A federal district judge in Los Angeles convicted a former partner of Nixon Peabody LLP for obstructing a Securities and Exchange Commission (“SEC”) investigation into whether one of the law firm’s former clients was running a Ponzi scheme.
Following a two-week bench trial, David Tamman, 45, of Santa Monica, was convicted on all ten counts on which he was tried: one count of conspiring to obstruct justice, five counts of altering documents, one count of being an accessory after the fact to co-defendant John Farahi’s mail and securities fraud crimes, and three counts of aiding and abetting Farahi’s false testimony before the SEC.
“A case like this reveals the lengths to which those committing frauds will go to conceal their criminal deeds,” said United States Attorney André Birotte Jr., whose office prosecuted the case. “It also demonstrates that we will go to equal lengths to overcome these efforts at concealment and cast a bright light on fraudulent schemes that threaten investors and others in today’s difficult financial environment.”
Federal officials alleged that immediately after the SEC made a surprise inspection of Farahi’s business, Tamman met with Farahi and began altering and backdating documents to make it appear that Farahi had been disclosing to investors that Farahi was himself taking the majority of investors’ funds.
Those altered documents were later produced to the SEC and falsely represented by Farahi to be the actual documents that had earlier been given to investors.
Tamman created and backdated promissory notes and supplemental disclosure documents and lied to his partners and co-counsel about the creation and alteration of documents that the SEC was seeking.
“This verdict demonstrates that there are severe consequences when an attorney crosses the line between vigorous representation of a client and obstruction of an SEC investigation,” said Michele Layne, Director of the SEC’s Los Angeles Regional Office.
Tamman and Farahi were both originally charged in an indictment returned on December 7, 2011.
In June 2012, Farahi pled guilty to charges that he ran a Ponzi scheme, sold unregistered securities, committed bank fraud, and conspired with Tamman to obstruct justice.
Tamman’s sentencing is scheduled for February 11, 2013.
He faces a statutory maximum sentence of up to 190 years in prison.
Farahi’s sentencing is scheduled for December 17, 2012.
Under the terms of his plea agreement, the government agreed to recommend a sentence of no more than 10 years in federal prison.