Former LA radio host sent to prison


GavelFormer 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 in Farci on Lotus Communications’ KIRN-AM Simi Valley, CA, was sentenced 3/18 to 10 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 pleaded guilty 6/7 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 US District Judge Phillip S. Gutierrez at the U.S. District Court, reported Canyon News.

“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 LA 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 deal, Farahi acknowledged that his Ponzi scheme caused losses of over $7 million. Prosecutors, however, were able to prove that the losses were over $24 million. Farahi also stated he used his victims’ funds for unauthorized purposes such as paying off former investors as well as subsidizing options futures trading.

He also said he violated federal security laws by selling unregistered securities and not following the SEC’s rules and regulations. Farahi admitted he worked with his attorney to hinder an SEC investigation by modifying documents and proving false and misleading testimony on three occasions while under oath.

His attorney David Tamman 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.

See the Canyon News story here