May 20, 2011
Iranian Jewish banker Ezri Namvar convicted on federal fraud charges
Yesterday, Los Angeles Iranian Jewish banker and real estate investor Ezri Namvar, 59, was convicted on four counts of fraud in a downtown L.A. federal court. After only three hours of deliberation, the jury found that Namvar had failed to return $23 million given for safekeeping to his company, Namco Financial Exchange Corp. (NFE), and instead invested the money in risky real estate deals.
The NFE’s controller Hamid Tabatabai, 62, was also convicted on four counts of working out a scheme with Namvar from March 2008 to August 2008 to defraud five of NFE’s clients of 1031 funds, which, according to the federal tax code, refers to profits realized from the sale of a business or investment property that are not immediately liable for capital gains taxes if the money is used to purchase a similar replacement property.
Namvar’s September 2010 indictment had charged that he returned only $4 million of the $27 million NFE’s clients’ 1031 funds gave his company for safekeeping, and that these funds were used by Namvar without authorization for various purposes unrelated to the clients. The indictment had also indicated that Namvar, with the help of Tabatabai, used NFE’s clients’ funds to pay off creditors and investors of Namvar’s investment company, Namco Capital Group Inc. as well as Namvar’s personal creditors.
Several Iranian Jewish victims of Namvar’s ponzi scheme expressed satisfaction at the jury’s verdict today since Namvar has long denied any wrongdoing among those in his community.
“Many of us victims feel that justice has been served somewhat today with this conviction,” said Abraham Assil, an Iranian Jewish business man and victim of Namvar’s ponzi scheme. “But we still believe more criminal charges need to be brought against the other Namvar family members involved for their role as accomplices to the criminal actions of Ezri Namvar”.
According to a U.S. Department of Justice statement, both Namvar and Tabatabai face statutory maximum sentences of 80 years in federal prison. U.S. District Court Judge Anderson ordered Namvar who is free on bond to be subject to home incarceration with electronic monitoring. Anderson has scheduled a June 1 hearing to determine if Namvar should be taken into custody prior to his August 22nd scheduled sentencing.
The U.S. Attorney’s office in downtown L.A. and Namvar’s attorney did not return calls for comment on the case. A. David Youssefyeh, a Century City Iranian Jewish attorney representing some of Namvar’s Iranian Jewish creditors in other civil cases against Namvar, said the banker’s conviction has been a long time coming for his victims.
“The fact that Ezri Namvar was convicted of fraud is a surprise to no one,” said Youssefyeh. “However, justice is not done yet. Justice will be done when Mr. Namvar is sentenced to prison for the rest of his life.”
Namvar was forced into involuntary bankruptcy in December, 2008, and accused by investors of creating a Ponzi scheme that lost as much as $500 million loaned to him — most of it by Los Angeles’ Iranian Jews. The petition followed 17 lawsuits filed against Namvar, his company Namco, entities owned by Namvar and other Namvar family members, alleging breach of contract and contractual fraud in a case that attorneys estimate involves 300 to 400 creditors, the majority of them Iranian Jews.
Youssefyeh said Namvar’s victims have been particularly frustrated during the last near three years because they have had to endure tremendous financial hardships while Namvar has continued to enjoy his lavish lifestyle and made a concerted effort to hide his assets during the bankruptcy proceedings.
“Unfortunately, Mr. Namvar has no one to blame but himself,” Youssefyeh said. “If he hadn’t spent so much time and effort trying to hide his assets from his victims, he would probably not find himself here today”.
A report released in early 2010 by the trustees in Namvar’s bankruptcy case, 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.
Many of Namvar’s Iranian Jewish creditors are low- to middle-income couples, individuals or retired seniors who invested their small savings with Namvar and his company, hoping to receive higher interest rates than what most banks were offering at the time. Their investments ranged anywhere from $10,000 to $300,000, and most said they had lost all hope of regaining their funds.
The Namvar case has bitterly divided many in Southern California’s tight-knit Iranian Jewish community, with many of the Namvar victims expressing frustration with the community’s social and religious leadership for remaining largely silent about Namvar’s culpability.
“Early on Rabbi David Shofet (of the Nessah Synagogue in Beverly Hills) indicated in a formal letter that if Namvar was proven in court to be a thief, then he and his family must give back the money they took from people,” said Assil. “Today I’d like to see what the rabbi’s response is to Namvar’s conviction”.