An Iranian-American businessman who hosted a popular Persian language radio show called Economy Today has been indicted on charges that he robbed investors of $20 million in a Ponzi scheme than ran for six years.
Los Angeles-based John Farahi, 54-who lives in the opulent Bel Air Estates neighborhood-offered listeners investment advice and promoted his company, New Point Financial Services, which he claimed made conservative investments in low-risk assets like certificates of deposit, TARP-backed corporate bonds, and deeds of trust. Instead, Farahi used the money he solicited to support his family's luxurious lifestyle, make payments to earlier investors, and engage in high-risk options trading. Farahi lost at least $15 million through his actual investments, the indictment alleges -- something he failed to disclose to clients.
Farahi's talk show was broadcast daily on L.A.'s KIRN-AM (670) for eight years, ending in January 2010, when the Securities and Exchange Commission filed a lawsuit accusing him, his wife and an employee of defrauding investors. During the show, Farahi explained the news coming out of the financial markets and took questions from callers.
"It's troubling," the station's general manager told the Los Angeles Times when the lawsuit was announced. "We immediately discontinued the program. We had no choice -- until there's a resolution."
Also indicted was New Point's corporate counsel, Santa Monica attorney David Tamman, who stands accused of conspiring with Farahi to obstruct the SEC investigation. According to the indictment, Farahi and Tamman altered documents to make it look as though New Point's investors had been fully informed about the firm's investments. Tamman faces a maximum of 190 years behind bars if convicted on all counts; Farahi's maximum sentence could be 717 years.
Farahi is said to have targeted members of L.A.'s close-knit Iranian-American Jewish community, who made up most of his more than 100 investors. At the time of the original SEC complaint, Karmel Melamed, a freelance journalist who writes about Iranian-American affairs, told The New York Times, "Sadly, I think this scandal will wake all Iranian Americans up to the reality that they can no longer trust those from amongst their community with just a handshake, as was the case in Iran when it came to doing business. They will now more than likely become more savvy by doing their research and investigating financial advisers who will be handling their money."
He added that "a few rotten apples" had turned to illegal means to make back the money they forfeited by leaving Iran for the United States in the wake of the 1979 Islamic Revolution.