A former Nixon Peabody securities partner convicted of backdating documents for a Beverly Hills, Calif., businessman as part of a $20 million Ponzi scheme should be sentenced to 12 to 15 years in prison, according to a court document filed by federal prosecutors in response to a U.S. Probation Office's presentence report.
The recommendation, filed under seal on Monday, found that David Tamman, convicted on November 13 for his role in the Ponzi scheme masterminded by John Farahi, should serve at least 12 years and seven months and as much as 15 years and eight months.
Tamman's attorneys objected to the report.
"The PSR repeatedly holds Mr. Tamman accountable for conduct by Mr. Farahi without evidence that Mr. Tamman knew or reasonably should have known of that conduct," wrote attorney William Genego of the Law Offices of William Genego in Santa Monica, Calif., in a July 1 filing. For instance, Tamman was aware of only $3 million in investor losses, not $22 million.
Tamman, who worked for Nixon Peabody from February 2007 to October 2009, was suspended by the State Bar of California on February 18 following his conviction on 10 counts including conspiracy to obstruct justice, alteration of records and mail fraud. He faces a statutory maximum sentence of 190 years.
Tamman's sentencing was delayed after he brought in David Duncan at Zalkind Duncan & Bernstein in Boston to replace his trial attorneys, Stanley Stone and Steven Stone of Stone & Stone in Encino, Calif. Duncan, his lead attorney, declined to comment.
Farahi, founder of Newport Financial Services Inc., was sentenced on March 20 to 10 years in federal prison after pleading guilty to defrauding investors and attempting to cover it up when the U.S. Securities and Exchange Commission launched an investigation. Specifically, he told investors – mostly members of the Iranian-American Jewish population in Los Angeles – that their money would be used to purchase corporate bonds backed by the Troubled Asset Relief Program; instead, he used the money to buy a Beverly Hills home and a yacht and to cover millions of dollars in stock losses he suffered during the fall of 2008.
U.S. District Judge Philip Gutierrez in Los Angeles ordered Farahi to pay more than $24.3 million in restitution to individual investors and the banks he defrauded.
Farahi's sentence mirrored what federal prosecutors had been seeking. He is serving his prison term at a correctional facility in Taft, Calif.
In a July 1 filing, assistant U.S. Attorney Paul Stern in Los Angeles agreed with the report's recommendation as to Tamman. He noted that "defendant not only obstructed the SEC's investigation of Farahi and Newport, but also obstructed the investigation, prosecution, and sentencing of the underlying obstruction crimes."
Amanda Bronstad can be contacted at firstname.lastname@example.org.