A Century City man was sentenced Monday to 11 years in federal prison for running a $3 million Ponzi scheme primarily targeting Iranian Jews living in the Southland.
Shervin Neman, whose given name is Shervin Davatgarzadeh, was also ordered by U.S. District Judge Otis D. Wright II to pay about $3.7 million in restitution.
Neman, 33, was convicted last year of two federal counts of wire fraud and one count of mail fraud.
Neman claimed to be a successful investor who made significant profits, but actually ran a Ponzi scheme from 2010 through 2013 by soliciting funds from investors with false claims that their money would be used to purchase foreclosed real estate and stocks, prosecutors said.
Instead of using investor funds to make the promised investments, Neman spent most of his clients’ money on personal expenditures and to repay other victims.
Neman had been scheduled to be sentenced in November, but the hearing was delayed to allow for a mental competency exam to be performed.
The U.S. Securities and Exchange Commission filed a civil complaint against Neman and his company, Century City-based Neman Financial Inc., three years ago in Los Angeles, prompting a federal judge to issue orders prohibiting him from committing securities fraud.
SEC documents show that Neman was operating a multimillion-dollar Ponzi scheme that primarily targeted members of the Persian-Jewish community in the Los Angeles area.
The month after the SEC sued Neman, he solicited $2 million from another victim with false promises that he could obtain pre-IPO shares in Facebook. Neman used the funds obtained from that investor to pay most of his earlier victims and the law firm representing him in the SEC action,
Neman then had victims who had been “paid back” write emails saying that he did not owe them money and then tried to use those emails as part of his defense in the SEC case, according to prosecutors.
In June 2012, Neman sent the $2 million victim a check for $2,235,800, supposedly his investment into Facebook plus interest, but it bounced.
— City News Service
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