February 16, 2010
Business fraud scandals devastate L.A.’s Iranian Jews.
Just over a year ago, Ezri Namvar was forced into involuntary bankruptcy and accused by investors of creating a Ponzi scheme that lost as much as $500 million that had been loaned to him — most of it by Los Angeles’ Iranian Jews. Many of his former investors once knew Namvar as a friend and trusted adviser, but they now say their lives have been turned upside down by their losses. Adding to their pain is the fact that, although the accusations surrounding Namvar have earned him the community’s ire, he is not the only object of their anger. Two other investment fraud scandals involving two other local Iranian Americans have since piled onto the local community’s difficulties.
None of the three men has been charged with criminal wrongdoing at this time, but their effect on the community remains profound. Once a tightknit group that could finish a deal with a handshake, the Iranian Jewish community is now experiencing a shattered sense of trust and is rethinking its old-school ways of doing business.
Namvar, who is in his 50s and lives in Brentwood, worked as a banker, moneylender and real estate investor in the Iranian Jewish community for nearly two decades, and evidence of his generosity can be found on synagogue plaques thanking him and his family. Namvar earned the trust of many Iranian Jews, which led them to invest in his company, Namco Capital Group Inc. (Namco). His status also was founded on his family’s longstanding business reputation in Iran and the fact that he was known to provide higher rates of return to local Iranian Jews than most banks at the time. Namvar and his family were also well respected in the community for their substantial charitable contributions to various Jewish educational groups in Southern California and Israel.
Lawsuits filed against him allege that in the past 18 months, Namvar stopped paying dividends to his Iranian Jewish investors and in some cases could not return any of the funds lent to him. Subsequent lawsuits allege that through his businesses he spent money on risky real estate investments that went sour.
Separately, another investment scandal hit the Iranian Jewish community in early January of this year, when the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against John Farahi, 52, a popular Iranian Jewish radio talk show host who also served as an investment adviser and stockbroker for local Iranian Jews. The suit alleges that Farahi and his Beverly Hills firm, NewPoint Financial Services Inc., defrauded Iranian American investors of millions of dollars and that Farahi, his company, his wife, Gissou Rastegar Farahi, and the firm’s controller, Elaheh Amouei, 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).
The third figure, Joseph Boodaie, also is a Beverly Hills Iranian Jewish businessman who lent money and offered community members higher rates of return on their savings than most banks. Boodaie earned the community’s trust as a bookkeeper, and he is said to have used his familiarity with clients’ assets to sell them investments in real estate deeds of trust. Last year, nearly a dozen different lawsuits were filed by various L.A.-area Iranian Jews and other businesses alleging that Boodaie had defrauded them of a combined total of close to $100 million, according to one local attorney.
Attorneys for Namvar, Farahi and Boodaie did not return calls requesting comment for this article.
The losses related to these three cases have badly shaken Southern California’s tightknit Iranian Jewish community, to the point that some friends and family members now find themselves at odds, and the life savings of many seniors in the community — much of it money brought out of Iran with great difficulty — have now disappeared.
“Unfortunately in our community, money has become a source for people to attain a reputation and respect for themselves — and many in our community are willing to go to great lengths [to] destroy others in order to obtain money and this social status,” said Fred Fouladi, an Iranian Jewish community activist.
As in the much larger Bernard Madoff scandal, a good deal of this comes down to social aspirations and greed. The complaint against Farahi alleges that investors’ money was transferred into personal accounts controlled by Farahi and his wife to build their mansion in Beverly Hills, as well as into risky stock market options that resulted in more than $18 million in losses for investors.
The SEC’s suit also claims that, since 2003, Farahi used his radio program, “The Economy Today,” featured on the Studio City-based Farsi-language Radio Iran KIRN 670 AM, to target members of L.A.’s Iranian American community, recommending they make appointments at his firm.