March 28, 2013
John Farahi sentenced to 10 years for Ponzi scheme
John Farahi, a popular Iranian-Jewish radio talk-show host and investment adviser, was sentenced in U.S. District Court on March 18 in downtown Los Angeles to 10 years in federal prison for operating a multi-million-dollar Ponzi scheme against local Iranian-Americans. Farahi, 56, also was ordered by the court to pay more than $24 million in restitution to close to 60 victims.
Last June, Farahi pleaded guilty to felony charges of mail fraud, loan fraud, selling unregistered securities and conspiring with David Tamman, his attorney at the time, to obstruct the U.S. Securities and Exchange Commission (SEC) investigation into his case.
According to an SEC press release, the statutory maximum penalty for the four charges to which Farahi pleaded guilty is 75 years in federal prison; however, under the terms of Farahi’s plea agreement, the government agreed to recommend a sentence of no more than 10 years in prison.
The SEC indicted Farahi in 2010, alleging that through his Beverly Hills firm, NewPoint Financial Services Inc., he defrauded Iranian-American investors of millions of dollars. It was alleged that he misled investors by telling them their funds were being invested in unsecured corporate bonds, FDIC-insured certificates of deposit, government bonds and corporate bonds issued by companies backed by funds from the Troubled Asset Relief Program (TARP).
According to the indictment, Farahi had instead transferred his investors’ money directly into his own personal accounts to pay for building his mansion in Beverly Hills and purchasing a yacht, as well as into risky stock-market options that resulted in more than $18 million in losses for investors.
The 2010 suit also stated that since 2003, Farahi used his radio program, “The Economy Today,” featured on the L.A.-based Farsi-language Radio Iran KIRN-AM (670), to target members of L.A.’s Iranian-American community, recommending they make appointments at his firm.
Iranian-Jewish community leaders and creditors have kept quiet about Farahi and other Iranian-Jewish investors charged in recent years with running Ponzi schemes, in keeping with a long-standing community taboo against publicly discussing potentially embarrassing incidents. Iranian-Jewish community leaders at the Beverly Hills-based Nessah Synagogue and West Hollywood-based Iranian American Jewish Federation did not return calls seeking comment.
But this isn’t the only time the community has been targeted by a Ponzi scheme. Ezri Namvar, 62, a longtime leading Iranian-Jewish businessman and philanthropist in Los Angeles, was sentenced in October 2011 to seven years in federal prison for stealing $21 million from four clients. Namvar also was ordered by the court to pay back $21 million in restitution to his victims, yet he is believed to have allegedly bilked investors — who put money into his $2.5 billion real estate portfolio before the 2008 market crash — out of hundreds of millions of dollars.