LOS ANGELES (CN) – NewPoint Financial Services and three of its officers duped Iranian-American investors into buying $20 million in purportedly low-risk investments and then used the money to engage in risky trading and build a multimillion-dollar mansion in Beverly Hills, the SEC claims in Federal Court.
NewPoint co-owners John Farahi and Gissou Rastegar Farahi and its controller, Elaheh Amouei, allegedly targeted investors in Los Angeles’ Iranian-American community by touting their firm on a daily finance radio show hosted by John Farahi on a Farsi-language radio station.
Potential investors were told they would be investing in FDIC-insured certificates of deposit, and government and corporate bonds issued under the Troubled Asset Relief Program, according to the SEC. NewPoint allegedly sold more than $20 million in debentures to at least 100 investors.
“The vast majority of the money was transferred to accounts held by Defendants John and Gissou Farahi,” the lawsuit states. They then “used the investor funds to, among other things, construct a multimillion-dollar personal residence in Beverly Hills, California, and to engage in risky options futures trading in the stock market,” the suit states.
The Farahis allegedly lost more than $18 million in the stock market in 2008 and early 2009.
The SEC obtained a court order freezing the assets of the company and its owners, in order to preserve any funds that might be returned to investors, the agency said in a press statement.
The court order also appoints a temporary receiver to prevent the destruction of evidence related to the alleged fraud.