The Talent

December 8, 2011 6:23 PM

Former Nixon Peabody Partner Faces Criminal Charges

Posted by Sara Randazzo

A federal grand jury in Los Angeles has indicted former Nixon Peabody partner David Tamman on ten criminal counts in connection with his alleged role in helping a former client cover up a securities fraud scheme totaling more than $20 million.

According to a press release issued Thursday by the U.S. attorney's office for the Central District of California, the charges against Tamman include conspiracy, obstruction of justice, and alteration of records. If convicted of all counts, Tamman faced a maximum sentence of 190 years in federal prison, the release states.

News of the indictment was first reported by the Daily Journal (subscription required).

The same grand jury also indicted John Farahi, the former Tamman client at the center of the alleged scheme, on 41 criminal counts, including mail fraud, loan fraud, and aggravated identity theft.

Prosecutors allege Farahi defrauded investors by falsely promising that their money was going toward the purchase of corporate bonds backed by the federal bank bailout program formally known as the Troubled Asset Relief Program. In reality, prosecutors allege, Farahi used the money to further his Ponzi scheme, engage in high-risk and speculative future options trading, and "support his family's lavish lifestyle."

When the Securities and Exchange Commission opened an investigation into Farahi's company, New Point Financial Services, in April 2009, he and Tamman allegedly conspired to conceal the fraud scheme, according to the indictment (PDF). Those efforts, the indictment says, included altering and backdating documents to make it appear that New Point was being transparent about the investments, removing incriminating documents from investor files before turning them over to the SEC, and lying to the SEC in sworn testimony.

Tamman, who according to state bar records now works as as a sole practitioner in Century City, California, could not be reached for comment Thursday. His lawyer, Stanley Stone of Stone & Stone in Encino, California, said, "We will prove he didn't do what is alleged."

The alleged offenses have already cost Tamman, 44, two jobs as the result of the SEC probe. A Nixon Peabody spokesman previously told The Am Law Daily that the firm terminated Tamman in October 2009 when "we learned that he was under SEC investigation and he failed to explain his actions to us."

Stone said that the SEC's investigation has been stayed.

Tamman sued Nixon Peabody in October, claiming Nixon made him a scapegoat in the matter and took most of his $1.5 million book of business out from under him. The suit, filed in Los Angeles state court, catalogs what he claims are several actions that Nixon took to pin anything related to the New Point scandal on him and to distance itself from the SEC probe in a bid to save its reputation and protect its self-insured malpractice policy.

Tamman brought New Point to Nixon as a client from his previous job at Liner Grode Stein Yankelevitz Sunshine Regenstreif & Taylor, according to his lawsuit against the firm, but several other Nixon lawyers also handled work for the client.

Nixon Peabody has not yet filed its response to the lawsuit, according to the court docket in the case.

After leaving Nixon Peabody, Tamman joined Greenberg Traurig, which terminated him in January once it learned of the alleged wrongdoings through an SEC administrative proceeding being brought against him.

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