By Casey Sullivan
Nov 13 (Reuters) - A former corporate partner with Nixon
Peabody was found guilty on Tuesday of helping a client cover up
a Ponzi scheme that swindled investors out of more than $20
David Tamman, a Los Angeles attorney, was found guilty of 10
criminal counts including altering documents and obstructing
justice during a 2009 investigation by the Securities and
Exchange Commission into Tamman's onetime client NewPoint
Tamman was found guilty by Judge Philip Gutierrez of U.S.
District Court for the Central District of California, who gave
the lawyer home detention until his sentencing on Feb. 11.
The criminal charges against Tamman stemmed from a
securities fraud case brought by the SEC against John Farahi, an
investment manager with NewPoint. Farahi pleaded guilty in June
to using several million dollars of investor money for personal
use, including the construction of a home in Beverly Hills.
Through a local Farsi language radio station in Los Angeles,
Farahi promoted NewPoint to listeners in the Iranian-American
community and claimed that the firm made conservative
investments in low-risk assets like certificates of deposit. But
instead, he used the money for personal use, to make payments to
earlier investors and engage in high-risk options trading. He
lost more than $20 million of investor money.
In the course of investigating allegations by investors
against Farahi, the SEC discovered evidence that Tamman had
altered NewPoint documents to protect Farahi, prosecutors said.
Tamman was indicted by a grand jury in December 2011.
During the week-long trial in Los Angeles, Tamman argued
that he altered the documents to remove material under
attorney-client privilege. Tamman also said that he would have
no reason to cover up his client's Ponzi scheme because Farahi
accounted for a small fraction of his business as a corporate
Tamman and his attorney, Stanley Stone, did not immediately
respond to requests for comment.
"This verdict should be a message to lawyers and other
professionals that there is only so far you can go when
representing clients under federal investigation," said Aaron
May, the lead prosecutor.
In a separate lawsuit, Tamman has accused his former law
firm, Nixon Peabody, of breach of fiduciary duty for failing to
provide him with defense counsel once the SEC began looking into
allegations against his NewPoint client.
Instead, Nixon Peabody fired Tamman. He is seeking damages
for the loss of business that resulted from the termination.
That case is pending in Los Angeles Superior Court, but it
is unclear if or how it will be affected by Gutierrez's verdict.
"David Tamman was solely responsible for the actions that
led to today's guilty verdict," said Nixon Peabody spokeswoman
Allison McClain in a statement. "He betrayed our trust, and
failed to live up to the ethical standards our firm demands."
Under the indictment, Tamman faces up to 190 years in
federal prison, but May, the lead prosecutor, said he is likely
to receive a lighter sentence.
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