John Farahi, his wife and his company controller have been charged by the Securities and Exchange Commission with defrauding investors lured in by Farahi’s radio show. An emergency court order has frozen the remaining funds collected from investors in the alleged scheme.
According to the SEC, Farahi used his Farsi-language show on KIRN-AM to entice fellow members of the Iranian community in Los Angeles to invest with his NewPoint Financial Services. The complaint says he sold more than $20 million of debentures to over 100 people by falsely claiming that they were low risk FDIC-ensured CDs, government bonds or corporate bonds backed by the Federal TARP program. But the SEC claims most of the money was simply transferred to accounts controlled by Farahi and his wife, Gissou, and that they used some of the money to build a multi-million-dollar mansion.
“They lured victims with false promises of investment safety while secretly enriching themselves and diverting investor funds for their personal use,” said Rosalind Tyson, Director of the SEC’s LA Regional Office.
The SEC also claims that the Farahis lost more than $18 million in 2008 and early 2009 investing in risky options futures. All in all, the SEC says NewPoint doesn’t have enough cash on hand to make all of its investors whole. The court order it was granted freezes the remaining funds, appoints a temporary receiver, prevents the destruction of documents and requires accountings from NewPoint and the Farahis.
The daily financial talk show is no longer airing on KIRN.