Bankrupt businessman Ezri Namvar is being accused of running a Ponzi scheme and stealing money to prop up his failing ventures, according to lawsuits filed in state court and U.S. Bankruptcy Court.
Namvar and his Namco Financial Exchange Corp. are facing at least five Los Angeles Superior Court lawsuits and one bankruptcy lawsuit that allege the Brentwood resident stole money that was meant to be held in what essentially are real estate escrow accounts. Several of Namvar's relatives, including his brothers and father, are named as defendants in three of the suits.
In his first public comments about his business failures and the lawsuits he faces, Namvar told the Business Journal: "There are two sides to every story. One day the truth will come out."
He declined further comment, as did his attorney.
The initial fraud lawsuit was filed in November in state court, but since late January at least five similar suits have been filed by three additional plaintiffs.
The accusations in the fraud complaints are more serious than the roughly two dozen other state court lawsuits filed by creditors of Namvar and his main investment company, Namco Capital Group Inc. Those suits generally claim Namvar and his company owe the creditors money.
Namvar, an immigrant from Iran, amassed a real estate empire that he figured was valued at $2.43 billion in July, although the stated value has declined since then.
Namvar financed his investments in an unusual way. He personally gathered money from members of the Persian Jewish community in and around Beverly Hills, some of whom handed over their life savings and got no hard collateral in return. They and other creditors are owed more than a half-billion dollars, according to bankruptcy court filings.
Namvar stopped paying them apparently last year as the real estate markets skidded. Several creditors threw him and Namco Capital into bankruptcy court in December in an attempt to get orderly repayment.
However, the Ponzi lawsuits go beyond complaints that money wasn't repaid because of business setbacks. They claim money was stolen.
"Based on the allegations in the complaint, if they were true, this could rise to the level of criminal activity," said Andrew Kirsh, a Goodwin Procter attorney who reviewed one of the lawsuits at the Business Journal's request and who is not involved in the cases.
Namco Financial is a so-called qualified intermediary that facilitates the tax deferred exchange of properties in a type of real estate transaction called a "1031 exchange." This transaction allows a property seller to defer paying taxes on gains from a sale by reinvesting the proceeds in another property of equal or greater value within 180 days.
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