(Reuters) - A former Los Angeles-area radio talk show host was sentenced to 10 years in prison after he pleaded guilty to running a $24.4 million fraud involving fake securities linked to the federal Troubled Asset Relief Program, U.S. authorities said on Tuesday.
John Farahi, 56, who operated Beverly Hills-based NewPoint Financial Services Inc, is the second securities industry professional sentenced to prison for selling investments in fake TARP-backed securities, according to a statement from Christy Romero, special inspector general for the Troubled Asset Relief Program (SIGTARP).
Farahi’s prison term matches that imposed in 2009 on Gordon Grigg, a financial adviser and owner of ProTrust Management Inc in Franklin, Tennessee, SIGTARP said.
TARP is the federal bailout program established during the recent global financial crisis.
According to SIGTARP, Farahi admitted to bilking investors by promising to buy TARP-backed corporate bonds and admitted to conspiring with his lawyer to obstruct a U.S. Securities and Exchange Commission probe.
It said Farahi used money obtained from investors, including many in Los Angeles’ Iranian-Jewish community, and borrowed from banks that received TARP infusions to repay earlier investors in a Ponzi-like fashion.
SIGTARP said Farahi lived luxuriously, with a Beverly Hills mansion, a yacht and three expensive cars - a Bentley, a Ferrari and a Rolls Royce.
“Exploiting the TARP bailout for personal gain is reprehensible,” Romero said.
In imposing the sentence on Monday, U.S. District Judge Philip Gutierrez in Los Angeles also ordered Farahi to repay $24.4 million to 59 victims, according to SIGTARP.
Farahi, of Bel Air Estates, California, pleaded guilty last June 7. A receiver had earlier been appointed for his firm. Farahi once had a regular show on KIRN-AM radio.
Gary Lincenberg, a lawyer for Farahi, said in an emailed statement: “Mr. Farahi’s hope and wishes are that all investors who lost money will be made whole by the time the receiver concludes his work.”
David Tamman, 46, a former partner at the law firm Nixon Peabody, had been found guilty last November in a trial before Gutierrez for helping Farahi obstruct the SEC probe.
The California State Bar last month suspended Tamman from practicing law. Tamman’s sentencing is scheduled for May 20.
David Duncan, a lawyer for Tamman, declined to comment.
The case is U.S. v. Farahi et al, U.S. District Court, Central District of California, No. 11-cr-01165.
Reporting by Jonathan Stempel in New York; Editing by Leslie Adler, Bernard Orr