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Tag: John Farahi

  • 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.

  • POSTAL INSPECTORS: Ponzi Scheme Targeted Filipino Community In New York; Razel Canedo Arrested In Atlantic City In ‘Nanny’ Ponzi Scheme

    EDITOR’S NOTE: If you’re keeping a “Bubba Blue” notebook on the ways to have a Ponzi scheme as opposed to having shrimp, here’s one you might want to list: an alleged “Nanny” Ponzi scheme.

    In yet another case that couples Ponzi and affinity fraud, Razel Canedo was charged with targeting Filipino immigrants in Greater New York City in an alleged $1 million scheme that sold promissory notes by suggesting the proceeds would be used to pay expenses of nannies and nurses from the Philippines who wanted to work in the United States.

    The scheme also used religious references, prosecutors said.

    Canedo, 41, was charged with mail fraud and wire fraud. She was arrested in Atlantic City. Investigators said she used the aliases of “Razel Torres” and “Razel Agravante,” while operating companies known as “Lady of Lourdes” and “K&K Nannies.”

    But Candeo did not invest the victims’ money in Lady of Lourdes or K&K Nannies, prosecutors said. Instead, she put the “bulk” of it in “overseas bank accounts or deposited it into domestic accounts and withdrew it as cash.”

    “Ponzi schemes often target religious or ethnic groups to defraud them of their hard earned money,” said Ronald J. Verrochio, inspector-in-charge, U.S. Postal Inspection Service. “Working with the U.S. Attorney’s Office and the community, the Postal Inspectors will combat these frauds to protect everyone in our community from falling victim.”

    As often is the case in Ponzi schemes, investors were promised huge returns.

    “Candeo told investors that they would earn a return on their investment of anywhere from 3 percent per month to 50 percent per year,” prosecutors said. “[She] told victims that the money invested in Lady of Lourdes would be used to pay for training, immigration expenses, and placement services for nurses from the Phillipines who wanted to work in the United States, and that the money invested in K&K Nannies would be used to pay for similar services for aspiring nannies.”

    U.S. Attorney Preet Bharara said the scheme was reprehensible.

    “Razel Canedo preyed on members of the Filipino-American community who invested their hard-earned money into what they later learned was merely Canedo’s bank accounts,” Bharara said. “We will continue to work with our partners at the U.S. Postal Inspection
    Service to pursue financial fraud and vindicate its victims.”

    Some investors’ received payouts to sustain the deception, and others received checks that bounced, prosecutors said.

    In recent affinity-fraud cases, former Christian Radio host Pat Kiley was implicated by the SEC and the CFTC in an alleged $190 million fraud in Minnesota. Also charged in the case was Trevor Cook.

    Milton Retana of Huntington Park, Calif., was convicted in a Ponzi scheme that targeted Latinos. Investigators found $3.2 million in cash in the back of a religious bookstore owned by Retana’s wife.

    Meanwhile, John Farahi, a host on Persian-language radio in Greater Los Angeles, was charged by the SEC of operating a financial scheme targeted at Iranian-Americans.

    Investors were told they were investing in FDIC-insured certificates of deposit, government bonds or corporate bonds issued by companies backed by funds from the Troubled Asset Relief Program (TARP).

    Elsewhere, Gregg T. Rennie pleaded guilty in U.S. District Court in Massachusetts to 13 counts of securities fraud and one count of wire fraud. He potentially faces decades in prison and fines in the millions of dollars.

    Rennie hosted a radio show known as “Your Money” and targeted Christian listeners, prosecutors said.

  • Former Talk-Radio Host Gregg Rennie Pleads Guilty In Ponzi Scheme; Weizhen Tang Arrested At Toronto Airport

    Weizhen Tang: Arrested Jan. 13, 2010

    A Massachusetts man accused of targeting senior citizens and people of faith — and fleecing millions of dollars from them in a Ponzi scheme — has pleaded guilty.

    Meanwhile, Canadian-citizen and Ponzi-scheme suspect Weizhen Tang, the self-described  “Chinese Warren Buffet,” was arrested last night at Pearson International Airport in Toronto.

    Tang was taken into custody after returning to Canada from China. He was whisked to jail, and has a court appearance scheduled today. Toronto police asked for the public’s help in locating Tang earlier this month. Tang said he was aware a warrant had been issued for his arrest, and his attorney said Tang was returning to Canada to face the charges.

    In the Massachusetts case, Gregg T. Rennie pleaded guilty in U.S. District Court to 13 counts of securities fraud and one count of wire fraud. He potentially faces decades in prison and fines in the millions of dollars.

    “Financial crimes that prey on trusting investors, as alleged in this case, will not be tolerated,” said U.S. Attorney Carmen M. Ortiz. “The U.S. Attorney’s Office is dedicated to protecting investors from financial predators and will aggressively pursue those who exploit the trust of the investing public.”

    Rennie, 44, of Quincy, former was the host of the “Your Money” radio program. Christians were targeted in the scheme, which gathered at least $3.2 million, prosecutors said.

    “[H]e stole no less than $3.2 million from a number of victims, including an elderly gentleman whom Rennie had known since his childhood, retirees who invested their retirement savings with Rennie, and individuals who listened to Rennie’s radio show,” prosecutors said. “[His] victims also included a church congregation that had invested funds that the congregation had raised in anticipation of building a new church.”

    Rennie fleeced investors by telling them he handled “risk free federal housing certificates with guaranteed rates of return,” prosecutors said.

    He “told his victims that these investments involved government grants or loans for housing projects, or were otherwise investments in federally subsidized real estate developments,” prosecutors said.

    But Rennie “used the funds to pay for his own personal and business expenses as well as to make periodic payments to other victims,” prosecutors said. “To conceal his fraud, [he] showed some of his victims prospectuses for legitimate investment vehicles from respected investment companies. He further sent his victims bogus invoices which appeared to reflect their investments.”

    Rennie is at least the third talk-radio host recently implicated in a financial-fraud scheme. Christian radio host Pat Kiley of Minnesota was accused by the SEC and the CFTC of participating in a $190 million Ponzi scheme with Trevor Cook.

    In Beverly Hills, Calif., radio host John Farahi is accused by the SEC of targeting Iranian-Americans in a debentures-scheme pitched in Persian.

  • Iranian-Americans Targeted In Beverly Hills Investment- And Affinty-Fraud Scheme, SEC Says; Debentures Program Allegedly Pitched On Persian-Language Radio Show

    UPDATED 7:03 P.M. ET (U.S.A. JAN. 12) A Beverly Hills radio host pitched his fraud scheme in Persian and targeted Iranian-Americans in Greater Los Angeles, the SEC said today.

    Client funds were used to build a mansion for John Farahi, 52, and and his wife, Gissou Rastegar Farahi, 50, the agency said. Client funds also were transferred to the Farahi Family Trust. John Farahi hosts the daily radio program.

    Named defendants in the case were the Farahis, Beverly Hills-based NewPoint Financial Services Inc. and Elaheh Amouei, 54. The SEC identified Amouei as NewPoint’s controller and the “personal bookkeeper” of the Farahis.

    A company named Triple “J” Plus LLC operated by John Farahi was named a relief defendant. John and Gissou Farahi have control over the Triple “J” bank accounts, the SEC said.

    “They lured victims with false promises of investment safety while secretly enriching themselves and diverting investor funds for their personal use,” said Rosalind R. Tyson, director of the SEC’s Los Angeles Regional Office.

    All of the defendants’ assets have been frozen in the case, which includes allegations that clients were told they were investing in FDIC-insured certificates of deposit, government bonds or corporate bonds issued by companies backed by funds from the Troubled Asset Relief Program (TARP).

    TARP is the $700-billion program operated by the Treasury Department to shore up banks.

    “The vast majority of the money raised was transferred to accounts held by Defendants John and Gissou Farahi,” the SEC said in its complaint. “John and Gissou Farahi, in tum, used the investor funds to, among other things, construct a multi-million dollar personal residence in Beverly Hills, California and to engage in risky options futures trading in the stock market in which . . . John and Gissou Farahi lost more than $18 million in 2008 and the beginning of 2009.”

    Investors were asked to invest in the debentures by the Farahis and/or Elaheh Amouei, NewPoint’s controller, after making an appointment to discuss investment opportunities offered by NewPoint, the SEC said.

    Since at least 2003, NewPoint has sold more than $20 million worth of debentures to more than 100 investors. Clients were told their investments were low-risk, the SEC said.

    At some point, NewPoint prepared Private Placement Memoranda (PPM) literature describing the opportunity as high risk, but most investors said they never received the material, the SEC said. Investors also did not know that they were making loans to John Farahi.

    “[N]ot only did Defendants John and Gissou Farahi and/or Defendant Amouei fail to provide the PPMs to most investors, it appears that they only added the disclosure regarding loans to Defendant John Farahi in 2009, after the offering ceased, the SEC said.

    “[T]he vast majority of the money raised was actually transferred to accounts controlled by the Farahis, including an account at relief defendant Triple ‘J,’” the SEC said.

    Beginning roughly in June 2009, the SEC said, John Farahi and Amouei “made further misrepresentations to investors in an effort to lull them into keeping their money with NewPoint.

    “Investors have allegedly been told that their money is safe and that they are guaranteed to get the entirety of their investment back — despite the fact that NewPoint lacks sufficient funds to make all investors whole,” the SEC said. “John Farahi has also paid back some investors on a selective basis while failing to return money to other investors who have asked for a return of their investment.”

    Amouei, accordring to the SEC, “falsely told some of the investors who have not received a return of their investment that NewPoint was unable to return their money because the Commission has frozen NewPoint’s financial accounts.”

    The NewPoint case in California became the second fraud case since November in which a radio show allegedly was used to pitch a fraudulent  investment program.

    Christian radio host Pat Kiley of Minnesota was accused by the SEC and the CFTC in November of promoting a $190 million Ponzi scheme with Trevor Cook, who reportedly used some of the proceeds to buy a submarine to access a private island he bought in Canada.