Beverly Hills fund exec indicted in $20-million swindle, feds say
A former investment fund manager is facing charges that he defrauded investors out of at least $20 million by falsely promising them their money was invested in government-backed corporate bonds when in fact he was spending it on risky financial deals and a lavish lifestyle.
John Farahi, 54, of Bel-Air Estates, was indicted on 41 counts late Wednesday by a federal grand jury in connection with a scheme in which prosecutors allege that he told investors the bonds were backed by the Troubled Asset Relief Program and then collaborating with others to cover up the fraud.
The indictment charges Farahi, who once served on the Reno City Council and was Farsi-language radio investment advisor, with a multitude of fraud offenses that include making false statements to TARP-funded banks in relation to multimillion-dollar loans while operating Beverly Hills-based New Point Financial Services.
His corporate attorney, David Tamman, 44, of Santa Monica, also is charged with conspiring with Farahi to obstruct a Securities and Exchange Commission investigation into the alleged fraud scheme.
Many of the investors were allegedly attracted to the firm through Farahi's daily radio show in which he touted a conservative investment philosophy.
According to the indictment, Farahi used investor money for a variety of personal purposes, including to support his family’s lavish lifestyle, to make Ponzi-like payments to early clients of New Point Financial Services, and to trade in high-risk and speculative future-options trading.
But Farahi allegedly failed to tell investors that he had lost at least $15 million through his undisclosed options trading.
Prosecutors allege that facing huge trading losses at the end of 2008, Farahi tried to extend the scheme by drawing down extensively on lines of credit at banks while making false statements to the banks about his financial condition. The victim banks included TARP recipients, Bank of America and U.S. Bank, as well as Sun West Bank.
Farahi is slated to surrender to authorities Friday morning, while Tamman is expected to appear Jan. 9.
— Richard Winton