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Regulation and Compliance > Litigation

Dentist Turned Advisor Fined Over Fraudulent Offerings

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What You Need to Know

  • The advisor and two of the entities he controlled allegedly engaged in three separate securities frauds.
  • He was accused of market manipulation, a fraudulent token offering and misusing proceeds from another offering.
  • The defendant agreed to pay $600,000 to settle the charges against him by the SEC.

A dentist-turned-investment advisor and two of the entities he controlled allegedly engaged in “three separate securities frauds of escalating size,” according to the Securities and Exchange Commission.

In a complaint filed Friday in U.S. District Court for the District of South Carolina, Charleston Division, the SEC charged Edgar M. Radjabli, 35, and two entities he controlled with engaging in three separate securities frauds of escalating size.

The defendants agreed to settle the charges against them, without admitting or denying the allegations in the complaint, the SEC said.

The settlement, which is subject to court approval, would require Radjabli to pay a total of $600,000 in monetary relief, comprising $162,800 in disgorgement, $17,870 in prejudgment interest and $419,330 in civil penalties, for which he and his two entities would be jointly and severally liable, according to the SEC.

The settlement would also permanently enjoin Radjabli and his entities from violating the charged provisions of federal securities laws, impose a conduct-based injunction and penny stock bar on Radjabli, and bar Radjabli from the securities industry, the SEC said.

The SEC alleged in its complaint that Radjabli, formerly a practicing dentist and an unregistered broker, and Apis Capital Management, an unregistered investment advisory firm he owned and controlled, conducted a fraudulent offering of Apis Tokens, a digital asset representing tokenized interests in Apis Capital’s main investment fund.

Radjabli and Apis Capital issued a June 2018 press release falsely claiming that the Apis Token offering had raised $1.7 million when the offering had actually not raised any money, according to the SEC.

The SEC further alleged that Radjabli and Apis Capital manipulated the securities market for Veritone, a publicly traded artificial intelligence company, by announcing in December 2018 an unsolicited cash tender offer to buy Veritone for $200 million. In reality, Radjabli and Apis Capital did not have the financing or any reasonable prospect of obtaining the financing needed to complete the transaction, according to the SEC.

Radjabli allegedly generated $162,800 in illicit profits from the resulting increase in Veritone’s stock price by trading Veritone securities on behalf of Apis Capital and an affiliated fund.

The complaint also alleged Radjabli raised almost $20 million from more than 450 investors in an unregistered, fraudulent securities offering launched in August 2019 through My Loan Doctor, a limited liability company incorporated in July 2019 in which that Radjabli had at least a 95% stake.

Radjabli falsely represented that investor funds raised by My Loan Doctor would be used to originate loans to health care professionals that would then be securitized and sold to large institutional investors, according to the complaint.

However, Radjabli allegedly invested the bulk of the investor funds in unsecured and uninsured loans to digital asset lending firms and loaned nearly $1.8 million of investor proceeds to Apis Capital, the SEC alleged.

The complaint charged Radjabli, Apis Capital and Loan Doctor with violations of the registration provisions of the Securities Act of 1933 and the antifraud provisions of the federal securities laws.

Although the SEC’s news release announcing the complaint said Radjabli is a Boca Raton, Florida resident, the complaint says he, at the “times relevant to this Complaint,” resided in North Charleston, South Carolina. The principal place of business listed for both Apis Capital and Loan Doctor were West Palm Beach, Florida.

“As the SEC alleges, Mr. Radjabli engaged in serial securities fraud that has no place in our markets,” according to Kristina Littman, chief of the SEC Enforcement Division’s Cyber Unit. “Today’s resolution includes important relief to protect investors from further harm,” she said in a statement.

(Photographer: Andrew Harrer/Bloomberg)


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