BH Money Manager Pleads Guilty to Ponzi Scheme

John Farahi is accused of swindling $7 million from his victims.

A former Beverly Hills money manager who used his Persian-language radio show to attract investors pleaded guilty today to federal charges stemming from a Ponzi scheme that swindled victims out of at least $7 million.

John Farahi, 54, of Bel Air Estates pleaded guilty to four felony counts—mail fraud, loan fraud, selling unregistered securities and conspiracy to obstruct justice—while collaborating with his corporate attorney to hide the fraud, according to the U.S. Attorney's Office.

Farahi, who ran Beverly Hills-based New Point Financial Services Inc., largely targeted moneyed members of the Iranian-Jewish community, promising conservative investments in corporate bonds backed by the Troubled Asset Relief Program.

In a plea agreement filed in federal court in Los Angeles, Farahi acknowledged that the scheme caused losses of more than $7 million, while prosecutors reserved the right to argue that losses to victims are in excess of $20 million.

The maximum penalty for the charges to which Farahi pleaded is 75 years in prison. Under the terms of the plea agreement, prosecutors agreed to recommend a sentence of no more than 10 years. The final decision will be made Jan. 14 by U.S. District Judge Philip S. Gutierrez.

"Mr. Farahi took advantage of investors' trust, as well as their money," said Steven Martinez, assistant director in charge of the FBI's Los Angeles field office. "Farahi's admitted crimes resulted in millions of dollars in losses and should remind those seeking to invest to use extreme caution when turning over their money in an environment where fraud is all too common."

The indictment against Farahi also charges Century City attorney David Tamman with conspiring to obstruct a Securities and Exchange Commission probe into Farahi's business dealings. Tamman faces trial in October.

According to his plea agreement, Farahi convinced his clients to invest in what he claimed were low-risk ventures, including certificates of deposit, TARP-backed bonds and deeds of trust. He then used clients' money to bankroll a lavish lifestyle, make Ponzi- style payments to early investors and engage in high-risk options trading, prosecutors said.

Prosecutors assert that when faced with huge trading losses, Farahi sought larger credit lines at banks by lying about his financial condition.

As an SEC probe neared in April 2009, Farahi and Tamman tried to conceal the fraud by altering documents, lying to the agency and removing incriminating documents from investor files, federal prosecutors allege.

Tamman, 45, is charged with one count of conspiracy, three counts of obstruction of justice, five counts of alteration of records and one count of being an accessory after the fact to the mail fraud and securities violations.

Have you ever worked with John Farahi? Do you know someone who has? Tell us in the comments section below.

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maryam eslami June 18, 2012 at 08:21 PM
10 years is nothing...this man shoud rotten in prison.


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