Former LA Radio Host Sent To Prison For Fraud
Posted by Ivetta Babadjanian on Mar 19, 2013 - 3:47:30 PM
BEVERLY HILLS—Former Beverly Hills money manager, John Farahi, is the second securities industry professional who has been sentenced to prison due to selling investments in fake Trouble Asset Relief Program (TARP) backed securities.
Farahi, who gave financial advice on a Los Angeles radio talk show in Farci on KIRN-AM, was sentenced on Monday, March 18 to ten years in federal prison for his involvement in a Ponzi scheme. He was also ordered to repay $24.4 million to 59 victims.
The 55-year-old of Bel Air Estates pleaded guilty on June 7 to four felony counts including mail fraud, loan fraud, selling unregistered securities and conspiracy to obstruct justice as he worked with his corporate counsel to hide the fraud. Farahi was sentenced by United States District Judge Phillip S. Gutierrez at the U.S. District Court in the Roybal Building on Temple Street Downtown.
“This verdict demonstrates that there are severe consequences when an attorney crosses the line between vigorous representation of a client and obstruction of an SEC investigation,” said Michele Layne, Director of the SEC’s Los Angeles Regional Office.
The majority of Farahi's victims were members of the Iranian-Jewish community to whom he promised conservative investments in corporate bonds backed by the TARP.
As part of his plea agreement, Farahi acknowledged that his Ponzi scheme caused in losses of over $7 million. Prosecutors, however, were able to prove that the losses were in fact over $24 million. Additionally, in his plea agreement, Farahi stated he used his victims' funds for unauthorized purposes such as paying off former investors as well as subsidizing options futures trading.
He also stated that he violated federal security laws by selling unregistered securities and not following the Security and Exchange Commission's (SEC) rules and regulations. Farahi went on to admit that he worked with his attorney to hinder an SEC investigation by modifying documents and proving false and misleading testimony on three different occasions while under oath to the SEC.
His attorney, 46-year-old David Tamman of Santa Monica, was found guilty last year for ten counts including obstruction of justice, altering records in a federal investigation and being an accessory after the fact to Farahi's crimes.
The SEC investigation began in April 2009 which caused Farahi and Tamman to try and conceal the fraud by lying to the agency and removing incriminating documents from investor files.
"Our key partners, U.S. Attorney AndreÌ Birotte Jr. and the SEC, took strong action in this case to protect investors in the Los Angeles community and taxpayers who funded TARP, and we will continue to work together to bring justice for crimes related to TARP,” said Special Inspector General for TARP (SIGTARP).
Tamman was suspended from practicing law by the California State Bar earlier this year and will receive his sentencing on May 20.
The case against Tamman and Farahi was based off of an investigation by the Office of the SIGTARP and the Federal Bureau of Investigation (FBI).
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