A federal jury convicted a California man of running a $3 million Ponzi scheme that targeted Iranian Jews. Shervin Naman, 32, was found guilty on two charges of wire fraud and one charge of mail fraud. Each of those charges carries a maximum twenty-year prison sentence. Neman's new lawyer has since filed a motion for a new trial on several grounds, including that Neman currently had enough funds to repay back his victims.
Neman told investors that his hedge fund, Neman Financial L.P., could deliver outsized returns through both investments in foreclosed residential properties and access to highly-touted stock offerings such as Facebook, Groupon, LinkedIn, and Angie's List. Through Neman's purported connections to a broker with access to these pre-IPO shares, potential investors were told that Neman could flip the shares after their IPO debut. Investors were promised returns of 11% to 18% paid within 30 to 180 days and evidenced by promissory notes signed by Neman. In total, Neman raised more than $7.5 million from investors.
However, Neman's touted IPO connections and investing prowess were false. Indeed, of the nearly $8 million raised from investors, less than 1% was used for its advertised purpose. Indeed, other than a single $66,000 investment in General Motors' IPO in November 2010, the remainder of investor funds were used to either make Ponzi-style payments to investors or to sustain Neman's lavish lifestyle. Specifically, more than $5.4 million was used to make Ponzi payments to investors, while while nearly $1.6 million was spent on, among other things, jewelry and high-end cars; Neman's wedding, honeymoon, and other vacations; and VIP tickets to sporting events.