The US Securities and Exchange Commission (SEC) has charged a Florida national for his alleged role in three separate securities fraud scams.
Edgar Radjabli, a former dentist, controlled Apis Capital Management LLC., marketed as an advisory firm that the SEC says was unregistered.
Through this company, Radjabli allegedly controlled Apis Tokens as a managing partner, an offering called the "first tokenized hedge fund" which was based on the Stellar platform.
Apis Tokens were touted as a way for investors to access the ACM Market Neutral Volatility Strategy fund by converting cryptocurrency including Bitcoin (BTC) and Ethereum (ETH) into Apis Tokens and stakes in the fund.
"The offering model of the Apis Token is different from a traditional ICO, as it allows investors to subscribe throughout the month, with the funds collected deployed at month's end and the tokens simultaneously issued to investors," the company claimed.
In June 2018, Apis Capital said that $1.7 million in funds had been raised and was "allocated to the strategy." However, the SEC says that no money at all had been secured.
By November, the organization said it intended to buy the blockchain AI division from White Company, and in December, Apis Capital claimed that the firm's investment arm, Apis Ventures, was planning to buy Veritone for $200 million.
The claimed deal placed Veritone shares at $10.26 per share, a 93% premium over the closing price on December 7, 2018.
"We are committed to completing this transaction and remain willing to work cooperatively with Veritone," Radjabli said in a press release at the time. "Our vision for the company involves significant synergy with our growing portfolio of AI and machine learning investments, opening up new opportunities for Veritone's technology."
Veritone is a publicly traded developer of operating systems for artificial intelligence (AI) solutions.
According to US regulators, "in truth, Radjabli and Apis Capital lacked the financing or any reasonable prospect of obtaining the financing necessary to complete the deal."
Instead, by hyping investor interest with a 93% premium price offering, shares surged -- and Radjabli allegedly claimed $162,800 in profit by trading Veritone stock through both Apis Capital and an affiliated fund.
The fraudulent fund claim and the pump-and-dump stock scheme were also joined by a third scam allegedly pulled off by the ex-dentist, who also managed to raise close to $20 million from over 450 investors in an unregistered, fraudulent securities offering.
The SEC says that Radjabli launched the offering through My Loan Doctor and told traders that cash raised would be used to find and sell on loans made to healthcare professionals to large investors. Instead, however, the bulk of the funds were allegedly invested in uninsured and unsecured loans, and close to $1.8 million was sent to Apis Capital.
Radjabli, Apis Capital, and Loan Doctor have been charged with violating antitrust and securities laws.
A settlement has been agreed, subject to court approval, in which Radjabli and the two entities must pay $600,000 in damages. Conduct-based injunctions would also be put in place and Radjabli would be banned from penny stocks and the securities industry as a whole, if accepted.
Have a tip? Get in touch securely via WhatsApp | Signal at +447713 025 499, or over at Keybase: charlie0