Yesterday Southern California’s Iranian American Jewish community was shocked to learn that on January 8th, the U.S. Securities and Exchange Commission (SEC) filed a civil law suit against popular Iranian Jewish radio talk show host and financial advisor, John Farahi. The suit alleges 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 and the firm’s controller, Elaheh Amouei, misled investors by falsely telling them their funds were being invested in low-risk 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). In reality, the complaint alleges, the investors’ money were transferred into personal accounts controlled by Farahi and his wife to fund construction of their multi-million dollar mansion in Beverly Hills and in risky option futures trading in the stock market 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 Persian language radio station Radio Iran KIRN 670 AM to target members of L.A.’s Iranian American community, recommending they make appointments at his firm. “They lured victims with false promises of investment safety while secretly enriching themselves and diverting investor funds for their personal use,” stated Rosalind R. Tyson, Director of the SEC’s Los Angeles Regional office in a statement.
In conjunction with the suit, the SEC has obtained an order temporarily freezing the Farahis’ and NewPoint’s assets until the government can investigate the case further. A hearing on the Farahis case is scheduled for January 15th in U.S. Federal court in downtown L.A.
I have met Farahi in the past as a journalist covering a number of local Iranian Jewish events in which he participated in as the master of ceremonies. I found many community members were typically impressed by his charisma as well as his ability to communicate. Farahi and his wife were typically rubbing elbows with socialites in the community and involved in a number of philanthropic Jewish events— and even donating themselves to such causes. His wife, Gissou, was a former executive board member of the Iranian American Jewish Federation (IAJF) and I can recall her being responsible for organizing a few Israel related fundraising events at the IAJF’s synagogue, Temple Beth El in West Hollywood roughly three to four years ago. This reputation the Farahis created in the community as well as his persona as a talk show host with “knowledge of American finances and investments” on KIRN, quickly won the couple friends among local Iranian Americans of various religions. All the reason why community members are now horrified to learn of this civil lawsuit brought by the SEC against this couple. Aside from the legal and financial ramifications of this case for the Farahis, this case will undoubtedly damage their high profile reputation in the local Iranian Jewish community which is so tight-knit.
In addition, this current alleged investment fraud case involving an Iranian Jewish businessman comes nearly a year after a similar case of supposed investor fraud involving Ezri Namvar, a Los Angeles area Iranian Jewish businessman came to light. Namvar was forced into involuntary bankruptcy by his Iranian Jewish creditors who accused him of losing as much as $400 million in funds they loaned him. Many local Iranian Jewish community leaders have privately informed me that both of these incidents have been a source of tremendous shame and pain for them as they are upstanding citizens. “How are we supposed to work in this city and maintain our own reputations when these types of people from our own community are involved in such blatant crimes!” said one L.A. Iranian Jewish activist, who asked that he not be named out his fear of being ostracized by his friends and family members. (We won’t get into the Madoff case, but Madoff’s name is also raised many times in community conversations relating to Namvar).
On a side note, it’s interesting to see how the SEC’s investigators have connected Farahi’s comments on his radio program to this case of alleged investment fraud considering how KIRN is a very influential radio station in Southern California’s Iranian American community. For one thing, KIRN is the ONLY 24-hour Persian language radio station in the free world on the AM dial that can be picked up by almost any radio and on the internet. Hence a significant number of local middle-aged to older community members who may not enjoy or understand English language television or radio programming, tune in daily to KIRN and rely on it for their information. I’ve appeared on the station’s bilingual youth program many times and have always been surprised at how many local Iranians of various ages actually listen to the station/ So it’s no surprise that Farahi’s daily show on this radio station may have either indeed directly or indirectly influenced people to seek his financial investment services.
Finally, this current scandal brings up one very ironic conversation I witnessed a few years ago outside the Nessah Synagogue in Beverly Hills between Farahi and another Iranian Jewish gentleman right after the sex scandal story regarding former Israeli President Moshe Katsav broke. I remember Farahi fervently arguing with this other gentleman about the “shame” Katsav brought upon the larger Iranian Jewish community worldwide as a result of Katsav’s alleged rape of a woman and how the community should not support Katsav any longer. Thereafter Farahi promptly got into his new Rolls Royce, slammed the door and drove off. It’s painfully ironic how Farahi may now be facing the same criticism he dished out for Katsav with this current case.
The SEC’s complaint against the Farahis, their firm and Elaheh Amouei can be found here