A former host of a Los Angeles-area radio show has been sentenced to 10 years in federal prison for running a scheme to defraud investors of millions dollars — including false statements to banks that received federal bailout funds.
John Farahi, who hosted a daily financial talk show on KIRN-AM and operated New Point Financial Services in Beverly Hills, also was ordered by U.S. District Judge Phillip Gutierrez in Los Angeles to pay $24.4 million to 59 victims.
Farahi, of Bel Air Estates, Calif., pleaded guilty last year to four felonies. He admitted to fleecing investors by using their funds to pay off other investors and to subsidize trading in futures options, according to Christy Romero, the special inspector general for the Troubled Asset Relief Program.
According to news reports, Farahi used his radio show to promote his sham investment strategy among members of the Iranian-American community. The scam enabled Farahi to live in a mansion, to sail in a yacht and to drive a Bentley, Ferrari and Rolls-Royce, according to Romero.
Farahi also made false statements in connection with lines of credit he maintained at Bank of America (BAC) and U.S. Bancorp (USB) in violation of a U.S. law that specifically prohibits fraud involving financial institutions that received Tarp funds.
"Exploiting the Tarp bailout for personal gain is reprehensible, and [the special inspector general] will work with our law enforcement partners to shut down Tarp-related fraud and bring perpetrators to justice," Romero said.
David Tamman, a lawyer in Santa Monica, was convicted last year of helping Farahi carry out his crimes and is scheduled to be sentenced by Gutierrez in May, according to Romero and the U.S. attorney's office in Los Angeles.
The management of KIRN-AM suspended Farahi's show in 2010 because of the allegations against him, the Los Angeles Times reported.
Gary Lincenberg, a lawyer for Farahi, said in an email that his client's "hope and wishes are that all investors who lost money will be made whole" by the time a receiver appointed by the court at the request of the Securities and Exchange Commission in a related case against Farahi finishes his work.
David Duncan, a lawyer for Tamman, declined to comment.