David Saks: FBI Arrests Man for Allegedly Running Foreclosure Ponzi Scheme

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FBI Arrests Man for Allegedly Running Foreclosure Ponzi Scheme

FBI Arrests Century City Man for Allegedly Running Ponzi Scheme and Bilking Additional Victim After Being Sued by SEC

U.S. Attorney’s Office April 26, 2013
  • Central District of California (213) 894-2434
 

LOS ANGELES—A Century City man was arrested this morning by FBI special agents after he was charged with running a Ponzi scheme and then bilking another victim out of millions of dollars that he used to pay back earlier victims after the SEC took him to court.

Shervin Neman, whose given name is Shervin Davatgarzadeh, 31, was arrested without incident this morning at his residence. Neman was arrested pursuant to a three-count fraud indictment that alleges he caused victims to suffer losses of more than $3 million.

The indictment alleges that Neman claimed to be a successful investor who made significant profits, but he in fact operated a Ponzi scheme from the summer of 2010 through last June by soliciting funds from investors with false claims that their money would be used to purchase foreclosed real estate and stocks, including pre-initial public offering shares. Instead of using investor funds to make these investments, the indictment alleges that Neman was spending most of the victims’ investment funds on personal expenditures and to repay other victims.

The Securities and Exchange Commission filed a civil complaint against Neman and his company, the Century City-based Neman Financial Inc., on April 11, 2012, in United States District Court in Los Angeles. The lawsuit alleged that Neman was operating a multi-million-dollar Ponzi scheme that was targeting primarily members of the Persian-Jewish community in Los Angeles. Subsequently, a federal judge issued orders prohibiting Neman from committing securities fraud (see, for example: https://www.sec.gov/litigation/litreleases/2012/lr22331.htm).

The month after the SEC filed its lawsuit, Neman solicited $2 million from another victim with false promises that Neman could obtain pre-IPO shares in Facebook, according to the indictment. Neman allegedly used the funds obtained from the new victim to pay, among other things, most of his earlier victims and the law firm representing him in the SEC action. Neman then had victims who had been “paid back” write e-mails saying that Neman did not owe them money, according to the indictment, which goes on to say that Neman used these e-mails as part of his defense in the SEC case. In June 2012, Neman sent to the later victim a $2,235,800 check that purported to be the return on the Facebook investment, but that check bounced, according to the indictment.

Neman was charged in an indictment returned under seal Wednesday by a federal grand. That indictment, which was unsealed this morning after Neman’s arrest, charges him with two counts of wire fraud and one count of mail fraud.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.

The three fraud charges in the indictment each carry a statutory maximum sentence of 20 years in federal prison.

Neman is expected to be arraigned this afternoon in United States District Court in downtown Los Angeles.

This case is the result of an investigation by the Federal Bureau of Investigation.

source: FBI



David Saks



Time&Temp Memphis

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Comment balloon 4 commentsDavid Saks • April 26 2013 02:42PM

Comments

There is always someone who will try anything to gain money by hurting people. I have heard some say that if one is smart enough to create a scam such as this then they should be quite successful in legitimate business.

Posted by Noah Seidenberg, Chicagoland and Suburbs (800) 858-7917 (Coldwell Banker) about 7 years ago

We have a lot of scammers here in Florida too. At least there will be some justice.  Thanks for sharing.

Posted by Kari Battaglia, PA, Love Where You Live (RE/MAX Platinum Realty) about 7 years ago

It's a never ending battle for truth, justice and the end of real estate fraud, Noah.

Posted by David Saks ((retired)) about 7 years ago

Affinity fraud is everywhere, Kari. One down, a million more cases to go, nationwide. I believe that the FBI is short-staffed because there's so much real estate fraud and not enough manpower to track it and hunt it down before it hurts someone else like a rabid wolf. There so much real estate fraud in America it should be reclassified as a domestic threat to national security. Look at the massive amounts of damage that it's already done to our banks and homeowners. And some obnoxious professionals in this business just smile and go about their routines on a daily basis making like it never happened, nor do they care as long as the commission check's in the mail.

Posted by David Saks ((retired)) about 7 years ago

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