The host of a popular Persian-language radio talk show was accused by the U.S. Securities and Exchange Commission of defrauding investors out of more than $20 million in a long-running investment scheme that targeted the Iranian American community.
In a lawsuit filed Monday in federal court in Los Angeles, the SEC accused John Farahi; his wife, Gissou Rastegar Farahi; and their company, NewPoint Financial Services, of losing millions of dollars in volatile investments they had promoted as safe.
FOR THE RECORD:
Fraud accusation: An article in Tuesday's Business section about a Persian-language radio talk show host who is accused of investment fraud said the U.S. Securities and Exchange Commission filed a lawsuit against the host, John Farahi; his wife, Gissou Rastegar Farahi; and their company, NewPoint Financial Services, on Monday. The lawsuit was filed Friday. —
The Farahis also transferred clients' money to bank accounts the couple controlled and used some of the money to build a multimillion-dollar home in Beverly Hills, the SEC contended.
The defendants could not be reached for comment Monday.
John Farahi, 52, has hosted a daily financial talk show, "Economy Today," for about eight years on KIRN-AM (670), said John Paley, the Persian-language station's general manager. The Los Angeles station suspended the program because of the allegations, playing music in its place Monday, Paley said.
"It's troubling," Paley said. "We immediately discontinued the program. We had no choice -- until there's a resolution."
In the show, Farahi told listeners about developments in financial markets and answered questions from callers, Paley said. The one-hour program aired weekdays at 1 p.m.
The SEC alleged that the Farahis or company controller Elaheh Amouei made appointments with interested listeners to discuss investment opportunities offered by NewPoint, and misled more than 100 victims to invest more than $20 million.
A judge issued an order temporarily freezing the assets of the company and those of the defendants.
Many investors were falsely told that they were investing in federally insured certificates of deposit, government bonds or corporate bonds issued by companies backed by funds from the Troubled Asset Relief Program, according to the lawsuit filed Friday.
The Farahis and Amouei guaranteed clients that their money would be returned, but the company does not have enough money on hand to reimburse investors, the lawsuit said.
Money that was not diverted to the Farahis was invested in risky options futures, the SEC said. The company lost $18 million from 2008 to early 2009, the lawsuit contended.
"They lured victims with false promises of investment safety while secretly enriching themselves and diverting investor funds for their personal use," said Rosalind R. Tyson, director of the SEC's Los Angeles regional office.
The radio station received several phone calls from listeners disappointed that the program had been canceled, Paley said. He said KIRN is the only Persian-language station in the United States. Its programs are streamed worldwide on the Internet, he said.
One of the surprised listeners was Hossein Hosseini, who said Farahi advocated a cautious investing strategy on his program.
"This was totally a surprise to me and I am sure many others in the community. The allegation does not fit with the person I know and the program I have listened to," Hosseini said. He said Farahi was "a household name and in many social gatherings I would hear people referencing him when talking finances."