Los Angeles real estate mogul Ezri Namvar, an Iranian immigrant who amassed and then lost billions of dollars of commercial real estate holdings, has been indicted on wire fraud charges, his attorney said.
Namvar, former owner of such high-profile properties as the Marriott hotel in downtown Los Angeles and the Cal Neva resort in Lake Tahoe, was accused of five counts of wire fraud related to a company, Namco Financial Exchange Corp., that sheltered proceeds from real estate transactions, said defense attorney Marc Harris.
Thom Mrozek, a spokesman for the U.S. attorney's office, said a grand jury indicted Namvar on Tuesday.
Namvar's exchange company held clients' money obtained from real estate sales until they needed it for new acquisitions. This helped shelter the clients from income tax.
But prosecutors allege that Namvar diverted money from five of the clients without their permission, said a source familiar with the case.
Namvar has not been arrested. Harris said he is working with federal prosecutors to set a date for Namvar to voluntarily appear in court for arraignment.
In addition to his exchange company, Namvar ran Namco Capital Group Inc., which raised hundreds of millions of dollars from private investors and used it to buy commercial real estate. Most of that money came from members of the Iranian Jewish community in Los Angeles.
Harris said that the indictment does not allege any wrongdoing related to the commercial real estate business. "The indictment did not allege any violation in relation to those investors," he said.
Laura Eimiller, a spokeswoman for the FBI in Los Angeles, declined to comment on the indictment. "Our investigation is continuing," she said.
In 2008, angry investors forced Namvar and his companies into involuntary bankruptcy, accusing him of squandering their money and attempting to hide devastating losses. Creditors of Namco Capital Group placed claims in bankruptcy court of nearly $525 million.
A court-appointed bankruptcy trustee issued a report earlier this year that accused the 59-year-old Namvar of treating investor money "as his personal family piggy bank." The report said that company money was used to pay for his brother's wedding and that "many of the remaining valuable assets seemingly belong to family members."
"The story concerning Namco [Capital Group] is one of faulty judgments of monumental proportions mingled with greed and self-interest," the report said.
Los Angeles attorney A. David Youssefyeh, who helped organize the investors' bankruptcy case, said hundreds of investors lost money in the commercial real estate business. He said Namvar misappropriated investor money and made ill-advised real estate investments that went bad.
"The damage has been ridiculous. People are devastated. There are families that have been made homeless. People have lost their entire life savings," Youssefyeh said.
Namvar, who left Iran when he was 18, is the son of a respected businessman.
"Trading on his family's name and his own intelligence, he was able to get access to hundreds of millions of dollars of investments by very unsophisticated Jewish refugees," Pooya Dayanim, a commercial real estate broker, told The Times in 2009.
"He miscalculated the market and over-leveraged himself."
But speculative investments, like Cal Neva, which he bought in 2005, backfired when the real estate and financial markets collapsed.
Harris said his client would plead not guilty. He said Namvar was a victim of the real estate downturn and had committed no crimes.
"We're very disappointed that the government has chosen to pursue this case criminally," Harris said. "We'll defend it vigorously and I fully expect that Mr. Namvar will be vindicated. There was certainly no misappropriation by Mr. Namvar."