Attorney David Tamman was sentenced Monday to seven years in federal prison for helping obstruct two investigations of a Ponzi scheme that took $22 million from investors.
Tamman, 46, of Santa Monica, Calif., was convicted on 10 counts after a bench trial last year, which included obstruction of justice, altering records in a federal investigation and being an accessory after the fact to the fraud scheme.
The defendant, a partner at the Nixon Peabody law firm, served as legal counsel for John Farahi, the operator of New Point Financial Services and leader of the Ponzi scheme. Tamman assisted Farahi’s coverup by falsifying and backdating documents.
“Today, justice was served for Tamman’s attempted massive cover-up of John Farahi’s multi-million dollar Ponzi scheme in which Farahi lied to investors and claimed that he was investing in safe, TARP-backed corporate bonds,” said Christy Romero, Special Inspector General for the Troubled Asset Relief Program. TARP is the formal name given to the federal bailout program for banks, launched during the economic troubles of 2008.
“Farahi used investors’ funds to bankroll his lavish lifestyle and high-risk trading, which resulted in heavy losses for investors and TARP banks,” Romero said.
Tamman’s altered documents caused the close of a 2004 investigation by the National Association of Securities Dealers (now known as the Financial Industry Regulatory Authority), which allowed Farahi’s scheme to continue for another five years, according to a sentencing brief by prosecutors.
“Despite being a highly educated lawyer, defendant David Tamman has displayed a remarkable disrespect for the law and the legal system over the course of almost a decade,” prosecutors wrote in their memo.
The conspirators also provided falsified and altered documents to a 2009 Securities and Exchange Commission investigation.
Tamman continued his obstruction of justice by lying to federal investigators, giving “false testimony” during his 2012 trial and lying to a probation officer after his conviction, according to the sentencing memo.
United States District Judge Phillip S. Gutierrez, who sentenced Tamman, said that the substantial punishment was warranted, as the defendant lied both to the SEC and during his trial.
Tamman must also pay a $2,500 fine and was suspended from practicing law earlier this year by the California State Bar.