Investors cheer indictment of L.A. real estate mogul
This week’s indictment of Los Angeles real estate mogul Ezri Namvar on criminal fraud charges was welcome news to local investors who say the Iranian immigrant preyed on their shared ethnic ties and bilked them out of hundreds of millions of dollars.
Namvar has agreed to surrender to federal authorities Monday to face charges that he stole $23 million from clients of his company, Namco Financial Exchange Corp., which safeguarded proceeds from commercial real estate transactions, said Thom Mrozek, a spokesman for the U.S. attorney’s office in Los Angeles.
A federal grand jury indicted Namvar on Tuesday.
The indictment alleged that Namvar misappropriated the money in 2008, using it to pay investors and creditors from a real estate investment company he ran, instead of holding it in escrow as promised. The charges carry a combined maximum sentence of 100 years in prison.
Also charged in the indictment was Hamid Tabatabai, who served as controller and vice president of Namco Financial.
“I am happy because he deserves it,” said Paul Laska, who lost more than $700,000 he had given to Namco Financial for safekeeping. “I’ve gone through hell. I lost my home in foreclosure because of this. It’s really affected me tremendously — financially and emotionally.”
Laska was one of the investors who forced Namvar’s companies into involuntary bankruptcy, asking a Bankruptcy Court to manage his remaining assets so he would not squander them. That request was granted.
Namvar’s attorney, Marc Harris, said his client would fight the charges and be vindicated.
In addition to Namco Financial, 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.
Namvar, a 59-year-old Iranian immigrant, was one of the biggest success stories of the real estate boom before the market crashed in 2008, amassing high-profile holdings that included the Marriott hotel in downtown Los Angeles and the Cal Neva resort at Lake Tahoe, to name a few.
Namvar’s good fortune ran out in 2008, when angry investors accused him of squandering their money and attempting to hide devastating losses. Creditors of Namco Capital Group placed claims of nearly $525 million in Bankruptcy Court.
Until word of the indictment broke Wednesday, many investors feared that Namvar would never be prosecuted, said David Youssefyeh, an attorney who represents 22 clients who lost “tens of millions” of dollars they had invested with Namvar.
“The fact that some authority brought charges against him means a lot to the victims. They suffered for two years while he’s been sitting in his mansion in Brentwood,” Youssefyeh said. “It makes them believe in the American justice system, makes them understand that it works, and that’s huge.”
Allegations in the indictment related only to Namco Financial, which helped investors avoid taxes by holding their commercial real estate profits in escrow until they could be reinvested. Namvar promised to safeguard the money but instead dipped into it throughout 2008 to help run his struggling businesses, the indictment alleged.
Arash Hakhamian, who said he invested about $40,000 with Namvar, welcomed news of the real estate magnate’s indictment.
“I’m glad they’re at least doing something,” he said. “I think any further investigation or probe into these allegations is great news. If they have nothing to hide and they’ve done nothing wrong I take no pleasure in seeing him in jail. I want to see further investigation by people who have equal resources as they do, someone who can fully investigate the depth of what has transpired.”