CFPB files legal action against my loan specialist and its founder for alleged misleading marketing of deposit accounts | Ballard Spahr LLP
The CFPB filed a complaint on July 6, 2020 in New York Federal District Court against My Loan Doctor LLC (“Loan Doctor”) and its founder, Dr. Edgar Radjabli, for allegedly making false, misleading and inaccurate marketing statements in violation of the Protection consumer finance Prohibition of the law against unfair, deceptive or abusive acts or practices.
The Bureau alleges that the Defendants engaged in deceptive acts or practices in connection with the offering of Healthcare Finance CD savings accounts and high yield CD accounts to consumers. The complaint claims that Loan Doctor falsely stated that he would use consumer deposits to make loans to healthcare professionals and that he lined up investors in advance to purchase the loans that Loan Doctor created. The Bureau asserts that Loan Doctor did not use deposits to make loans and did not enter into contracts with investors to purchase such loans.
The complaint also claims that Loan Doctor made false claims regarding the safety of consumer deposits. The Bureau contends that Loan Doctor falsely portrayed itself as a commercial bank and that the security of consumers’ deposits was comparable to that of a savings account. The complaint alleges that although Loan Doctor claimed that deposits which were not used to secure loans would be held in insured accounts, deposited in US banks or at Lloyd’s of London, and fully secured by cash or As for cash alternatives, most of the deposits were actually placed in a hedge fund owned by Dr. Radjabli and invested in volatile securities or securities backed investments.
Finally, the complaint asserts that Loan Doctor falsely stated that its high yield CD accounts paid interest at rates between 5% and 6.25% for years prior to 2019. The Bureau contends that this statement was false because Loan Doctor only accepted consumer deposits in August 2019.
The Bureau’s complaint seeks an injunction against the defendants, as well as damages, consumer redress, restitution and civil monetary penalties.
In addition to the alleged violations alleged by the CFPB against defendants under the Consumer Financial Protection Act, we are surprised that the Securities and Exchange Commission has not joined the complaint to assert claims for the sale of unregistered securities in under the Securities Act of 1933, as amended, and for the sale of securities without a registered broker under the Securities Exchange Act of 1934, as amended.