California Attorney David Tamman Sentenced to Seven Years in Securities Fraud Case
On 23 September 2013, the U.S. Attorney’s Office for the Central District of California announced that attorney David Tamman, formerly of the Nixon Peabody law firm, had been sentenced to seven years’ imprisonment for obstructing two investigations into a $22 million investment fraud.
Judge Phillip S. Gutierrez noted that in addition to the crimes Tamman had helped cover up, he also lied to the Securities and Exchange Commission (“SEC”) during their investigation and doubled down on those lies during his 2012 trial.
Evidence produced at the trial showed that Tamman conspired with John Farahi to conceal Farahi’s illegal activities. Farahi, a fund manager and radio personality, told his investors that he was buying corporate bonds backed by the Troubled Asset Relief Program (TARP) for his NewPoint Financial Services, Inc., when in fact he was running a Ponzi scheme. Farahi targeted the Iranian-American community in the Los Angeles area, making use of a daily financial radio show broadcast in Farsi.
Farahi pled guilty in June 2012, and was sentenced to 10 years in prison on March 18, 2013.
Tamman chose a bench trial over a guilty plea. He was found guilty of 10 counts, including obstruction of justice, altering records in a federal investigation, and being an accessory after the fact to Farahi’s scheme.
Federal prosecutors said in their sentencing brief, “Despite being a highly educated lawyer, defendant David Tamman has displayed a remarkable disrespect for the law and the legal system over the course of almost a decade.” As early as 2004, the attorney had falsified documents that persuaded the National Association of Securities Dealers (now FINRA) to drop an investigation of Farahi, making it possible for the fund manager to keep his fraud alive for another five years.
When the SEC began to investigate in 2009, Farahi and Tamman altered and created securities offering documents and promissory notes. In January 2010, the SEC froze NewPoint’s and Farahi’s assets, and filed an SEC Enforcment action against them. Tamman continued to cover up Farahi’s crimes, and then his own, first by lying to the SEC investigators and then to the Court in the course of his criminal trial.
“Today justice was served for Tamman’s attempted massive cover-up of John Farahi’s multi-million dollar Ponzi scheme in which Farahi lied to investors and claimed that he was investing in safe, TARP-backed corporate bonds,’ said Christy Romero, Special Inspector General for TARP (SIGTARP). “Contrary to his claims, Farahi used investors’ funds to bankroll his lavish lifestyle and high-risk trading which resulted in heavy losses for investors and TARP banks. As Farahi’s attorney, Tamman was Farahi’s enabler, falsifying and backdating business documents to hide the fraud, and as a result, Tamman will spend the next seven years in federal prison.”
For further information about this securities law blog post, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton, Florida, (561) 416-8956, by email at [email protected] or visit www.securitieslawyer101.com. This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship. Please note that the prior results discussed herein do not guarantee similar outcomes.
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