Former investment fund manager John Farahi told investors that he would purchase corporate bonds backed by the Troubled Asset Relief Program, but federal officials indicted Farahi for using the money for personal expenses and to make Ponzi-scheme payments to early investors.
Farahi allegedly swindled $20 million out of 100 investors, mostly drawn from an Iranian-Jewish community in California. “The indictment alleges that Farahi did not make these types of investments and that he instead used investor money for a variety of personal purposes, including to support his family’s lavish lifestyle, to make Ponzi payments to early clients of New Point Financial Services, and to trade in high-risk and speculative future options trading,” the Federal Bureau of Investigations announced in a press release yesterday. “Starting in 2008, Farahi allegedly failed to tell New Point Financial Services investors that he had lost at least $15 million through his undisclosed options trading—even as he continued to solicit investors for New Point Financial Services.”
Farahi is expected to be arraigned in court later today.
