Federal authorities are conducting a criminal investigation of Ezri Namvar, the bankrupt Brentwood businessman who has been accused of running a Ponzi scheme, the Business Journal has learned.
Sources who were either interviewed by the FBI or were present for questioning of others this year and last fall said that discussions largely focused on Namvar's bankrupt Namco Financial Exchange Corp., which is named in several lawsuits accusing the businessman of running a Ponzi scheme and stealing money to prop up his failing ventures.
A prosecutor in the United States Attorney's Office in Los Angeles, which typically works in conjunction with the FBI, confirmed his involvement in the investigation.
"I am the attorney who is handling the investigation," said Jeremy Matz, an assistant U.S. attorney in the major frauds section. He declined further comment.
Such investigations, of course, can be dropped entirely or they can lead to settlements. But they also can result in indictments.
Namvar, 57, had a local real estate empire valued at $2.43 billion last summer, but it collapsed during the real estate bust late last year.
His situation is remarkable partly because of the size of the losses, but also because of the unusual way he raised money. Namvar solicited personal investments from immigrants, many of whom are Jewish and fled Iran because of the country's 1979 Islamic revolution.
Bankrupt Namco Capital Group Inc., his main investment company, owes more than a half-billion dollars to 464 creditors, mostly Persian Jews like Namvar who live in and around Beverly Hills. It is believed he personally owes a large amount as well.
Namvar in December was forced into Chapter 11 involuntary bankruptcy along with Namco Capital amid concerns that he was disposing of assets to pay back some creditors preferentially.
It is not known whether a grand jury has been convened in the matter and sources interviewed by the FBI said they had not been subpoenaed to testify or supply evidence. But, Laurie Levenson, a former assistant U.S. attorney, said that because the case is in the hands of an assistant U.S. attorney, it has passed a screening process and is seen as a case that could result in criminal charges.
"They are pretty serious," said Levenson, a professor at Loyola Law School in downtown Los Angeles, who learned of the investigation from the Business Journal. "I don't know if even they have decided if they will seek an indictment, who they will indict or the scope of the charges. There are plenty of cases that make it to this point and are resolved with a deal, but you don't want to be on the short list."
Namvar could not be reached for comment. A receptionist at Namco Capital said he no longer comes to the company's office at 12121 Wilshire Blvd. in West Los Angeles. Namvar's bankruptcy counsel, Stephen Biegenzahn, and Namvar's longtime attorney, Timothy Neufeld, could not be reached for comment. It is unclear if Namvar has retained a criminal defense attorney.
Several sources, including the trustee appointed to handle Namvar's personal bankruptcy, said they were aware of the investigation. Others said they had participated in or were present for interviews conducted by the FBI.
Most discussions are said to have centered on Namco Financial.
The company is a so-called qualified intermediary that facilitates the tax-deferred exchange of properties in a type of transaction called a 1031 exchange. The transaction requires investors to park the proceeds of their initial property sale with intermediaries until a replacement property can be purchased. Namvar and Namco Financial are facing at least six Superior Court lawsuits and one U.S. Bankruptcy Court suit that allege at least $24.4 million in total was taken from 1031 exchange accounts. Generally, the suits allege that Namvar stole the money to pay off various business debts.
One attorney involved in litigation with Namco Financial said that he was present while the FBI interviewed his client in February.
"The topic was the theft of our money," said the attorney, who declined to comment on the record because the FBI asked that he not discuss the matter. "The focus was who, what, when, where and how."
A. David Youssefyeh, an attorney who is advising several clients who claim they are owed money by Namvar and Namco Capital, said that last fall he was contacted by the FBI and interviewed in the FBI's West L.A. office.
"I have spoken with them and given them background information. You just give them information -- they don't tell you anything," said Youssefyeh, adding that the hourlong discussion touched on a variety of topics including allegations of theft related to Namco Financial.
Youssefyeh also said the FBI has conducted interviews with people who had dealings with Security Pacific Bank of Los Angeles, which Namvar owned and oversaw as chairman until regulators declared it insolvent in November and closed it. The bank is named in some of the 1031 exchange lawsuits.
Three related lawsuits filed by Sunnylane Partners LLC against Namvar, Namco Financial and others allege that the defendants stole about $1.97 million deposited with Namco Financial and the shuttered bank was the recipient of stolen money. The suits also allege that in the second half of 2008, Namvar and his brothers sold real estate assets and put the proceeds into the failing bank in an attempt to save it.
Christopher Reeder, an attorney who represents three of Namvar's brothers -- Sean, Ramin and Tony -- previously told the Business Journal his clients had no knowledge of any alleged Ponzi scheme or thefts. Reeder said last week that he and his clients have not been contacted by the FBI and first learned of the investigation from the Business Journal.
"If we are contacted we'd be happy to help in the investigation in any way we can," he said.
David Barr, a Federal Deposit Insurance Corp. spokesman, has previously said that a standard review of Security Pacific was undertaken, but last week Barr said he couldn't confirm whether there is an ongoing investigation of the bank being conducted by the FDIC alone or in conjunction with the FBI.
Laura Eimiller, a spokeswoman for the FBI, said she could not confirm or deny an investigation of Namvar. Also, a spokeswoman for the District Attorney's Office of Los Angeles County said she was unable to discuss whether the office was also conducting an investigation.
Levenson said that investigations involving the U.S. Attorney's Office and the FBI are generally rather lengthy. "Timewise, these things don't generally happen overnight," she said.
Several sources said that Matz's involvement in the investigation means that the U.S. Attorney's Office is taking the case very seriously. Matz is the son of prominent federal Judge Howard Matz and has been involved in several high-profile fraud cases, including the 2007 indictment of local real estate brokers and Orange County real estate appraisers who were involved in a $40 million mortgage fraud scheme.
"He is seasoned, experienced and a very smart prosecutor," Levenson said. "It strikes me that this is a case they are taking seriously because they are giving it to one of their top people. I don't think they'd waste Jeremy's time with a case that didn't have at least serious issues to be investigated."
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