LOS ANGELES (CN) - A 31-year-old Century City man was arrested Friday and charged with bilking a man of millions of dollars he used to pay back victims of an earlier Ponzi scheme.
Shervin Davatgarzadeh aka Shervin Neman was arrested on a three-count fraud indictment accusing him of cheating people of more than $3 million, the U.S. Attorney's Office said.
The SEC sued Davatgarzadeh a year ago, accusing him and his company, Neman Financial, of targeting Los Angeles' Persian-Jewish community in a multimillion-dollar Ponzi scam.
A federal judge then ordered him not to commit securities fraud, but apparently it didn't take.
The man had chutzpah, prosecutors said in the statement: "The month after the SEC filed its lawsuit, Neman solicited $2 million from another victim with false promises that Neman could obtain pre-IPO shares in Facebook, according to the indictment. Neman allegedly used the funds obtained from the new victim to pay, among other things, most of his earlier victims and the law firm representing him in the SEC action. Neman then had victims who had been 'paid back' write e-mails saying that Neman did not owe them money, according to the indictment, which goes on to say that Neman used these e-mails as part of his defense in the SEC case. In June 2012, Neman sent to the later victim a $2,235,800 check that purported to be the return on the Facebook investment, but that check bounced, according to the indictment."
A federal grand jury indicted him last week and the indictment was unsealed after he was arrested. He is charged with mail fraud and two counts of wire fraud. Each charge is punishable by up to 20 years in prison.
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