 49.
Within 90 days of the Effective Date, Defendants must provide the Bureau Case 1:20-cv-05159-ALC-BCM Document 46 Filed 12/09/22 Page 18 of 23
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with a list of all persons and their titles to whom this Order was delivered through that date under Paragraphs 46 and 47 and a copy of all signed and dated statements acknowledging receipt of this Order under Paragraph 48. X.
Recordkeeping IT IS FURTHER ORDERED that:
50.
Defendant Loan Doctor, LLC and Defendant Radjabli, for any business for which he is a majority owner or which he directly or indirectly controls, must create, for at least 5 years from the Effective Date, all documents and records necessary to demonstrate full compliance with each provision of this Order, including all submissions to the Bureau. Defendants must retain these documents for at least 5 years after creation and make them available to the Bureau upon the Bureau’s request. 51.
Defendant Loan Doctor, LLC must maintain for at least 5 years from the Effective Date or 5 years after creation, whichever is longer: a.
copies of all sales scripts, training materials, advertisements, websites, and other marketing materials, including any such materials used by a third party on Loan Doctor, LLC’s behalf;
b.
for each individual Affected Consumer, and for any other consumer who enrolls or participates in any Loan Doctor, LLC product or service, the consumer’s name, address, phone number, and email address, amount paid, quantity of product or service purchased, description of the product or service purchased, the date on which the product or service was purchased, a copy of any promotional or welcome materials provided, and, if applicable, the date and reason the consumer left the program;
Case 1:20-cv-05159-ALC-BCM Document 46 Filed 12/09/22 Page 19 of 23
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c.
for any Loan Doctor, LLC product or service, accounting records showing the gross and net revenues generated by the product or service; d.
all consumer complaints and refund requests (whether received directly or indirectly, such as through a third party), and any responses to those complaints or requests;
e.
records showing, for each employee providing services, that person’s name, telephone number, email, physical, and postal address, job title or position, dates of service, and, if applicable, the reason for termination; and f.
records showing, for each Service Provider providing services related to any Loan Doctor, LLC product or service, the name of a point of contact, and that person’s telephone number, email, physical, and postal address, job title or position, dates of service, and, if applicable, the reason for termination.
52.
Defendant Loan Doctor, LLC must make these materials available to the Bureau upon the Bureau’s request.
XI.
Notices IT IS FURTHER ORDERED that:
53.
Unless otherwise directed in writing by the Bureau, Defendants must provide all submissions, requests, communications, or other documents relating to this Order in writing, with the subject line, “Bureau of Consumer Financial Protection v. Loan Doctor, LLC and Edgar Radjabli, Case No. 1:20-cv-05159-ALC” and send them contemporaneously to the following addresses: a.
by overnight courier or first-class mail:
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Assistant Director for Enforcement Consumer Financial Protection Bureau ATTN: Office of Enforcement 1700 G St., NW Washington, D.C. 20552 b.
by email to:
Enforcement [email protected] XII.
Cooperation with the Bureau IT IS FURTHER ORDERED that:
54.
Defendants must cooperate fully to help the Bureau determine the identity and location of, and the amount of injury sustained by, each Affected Consumer. Defendants must provide such information in their or their agents’ possession or control within 14 days of receiving a written request from the Bureau. 55.
Defendants must cooperate fully with the Bureau in this matter and in any investigation or litigation related to or associated with the conduct described in the Complaint. Defendants must provide to the Bureau truthful and complete information, evidence, and testimony. Defendant Radjabli must appear, and Defendant Loan Doctor, LLC must cause its officers, employees, representatives, or agents to appear, for interviews, discovery, hearings, trials, and any other proceedings that the Bureau may reasonably request upon 10 days written notice, or other reasonable notice, at such places and times as the Bureau may designate, without the service of compulsory process.
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XIII.
Compliance Monitoring IT IS FURTHER ORDERED that:
56.
Within 14 days of receipt of a written request from the Bureau, Defendants must submit compliance reports or other requested information, which must be sworn under penalty of perjury, provide sworn testimony, or produce documents. 57.
For purposes of this Section, the Bureau may communicate directly with Defendants, unless Defendants retain counsel related to these communications. 58.
Defendants must permit Bureau representatives to interview any employee or other person affiliated with Defendants who have agreed to such an interview regarding: (a) this matter; (b) anything related to or associated with the conduct described in the Complaint; or (c) compliance with this Order. The person interviewed may have counsel present.
59.
Nothing in this Order will limit the Bureau’s lawful use of compulsory process under 12 C.F.R. § 1080.6.
XIV.
Transfer or Assignment of Operations IT IS FUTHER ODERED that:
60.
Should Defendants seek to transfer or assign all or part of their operations that are subject to this Order, Defendants must, as a condition of sale, obtain the written agreement of the transferee or assignee to comply with all applicable provisions of this Order.
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XV.
Retention of Jurisdiction IT IS FURTHER ORDERED that:
61.
All pending motions are hereby denied as moot. 62.
The Court will retain jurisdiction of this matter for purposes of construction, modification, and enforcement of this Order. IT IS SO ORDERED.
Dated: December 9, 2022 ____________________________________ United States District Judge Case 1:20-cv-05159-ALC-BCM Document 46 Filed 12/09/22 Page 23 of 23