PatrickPretty.com

Day: December 8, 2011

  • BULLETIN: Former Radio Host John Farahi Indicted In Alleged Ponzi Scheme; His Attorney Also Indicted Amid Allegations He Obstructed SEC Probe

    BULLETIN: John Farahi, a former Los Angeles radio host who once was a member of the city council of Reno, Nev., has been indicted on dozens of counts of defrauding investors and banks out of at least $20 million, federal prosecutors in the Central District of California said.

    David Tamman, an attorney, was indicted amid allegations he conspired with Farahi to obstruct an SEC probe. Farahi and Beverly Bills-based New Point Financial Services Inc. were charged civilly by the SEC in January 2010.

    Farahi, 54, resides in  Bel Air Estates. Tamman, 44, resides in Santa Monica.

    Prosecutors said Farahi falsely promised investors that “their money would be used to purchase corporate bonds backed by the Troubled Asset Relief Program,” alleging Tamman helped cover up the fraud.

    Most of Farahi’s investors were members of the Iranian-Jewish community, prosecutors said.

    “Farahi attracted many of the investors through his daily radio show in which he touted a conservative investment philosophy,” prosecutors said. “When Farahi met with investors he falsely told them New Point Financial Services invested in low-risk investments like certificates of deposit, TARP-backed corporate bonds, and deeds of trust backed by substantial amounts of borrower equity.”

    In reality, prosecutors said, Farahi used investors’ money to support his “lavish lifestyle,” to make Ponzi payments and engage in “high-risk and speculative future options trading.”

    Farahi lost “at least $15 million through his undisclosed” trading and continued to solicit new investors as losses piled up, prosecutors said.

    To keep the scheme afloat, Farahi drew down lines of credit and lied to banks, prosecutors said.

    After the SEC began its probe in 2009, Farahi and Tamman “engaged in a conspiracy” to backdate documents and remove “incriminating” documents, prosecutors said.

    Farahi was charged with 16 counts of mail fraud, five counts of selling unregistered securities, five counts of altering documents, four counts of loan fraud, four counts of obstruction of justice and single counts of conspiracy, wire fraud, aggravated identity theft, suborning perjury, concealing a material fact and witness-tampering.

    He faces a maximum prison term of 717 years, if convicted on all counts.

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

    If convicted on all counts, Tamman faces a maximum prison sentence of 190 years.

    The FBI and the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) led the criminal probe.

  • BULLETIN: Feds Say Romanian Hackers Breached Computers Of Subway Sandwich Restaurants And More Than 50 Other Retailers; Credit-Card Data Of 80,000 Customers Compromised And ‘Millions Of Dollars Of Unauthorized Purchases Have Been Made’

    BULLETIN: Three Romanian nationals have been arrested in the aftermath of a successful hacking bid that compromised the computer systems of Subway sandwich restaurants and 50 other retailers, the Justice Department, federal prosecutors in New Hampshire and the U.S. Secret Service said.

    One Romanian national remains at large. Authorities said credit-card data from tens of thousands of customers was compromised and that “millions of dollars of unauthorized purchases have been made using the compromised data.”

    Arrested were Adrian-Tiberiu Oprea, 27, of Constanta, Romania; Iulian Dolan, 27, of Craiova, Romania; and Cezar Iulian Butu, 26, of Ploiesti, Romania.

    Florin Radu, 23, of Rimnicu Vilcea, Romania, remains at large, U.S. officials said. The scam operated “from approximately 2008 until May 2011” and involved “U.S.-based merchants’ point-of-sale . . . or ‘checkout’ computer systems.’”

    Although the officials said the breach affected about 150 Subway outlets — less than 1 percent of the chain’s restaurants — the data theft from Subway and the other retailers affected more than 80,000 customers.

    Subway is a well-known international franchise based in Milford, Conn. The 46-year-old company is famous for its sandwiches — and also its television commercials featuring Jared Fogle. Fogle became famous in his own right after his weight ballooned to 425 pounds as a college freshman and he became trim again after losing nearly 250 pounds by eating healthy food from Subway.

    Subway is an internationally famous franchise that calls its service staff "Sandwich Artists." One of the firm's "Sandwich Artists" is Sara Manchipp, the reigning Miss Wales.

    All four of the suspects have been charged with conspiracy to commit computer fraud, wire fraud and access device fraud.

    Oprea was arrested last week in Romania and is detained there, prosecutors said.

    “Dolan and Butu were arrested upon their entry into the United States on Aug. 13 and Aug. 14, 2011,” prosecutors said.

    Details on why Dolan and Butu were arrested upon entry were not immediately clear. The hacking was performed “remotely,” officials said.