Cover Story

February 16, 2010

Frayed Trust

Business fraud scandals devastate L.A.’s Iranian Jews.

By Karmel Melamed

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“The Nessah organization is extremely concerned about and has much sympathy for those members of the community who have been hurt by these unfortunate circumstances,” the letter from Nessah says. “The organization’s bylaws provide specific guidelines relating to the removal of sitting directors. Nessah has conducted the requisite due diligence with regard to this matter, and has concluded that its bylaws do not permit the removal of Mr. Namvar from the board at this time.”

The statement also says that Nessah has general elections coming up, in which congregants will select future board members for the organization.

Critics respond that doing nothing suggests a lack of moral courage.

“This fiasco with Namvar and [his company] Namco is not just about what has happened to a large number of our community members, and it’s not just about his involuntary bankruptcy alone,” said George Haroonian, a longtime local Iranian Jewish activist whose family members lost their savings invested in Namco. “It’s really about our community’s leadership not being able to positively respond to this problem.”

Last year, Haroonian wrote a public letter calling for Nessah to suspend Namvar’s position on the synagogue’s board until the bankruptcy and lawsuits had been decided. In a recent interview, he said that in Iran such cases of financial difficulties between Jews were handled outside of the courtroom, often more effectively.

“In Iran when these things happened, the community’s leadership, key businessmen and elders would get together all parties involved and help out those who had suffered the economic loss,” Haroonian said. “Today, unfortunately, we don’t have that here. I think there is a lot to be said [about] the lack of moral courage in our community — and just donating to certain causes has sadly become the same as real community service for us.”

The current problems of deceptions in business dealings were rare in Iran prior to the 1979 revolution, elders in the Jewish community say. This is because people who attempted to pass bad checks or failed to repay large debts were put in prison by the government until their families could raise the funds to repay their creditors.

Meanwhile, Namvar’s bankruptcy case has slowly moved forward, as the court-appointed trustees investigate the Iranian Jewish businessman’s assets and liabilities.

A preliminary report released last summer by the trustees showed that Namco owes more than $500 million to more than 170 secured and unsecured creditors. The report also states that Namco is owed more than $600 million from loans it made to 16 members of Namvar’s family, various limited liability corporations owned by Namvar and to more than 60 individuals and entities. In addition, the report indicates that Namvar gave himself a loan of more than $32 million, and he also gave $50 million to each of his four children.

A. David Youssefyeh, a local Iranian Jewish attorney who since December 2008 has been advising nearly 20 Iranian Jewish creditors with claims against Namvar, said he is unsure whether all of Namvar’s creditors will be able to recover all of their invested funds.

“My assessment for the creditors is not too positive, because a year has been wasted with trying to figure out what his assets are, instead of Mr. Namvar cooperating with the trustees who can quickly help the creditors get repaid — this shows bad faith by him,” Youssefyeh said. “Everything that has happened in the last year has confirmed for me that what we were trying to do at the beginning of this was our only option. Unfortunately, nothing has changed for these people; none of them [has] been paid yet, and due to Mr. Namvar’s lack of cooperation, I don’t see any change for them in the near future.”

Youssefyeh also said the trustees in the case will complete their final assessment of Namvar and Namco’s assets and liabilities by the end of this month, and some of the creditors will likely receive some portion of their funds in one or two years.

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A version of this article appeared in print.

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Dear Editor,  Thank you for the story “Frayed Trust”. I thought it was unfortunate and in poor taste to display a Persian rug and jagged red fonts to illustrate the cover of the main story. The display was unnecessary and served no other purpose than to ferment unfortunate stereotypes. Could you not have picked some other illustration to capsulize the essence of the main story?

Comment by adriana gorbaty on 2/19/10 at 9:58 pm

Sometimes, you just can’t trust people. Falling into a business scam is definitely bad news that has profound effects on the financial community.

Comment by Football Betting on 2/22/10 at 5:29 pm

Unfortunately, my family is a victim of one of these three evils in the article who my husband invested with, all of our life savings earned over 22 years. He ignored my pleadings to not to invest with this fraudulent person. He trusted him and was deceived by the high interest rate. Today our family is in crisis. We are getting divorce, have no savings left. You pay a high price for trusting someone because you never know who is going to take advantage of your trust. Where is the justice?

Comment by Sherry on 2/23/10 at 7:56 pm

It is awful to hear stories like Sherry’s. The pain of being scammed and losing trust is lifelong. I hope that there is indeed justice for her and her loved ones.

Comment by Mary on 1/06/11 at 8:33 am

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