Shervin Neman, the Los Angeles man arrested last year after allegedly targeting Iranian Jews and other investors in a Ponzi scheme, was found guilty on May 16 of defrauding two people out of a total of $3 million — one of the victims being a former NBA and NFL executive, according to the defendant’s attorney.
The sentencing, currently scheduled for Oct. 20, could result in a 60-year term in federal prison on two counts of wire fraud and one count of mail fraud. Each of the three counts carries a maximum 20-year sentence.
On May 30, Neman’s new counsel, Anthony Brooklier, of the law firm Marks & Brooklier, filed a motion for a retrial on the grounds that Neman’s trial lawyer did not present evidence that, among other things, Neman has had the funds all along to pay back his victims.
Indicted by a grand jury in 2012, Neman, 32, also known as Shervin Davatgarzadeh, was detained at his home by FBI agents in April 2013.
The Securities and Exchange Commission (SEC) argued in a 2012 civil suit that Neman raised more than $7.5 million from investors in California, Florida and Texas since 2010 by claiming to be a professional investor. That case, Brooklier said, is currently on hold pending the completion of the government’s criminal case.
The SEC’s complaint alleges that Neman used the investments to flip foreclosed residential real estate, promising returns of 11 percent to 18 percent, payable within one to six months. Promissory notes issued from “Neman Fund,” the complaint alleges, were signed by Neman as the fund’s president and CEO.
Yet, after the SEC filed its complaint, Neman allegedly solicited $2 million from another investor, identified in the criminal indictment as “R.W.” Neman said that through his connections to a stockbroker with access to private shares in Facebook, he could invest his funds before the initial public offering, increasing the chance of quick returns, the criminal indictment states.
In the end, the indictment charged Neman with defrauding two victims, identified simply as “R.W.” and “S.W.” Although officials with the local office of the Department of Justice declined to reveal the full names of the victims, Brooklier told the Journal that “R.W.” is Robert “Bob” Whitsitt, a former general manager for two NBA teams — the former Seattle SuperSonics and the Portland Trail Blazers — and former president of the Seattle Seahawks. Brooklier said Whitsitt testified at the trial.
A July 2013 article out of the Seattle bureau of the Courthouse News Service said that Whitsitt and his wife, Jan, sued the Santa Monica financial advisory firm Allen & Associates for encouraging them to invest in Facebook through Neman.
Whitsitt and his wife run a consulting firm in Washington state. They did not respond to multiple calls from the Journal.
The indictment said that with the $2 million received from “R.W.,” Neman paid his legal team and earlier victims, who he asked to send him emails stating that he no longer owed them money. He then attempted to use those emails in his defense against the SEC.
So as not to leave “R.W.” in the cold on his fabricated Facebook stock purchase, Neman sent him a $2.2 million check, according to the indictment. That check bounced. (Brooklier said Neman disputes that he mailed a fraudulent check.)
The only real investment Neman actually made, according to the SEC, was a $66,000 purchase of pre-IPO shares in General Motors Co.
According to the SEC’s civil complaint, Neman used the bulk of the $7.5 million he originally raised to pay existing investors and more than $1.5 million to finance his lifestyle and the appearance of his fictitious business, which included office space in a Century City building and two assistants. Neman’s wife, Cassandra, was named as a “relief defendant” — she was not charged with any wrongdoing but did receive extensive benefit from her husband’s Ponzi scheme.
“Among other things,” the complaint read, “Neman used investor funds to pay for his wedding and honeymoon, his wife’s engagement ring, luxury cars, VIP tickets to entertainment venues, jewelry, hotels, and restaurants.”
In April 2012, Barack Obama’s re-election campaign placed in escrow a $35,800 donation Neman had made, which was the maximum allowable contribution under campaign finance laws.
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