Home > Law Enforcement > Dentist-Turned-Investment Adviser Charged in Three Frauds by SEC

Dentist-Turned-Investment Adviser Charged in Three Frauds by SEC

Edgar Radjabli is accused of manipulating the securities market for Veritone, among other schemes.

By Michael Katz


Edgar Radjabli, a dentist turned unregistered investment adviser, was charged by the US Securities and Exchange Commission (SEC) for three interrelated securities frauds “of escalating size and potential investor harm.”

According to the SEC’s complaint, Radjabli, who was a practicing dentist as recently as 2015, and an unregistered investment adviser firm he owned and controlled called Apis Capital conducted a fraudulent offering of a digital asset representing tokenized interests in the firm’s main investment fund. The SEC said Radjabli and Apis issued a June 2018 press release falsely claiming that the offering had raised $1.7 million when in fact it raised nothing.

In the second alleged scheme, the SEC accuses Radjabli of manipulating the securities market for Veritone Inc., a publicly traded artificial intelligence (AI) company in which Apis Capital and an affiliated investment fund owned shares. In December 2018, Radjabli and Apis Capital issued a press release announcing an unsolicited cash tender offer to acquire Veritone for $200 million—an 82% premium.

The SEC said the tender offer, and the related forms that Radjabli and Apis Capital filed with the regulator “contained a number of materially false and misleading misrepresentations.” It said they falsely represented that they had current and committed capital “well in excess of the proposed aggregate purchase price,” and that they beneficially owned a 5.03% stake in Veritone.

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“In truth, the defendants lacked the financing, or any reasonable prospect of obtaining the financing, necessary to complete the deal,” said the complaint.

According to the complaint, after the pre-market announcement and SEC filings of the tender offer, Veritone’s stock price opened 41.4% higher than the previous day’s close. Radjabli allegedly capitalized on the price bump by selling Veritone securities and purchasing put options on behalf of Apis Capital and its affiliated fund. The SEC said that 10 days later, Radjabli and Apis Capital withdrew the supposed tender offer. As a result, Radjabli generated illicit profits of approximately $162,800, according to the SEC.

In his third alleged fraud, the SEC says Radjabli raised just under $20 million from 461 investors in an unregistered, fraudulent offering of a security called Health Care Finance High Yield CD Account, which guaranteed a 6% return. The SEC said Radjabli made materially false and misleading representations to investors about how their funds would be used, such as saying that they would be used by Loan Doctor—a company Radjabli was also CEO of—to originate loans to health care professionals, which then would be securitized and sold to large institutional investors.

However, the SEC alleges Loan Doctor never originated or securitized any loans, and that Radjabli instead invested the lion’s share of the investor funds in unsecured and uninsured loans to digital asset lending firms, and loaned almost $1.8 million of investor proceeds to Apis Capital. Radjabli eventually reimbursed investors with the 6% interest and closed down Loan Doctor under the pressure of investigations that had been launched by the SEC and the Consumer Financial Protection Bureau (CFPB).

Without admitting to or denying the allegations in the complaint, Radjabli and Apis Capital have agreed to a settlement under which Radjabli will pay $600,000 in monetary relief. The settlement also permanently enjoins Radjabli, Apis Capital, and Loan Doctor from violating the charged provisions of the federal securities laws, and imposes a conduct-based injunction and penny stock bar on Radjabli, as well as bars him from the securities industry.

“As the SEC alleges, Mr. Radjabli engaged in serial securities fraud that has no place in our markets,” Kristina Littman, chief of the SEC Enforcement Division’s Cyber Unit, said in a statement.

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Home > News > Market Moves > Why the Fed Won’t Tighten Soon: Too Much Unemployment, Says Strategist
Market Moves

Why the Fed Won’t Tighten Soon: Too Much Unemployment, Says Strategist

The high jobless level counters any push to curb central bank stimulus, argues Commonwealth’s McMillan.
By Larry Light


All eyes will be on the Federal Reserve on Wednesday to glean any inkling that it will tighten policy in the face of recent high inflation numbers. But the unemployment picture is too disconcerting for that to happen, argues Brad McMillan, CIO for Commonwealth Financial Network.

The Fed has a dual mandate to keep inflation and joblessness down. Classically, these two are in opposition, although, as the stagflation 1970s proved, not always. To McMillan, the unemployment picture is grimmer than is outwardly apparent—and that worry should stay the Fed’s hand.

Right now, the Fed is holding down short-term rates and pumping liquidity into the economy via its enormous bond-buying program, known as quantitative easing, or QE. Fed officials have said they need to see “substantial further progress” toward maximum employment and an average 2% inflation before reducing current bond purchases of $120 billion per month.

Employment, McMillan wrote in a research note, “is worse than the headline numbers suggest.” While job growth is expanding and labor shortages keep popping up in various industries, he stated, millions remain out of work. “This is by far the bigger real problem with the economy right now,” he added.

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The nation is 7.6 million jobs below its pre-pandemic level, according to the May employment report. Thus far, the U.S. has recovered 14.7 million, or 65%, of the 22.4 million jobs lost last spring, and last month the unemployment rate dropped sharply from 6.1% to 5.8%. Meanwhile, the Consumer Price Index (CPI) shot up 5%, year over year.

McMillan isn’t impressed by the high inflation number and, up to now, Fed Chair Jerome Powell hasn’t been either, writing it off as the temporary result of bottlenecks as the economy opens back up.

“Over the past decade, there have been repeated warnings that inflation was taking off, which proved to be false,” McMillan said. Plus, “There have been repeated scares that the central banks were going to tighten, and it hasn’t happened.” He pointed to the 2013 “taper tantrum,” when long-term rates spiked after the Fed chieftain then, Ben Bernanke, suggested the it would ease off QE. (He quickly reversed himself.)

Today, McMillan asserted, some of the inflation jumps in certain categories are easing off, thus bolstering the transitory narrative. Lumber, for instance, has seen price declines recently.  What’s more, he continued, the yield on the benchmark 10-year US Treasury has dipped to just under 1.5%, down from the 2021 peak of 1.72% in March. That, he said, is a sign of tepid inflation.

Still, expectations are strong that QE at least will be diminished up ahead. Some 75% of economists last week anticipated a QE shrinkage between August and year-end, a Bloomberg survey found.

Since the March 2020 US onset of COVID-19, the Fed has purchased more than $2.5 trillion of US Treasury bonds, along with about $870 billion in agency mortgage-backed securities. This has helped buoy the stock market and bolstered consumers’ purchasing power.

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