Ex-Nixon Peabody Partner Convicted For Role in Ponzi Scheme Sees California Law License Suspended
The National Law Journal
Former Nixon Peabody securities partner David Tamman has been suspended from practicing law in California following his conviction on charges related to a $20 million Ponzi scheme.
Tamman, who worked for Nixon Peabody from February 2007 to October 2009, was suspended by the State Bar of California on February 18. The bar automatically suspends any attorney convicted of "felonies involving moral turpitude." Tamman is a graduate of the University of Southern California Gould School of Law who has been practicing since 1995.
He did not return a call for comment.
On November 13, U.S. District Judge Philip Gutierrez found Tamman guilty on 10 counts including conspiracy to obstruct justice, alteration of records and mail fraud. He was charged alongside John Farahi, founder of Newpoint Financial Services Inc. in Beverly Hills, Calif., for backdating documents and lying about it during a U.S. Securities and Exchange Commission investigation.
The documents related to a fraud in which Farahi told investorsmostly members of the Iranian-American Jewish population in Los Angelesthat their money would be used to purchase corporate bonds backed by the Troubled Asset Relief Program; instead, Farahi used the money to support a lavish lifestyle that included a Beverly Hills home and a yacht and to cover millions of dollars in stock losses he suffered during the fall of 2008, when the economy collapsed.
Farahi pleaded guilty on June 7 to one count each of mail fraud, loan fraud, illegal sale of securities, and conspiring to obstruct justice. Under his plea deal, Farahi, who originally faced 41 counts, agreed to five years supervised release and a $1.75 million fine. Gutierrez also ordered Farahi to pay restitution to his victims.
Farahi has proposed that he spend at least two years in prison and cooperate with the government, while federal prosecutors have said they would not seek a sentence of more than 10 years. The U.S. Probation Office's presentencing report calculated a term of at least 15 years and eight months but not more than 19 years and seven months.
Farahi's attorney, David Hurwitz, of counsel at Bird, Marella, Boxer, Wolpert, Nessim, Drooks & Lincenberg said the report "greatly overstates the seriousness of the offense conduct," particularly given the economic collapse at the time. He also said the report's calculation of the number of victims and monetary losses was too high.
Hurwitz referred calls to lead attorney Gary Lincenberg, a principal at the Los Angeles-based firm, who declined to comment.
Tamman first began representing Newpoint Financial in 2003 while at Liner Grode Stein Yankelevitz Sunshine Regenstreif & Taylor in Los Angeles. He brought the client with him to Nixon Peabody, which fired him amid the SEC investigation. He later joined Greenberg Traurig, which fired him in January 2011 after the SEC initiated public administrative proceedings against him.
On January 23, Tamman changed attorneys in his criminal case, replacing Stanley Stone and Steven Stone of Stone & Stone in Encino, Calif., with three attorneys at Boston-based Zalkind Duncan & Bernsteinpartners David Duncan and Norman Zalkind and associate Ruth O'Meara-Costello. Tamman did not replace his local counsel, William Genego of the Law Offices of William Genego in Santa Monica, Calif.
Tamman, whose sentencing is scheduled for May 20, faces a statutory prison term of 190 years.
Tamman has sued Nixon Peabody in Los Angeles County, Calif., Superior Court, claiming he was "thrown under the bus" by the firm in an attempt to distance itself from the SEC investigation. That case has been stayed pending the criminal action.
The receiver for Newpoint also has sued Nixon Peabody, alleging the firm was complicit in the fraud. On September 5, U.S. District Judge Dean Pregerson denied Nixon Peabody's attempt to dismiss the case.