Ezri Namvar, the bankrupt Westside businessman who amassed an estimated $2.5 billion real estate portfolio that collapsed two years ago amid allegations he was operating a Ponzi scheme, has been indicted on five counts of wire fraud.
According to the indictment, Namvar stole $23 million from five clients of the now-bankrupt Namco Financial Exchange Corp., a company that acted as an intermediary for investors who were buying and selling properties in tax-deferred exchanges.
The indictment, which was issued Tuesday, alleges that instead of holding the funds as promised, Namvar took money out of his clients’ accounts and used it to pay back investors of his main company, Namco Capital Group Inc., which is also bankrupt. The transactions in question occurred from March to August 2008.
Namvar, 59, has agreed to surrender to the FBI on Monday, according to a press release from the U.S. Attorney’s Office.
“I’m disappointed with the decision to seek criminal charges in this case,” said Marc Harris, a criminal defense attorney representing Namvar. “We intend to vigorously contest the charges and expect Mr. Namvar to be fully vindicated.”
Namvar declined to comment.
Also indicted on five counts of wire fraud was Hamid Tabatabai, 62, controller and vice president of Namco Financial. He surrendered to authorities Thursday. Tabatabai could not be reached for comment.
Each count of wire fraud carries a statutory maximum sentence of 20 years in federal prison.
Namco Financial was a so-called qualified intermediary that facilitated the tax-deferred exchange of properties in a type of real estate transaction called a 1031 exchange. A 1031 exchange 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.
Real estate investors are required to park the proceeds from their initial sales with intermediaries such as Namco Financial until replacement properties can be purchased. According to the indictment, the five clients deposited a total of $27 million with the company, but only $4 million was returned.
“Defendant Namvar, with the knowing assistance of defendant Tabatabai and others, used those exchange proceeds for a variety of purposes unrelated to the victim clients’ 1031 exchanges,” the indictment states.
Lawsuits filed over the last two years have accused Namvar of taking money out of exchange accounts and using it to prop up his various ventures, including Security Pacific Bank, a small Westside bank that the businessman had a majority interest in before it was seized by regulators in 2008.
Namvar, whose properties have included the Wilshire Bundy office building in West L.A., downtown’s Marriott hotel and the Cal Neva resort in Lake Tahoe, has been under investigation by the FBI since at least 2009, just months after investors personally forced him into bankruptcy along with Namco Capital in December 2008.
Namvar, an immigrant from Iran, raised most of his money by personally soliciting investments from members of the Persian Jewish community in and around Beverly Hills. When his ventures soured, many investors lost their life savings and were left destitute. He had been accused of operating a Ponzi scheme in lawsuits filed in late 2008 and 2009.
The 464 creditors of Namvar and Namco Capital claim they are owed at least $866 million, according to court filings and other documents, though final tallies could be lower. Namvar’s personal bankruptcy is among Los Angeles County’s biggest in decades.
“It’s really a sad day,” said A. David Youssefyeh, an attorney representing 22 creditors. “I really hope he uses this opportunity to return the money he took from his victims, and I hope this gives his victims some peace.”
For reprint and licensing requests for this article, CLICK HERE.