Real Estate Mogul Indicted in $23M Fraud Case

Allison Tussey —  September 24, 2010 — Leave a comment

Ezri Namvar, 59, Brentwood, California, a prominent Los Angeles businessman, was named in a five-count indictment returned by a grand jury on charges of stealing approximately $23 million from five clients who allowed his “qualified intermediary” company to hold their money in a safekeeping before it was reinvested in real estate. A second defendant, Hamid Tabatabai, 62, Agoura Hills, California, was also charged in the indictment that accuses both men of five counts of wire fraud.

The indictment alleges that the five victims entered into agreements to have approximately $27 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 the agreements, the money belonging to the five 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 and others, allegedly 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 five 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, the indictment alleges that 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. The indictment further alleges that some of the money went directly from NFE to repay Namvar or NCG creditors.

During the course of the fraudulent scheme, the five victims provided NFE with approximately $27 million in 1031 exchange proceeds, of which only approximately $4 million was returned to or used on behalf of the victims.

Tabatabai surrendered and was taken into custody by special agents with the Federal Bureau of Investigation. Tabatabai is scheduled to be arraigned on the indictment in United States District Court.

Through his attorney, Namvar has agreed to surrender to the FBI on Monday, September 27, 2010.

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

Namvar and Tabatabi are each charged with five counts of wire fraud. Each count of wire fraud carries a statutory maximum sentence of 20 years in federal prison.

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

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Allison Tussey

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