Businessman Guilty in 1031-Exchange Fraud Case

Allison Tussey —  May 24, 2011 — Leave a comment

Ezri Namvar, 59, Brentwood, California, a prominent Los Angeles, California, businessman and real estate developer, was found guilty of four wire fraud charges for stealing approximately $21 million from four clients who allowed his “qualified intermediary” company to hold their money in safekeeping before it was reinvested in real estate.

Namvar was convicted of the felony counts by a federal jury that deliberated for about three hours after hearing eight days of testimony.

The jury convicted a second defendant on the four wire fraud charges. Hamid Tabatabai, 63, Agoura Hills, California, was Namvar‘s right-hand man at the qualified intermediary company.

As a result of the convictions, Namvar and Tabatabai face statutory maximum sentences of 80 years in federal prison.

Following the verdicts, United States District Judge Percy Anderson ordered that Namvar, who is free on bond, be subject to home incarceration with electronic monitoring. Judge Anderson has a hearing scheduled for June 1, 2011, at which time prosecutors will argue that Namvar should be remanded into custody.

The evidence presented at trial showed that four victims entered into agreements to have approximately $25 million deposited with Namvar‘s company, Namco Financial Exchange Corp. (NFE), which held itself out as a qualified intermediary for real estate transactions commonly called “like-kind exchanges,” “tax-free exchanges” or “1031 exchanges.” Under exchange agreements with NFE, the money belonging to the victims was to be held in safekeeping so the money would be available upon demand to effectuate 1031 exchanges.

However, instead of holding the money as promised, Namvar, with the assistance of Tabatabai, used the victims’ money for a variety of unauthorized and undisclosed purposes, including paying off creditors and investors of Namvar‘s investment company, Namco Capital Group, Inc. (NCG).

Namvar controlled both Namco companies. Tabatabai was the controller and a vice president of NFE, and he held similar positions of authority at NCG.
The four victims entered into exchange agreements with NFE in 2008, and their money, per the agreements, was wired to NFE over a six-month period. NFE was forced into bankruptcy proceedings in April 2009.

During the course of the fraudulent scheme, Namvar and Tabatabai fraudulently transferred victims’ money from NFE to, among other places, an NCG bank account, where the money was used to pay the expenses and liabilities of NCG.

During the course of the fraudulent scheme, the four victims provided NFE with approximately $25 million in 1031 exchange proceeds, of which only approximately $4 million was returned to or used on behalf of the victims.

Namvar and Tabatabai are scheduled to be sentenced by United States District Judge Percy Anderson on August 22, 2011.

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

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Allison Tussey

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