John Farahi, a Los Angeles Iranian-Jewish radio talk show host and financial investment manager, last week was charged in U.S. District Court in downtown Los Angeles for allegedly defrauding more than 100 local Iranian-American investors and various financial institutions of nearly $20 million over the course of nearly five years.
The 41-count indictment claims Farahi, 54, misled investors by telling them their funds were being invested by his Beverly Hills firm, NewPoint Financial Services Inc., 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 indictment alleges Farahi did not make these investments for his clients but instead used the funds to create a Ponzi scheme, making payments to his firm’s earlier clients, trading in high-risk future options and using the funds to support his family’s lavish lifestyle.
“Starting in 2008, Farahi allegedly failed to tell NewPoint Financial Services investors that he had lost at least $15 million through his undisclosed options trading — even as he continued to solicit investors for NewPoint Financial Services,” according to a recently released U.S. Department of Justice statement.
In addition, the indictment claims that since 2003, Farahi has used his radio program, “The Economy Today,” featured on the Studio City-based Farsi-language Radio Iran KIRN 670 AM, to target members of Los Angeles’ Iranian-American community — many of whom are Iranian Jews — recommending they make appointments at his firm. According to the indictment, Farahi also allegedly lied to major banks about his financial condition in order to draw funds from lines of credit he had with the banks.
In April 2009, following the U.S. Securities and Exchange Commission (SEC) investigation into Farahi and his firm, the indictment states that Farahi allegedly conspired with his Century City attorney, David Tamman, to conceal his fraud scheme from the SEC. As a result, Tamman was also recently indicted for his alleged involvement with the cover-up of Farahi’s supposed Ponzi scheme.
According to U.S. federal statutes, if convicted on all 41 criminal counts, Farahi could face a maximum sentence of more than 700 years in federal prison and Tamman could face a maximum sentence of 190 years in federal prison. Farahi voluntarily surrendered to authorities and was taken into custody on Dec. 9; he remains in jail and has been denied bail.
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