فساد مالی‌ جامعه یهودی - رادیو ۶۷۰ام لوس انجلس - و جان فرهی یهودی میهن فروش

یهودیان درون و بیرون از ایران جز بد نامی‌ فساد جنسی‌ و مالی‌ - خوش گذرانی‌ ،میهن فروشی و هم کاری برای سود مالی‌ با جمهوری رو به مرگ و ننگین اسلامی هیچ چیز برای ایران به ارمغان نیاوردند!  این هم یکی‌ از صدها فساد و کلاه برداری جمعه یهودیان آمریکا ( کالیفرنیا لوس انجلس) که سر به ۲۰ میلیون دلار میگذارد. جان فرهی، همسر او کیسو رستگار فرهی و آذری نامور   و چند یهودی دیگر به دلیل کلاه برداری دستگیر شدند- در جایی که ایران در بند جمهوری اسلامی  است- کشتار - فقر و فحشا بیداد می‌کند، یهودیان ( روی دوم سکه حزب الهی‌های پول پرست) با بیرون آوردن پول دزدی و کلاهبرداری خود از ایران و ادامه دزدی و کلاهبرداری و مزدوری برای جمهوری اسلامی در بیرون از ایران به ویژه در آمریکا ، در قصرهای چندین میلیون دلاری ،در جشن ، فساد جنسی‌- خوش باشی‌ ، پر کردن کنسرتها و بیخیالی سر میکنند و اصلا خود را ایرانی‌ 

در اینجا برگ رسمی‌ اعلام جرم در مورد جان فرهی یهودی و خانواده او به ویژه گیسو فرهی برای آگاهی‌ شما درج شده است- رادیو ۶۷۰ام لوس انجلس که همه کارکنان و کارمندان این رادیو میهن فروش و مزدور   جمهوری اسلامی هستند ( درست ماند جان فرهی) نقش بسیار اساسی‌ در فریب مردم ،،در این زمینه و هم کاری با این کلاه بردار یهودی داشت و دارد.نمیدانند!

281707.1
REPLY ISO MOTION TO MODIFY ASSET FREEZE ORDER
Gary S. Lincenberg - State Bar No. 123058
gsl@birdmarella.com
David I. Hurwitz - State Bar No. 174632
dih@birdmarella.com
BIRD, MARELLA, BOXER, WOLPERT,
NESSIM, DROOKS & LINCENBERG P.C.
1875 Century Park East, 23rd Floor
Los Angeles, California 90067-2561
Telephone: (310) 201-2100
Facsimile: (310) 201-2110
Attorneys for Defendant John Farahi
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION
SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,
vs.
NEWPOINT FINANCIAL SERVICES,
INC., JOHN FARAHI; GISSOU
RASTEGAR FARAHI; and ELAHEH
AMOUEI,
Defendants.
and
TRIPLE “J” PLUS, LLC
Relief Defendant.
CASE NO. CV 10-0124 DDP (JEMx)
DEFENDANT JOHN FARAHI’S
REPLY IN SUPPORT OF MOTION
TO MODIFY MARCH 17, 2010
PRELIMINARY INJUNCTION
ORDER AND ORDERS TO
RELEASE FUNDS TO PAY LIVING
EXPENSES AND ATTORNEY’S
FEES
Date: April 19, 2010
Time: 10 a.m.
Judge: Hon. Dean D. Pregerson
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REPLY ISO MOTION TO MODIFY ASSET FREEZE ORDER
I. INTRODUCTION
In opposing John Farahi’s request to release frozen funds to allow for
payment of living expenses and attorney’s fees, the SEC has demonstrated why the
request should be granted. From the outset of this litigation, Farahi and his counsel
have sought to settle with the SEC, work with the receiver, and preserve the
remaining assets for the benefit of the NewPoint investors. Farahi chose not to fight
the temporary restraining order placing a receiver over his business or contest the
allegations of the complaint. Instead, Farahi has consented to the entry of a
judgment against him, stipulated to put business entities into the receivership, turned
over personal assets to the receiver, and offered to turn over additional assets to the
receiver, including his residence, boat and car. Notwithstanding Farahi’s attempts to
make peace with the SEC and return funds to the investors, the SEC has continued
to litigate the case aggressively.
Farahi’s counsel attempted on several occasions to negotiate a reasonable
resolution to the issue of living expenses. The SEC knows that Farahi has no source
of income after it shut down his business, yet it has steadfastly refused to negotiate
and forced Farahi to litigate this issue, despite the precedent permitting payment of
reasonable living expenses from personal funds.1 The SEC cannot contest that
Farahi has some personal funds that have no relationship to NewPoint, completely
ignoring in their Opposition, for example, Farahi’s interest in a Carson City real
estate partnership. The SEC also fails to articulate a rational argument why the
Court should not release some funds from Farahi’s personal income tax refund. As
to the boat and the car, despite the fact that these are personal assets, Farahi has
agreed to place them in the hands of the receiver for sale, and requests only that a
1 See 5 Bromberg & Lowenfels on Securities Fraud §12.74 (“A freeze will usually
be relaxed to permit payment of reasonable living expenses in specified amounts.”,
citing SEC v. Scott, Gorman Municipals, Inc., 407 F. Supp. 1383 (S.D.N.Y. 1975)).
Case 2:10-cv-00124-DDP-JEM Document 105 Filed 04/08/10 Page 2 of 11
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REPLY ISO MOTION TO MODIFY ASSET FREEZE ORDER
portion of the sales proceeds be set aside for personal expenses, with the majority of
the proceeds going to benefit the investors. In short, Farahi is entitled to some
distribution from his frozen funds to use to pay living expenses.
While Farahi’s counsel have expended far less time on the is matter than SEC
counsel, the SEC’s aggressive litigation strategy has caused Farahi’s counsel to
expend substantially more time and resources than would otherwise have been
necessary. Early on, Farahi’s counsel sought to negotiate a complete settlement that
would have resulted in his dismissal from the action. The SEC refused, insisting
that the settlement be bifurcated, with an upfront agreement not to contest the
allegations of the complaint and further litigation as to the remedy. Part of the legal
fees incurred in the requested time period related to negotiating and finalizing the
settlement. Part has been spend responding to requests for information from the
receiver. Part has been spent preparing an asset statement to comply with the
consent judgment. While Farahi has filed only this motion to modify and the Courtordered
asset schedule, there are now more than 100 entries on the Court’s docket,
including numerous pleadings. Counsel would be remiss if they did not review
these pleadings and counsel the client as to the proceedings.
Even after Farahi settled, the SEC has continued to go after him and his
family. Following the settlement, the SEC amended its complaint to name his
children and an entity controlled by his wife’s uncle as additional relief defendants
without even taking the time to discuss the facts with Farahi’s counsel to determine
if there was any reasonable basis for adding these new parties. The SEC argues as if
Farahi had no interest and his counsel need not be actively involved in these
proceedings, but its actions belie its argument. The SEC’s papers regarding Quiff
are filled with false accusations that Farahi diverted NewPoint funds to Quiff,
allegations which Farahi is confident will be proven baseless.
In short, Farahi’s counsel seeks money out of Farahi’s personal funds, funds
which the Receiver has made no claim over, to pay for reasonable legal expenses.
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II. ARGUMENT
A. The Court Should Release Funds for Living Expenses.
Farahi requested that the Court permit him to draw $5,500 per month from the
frozen assets for personal living expenses, including $3,900 per month for health
insurance and medical care, and the remainder for food, gas and telephone service.
The SEC concedes that these requests are for necessities, not luxuries. (Opp. at 4.)
The SEC also does not contest the reasonableness of the amounts requested for
personal expenses, or the evidence provided to prove the amounts.
Nevertheless, the SEC argues that Farahi should be denied funds for medical
treatment because a NewPoint investor is unable to pay for her medical expenses.
But this appeal to emotion is not a grounds to deny release of Farahi’s personal
funds to pay for his personal living expenses. Moreover, depriving Farahi of funds
for medical care will not help that investor with her bills. The SEC and receiver are
the ones who have chosen not to distribute funds to this investor based on her
hardship. Indeed, the SEC’s complaint accused Farahi of favoring investors with
redemptions based on such personal hardships. (FAC ¶ 28.)
The SEC further argues that Farahi can borrow funds from his sons to pay for
living expenses. (Opp. at 4 n. 2.) This argument is not worthy even of a footnote.
The SEC has no evidence that the sons possess funds to help him, and its allegations
against the sons are baseless. The SEC did not even bother to ask Farahi’s counsel
to explain how the distributions to bank accounts in the sons’ names were used
before making these allegations. More importantly, it is not what is at issue here.
With a weak argument against Farahi’s reasonable request to release funds to
pay for medical care, health insurance and food, the SEC’s opposition focuses
instead on his separate request for funds to maintain his home. The SEC
misconstrues the reasoning behind Farahi’s request. Farahi has already offered to
put the home in the hands of the receiver, and for the receiver to take over the
expenses. While Farahi has no equity in the house, that is because in addition to a
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281707.1 4
REPLY ISO MOTION TO MODIFY ASSET FREEZE ORDER
first and second mortgage held by banks, NewPoint has a lien on the property. As
of today, Farahi understands that the receiver has not decided finally whether there
may be sufficient equity in the property for him to take it over, and the banks have
not attempted to foreclose. If the Court agrees with the SEC that the property
should not be maintained for the benefit of the creditors, including NewPoint, then
no funds will be spent to maintain it, and the ultimate sales price will in all
likelihood be lessened. If the Court agrees with Farahi, then he will keep up the
value of the property. In the meantime, Farahi continues to reside in the house in
part to conserve his frozen assets. There is nothing callous about that.
B. The Court Should Release Funds for Payment of Attorney’s Fees.
Farahi requested that the Court modify the asset freeze to permit payment of
his actual and reasonable attorney’s fees incurred from January 27, 2010 to the
present.2 The SEC has opposed counsel’s request, arguing that the request is not
sufficiently specific and questioning the reasonableness of the amount, given the
early settlement as to liability. The SEC’s argument ignores the facts that since
January 27, 2010, Farahi’s counsel have:
 negotiated a bifurcated settlement with the SEC and counseled their
client through the settlement process;
 worked with the receiver and the client to respond to the receiver’s
requests for information and to transfer assets to the receiver;
 counseled their client regarding the SEC proceedings, including the
preparation of a schedule of assets;
2 Fees for a previous period of work, ending on January 27th, were released pursuant
to a stipulation and prior court order to Bird Marella and to attorney Sylvia Scott’s
law firm Freeman Freeman & Smiley. Ms. Scott has since withdrawn from
representing John Farahi, Gissou Farahi and Elaheh Amouei. Without counsel, Mrs.
Farahi has been unable to settle the case, and currently is without representation.
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 reviewed the more than 100 pleadings filed in this action to advise their
client about what if any action to take in response; and
 communicated with counsel for the SEC, the receiver, and codefendants
in response to the numerous filings of these parties.
During this period, Farahi’s counsel have diligently represented their client – the
primary subject of the SEC case – while keeping in mind his interest (shared with
the SEC) in preserving assets for the benefit of the NewPoint investors. Counsel
have attempted to resolve every issue without judicial intervention, and have not
filed any papers other than the Court-ordered schedule of assets and this request to
modify the asset freeze, an issue which counsel attempted to resolve several times
with the SEC and the receiver before filing.
The SEC criticizes Farahi’s counsel for taking an active role in litigating not
only on behalf of their client, but also on behalf of other parties in the case. (Opp. at
5.) But the SEC’s criticism is misplaced. The SEC made Farahi the centerpiece of
its argument against Quiff by falsely accusing him of diverting funds to Quiff’s
account and taking his deposition on an expedited basis on the morning of the
hearing. Farahi’s counsel were obligated to defend his interests under these
circumstances, and present Farahi’s testimony to the Court, leaving Quiff’s counsel
to represent its separate interests. Likewise, the SEC cannot argue in good faith that
its allegations against the relief defendants Triple J and Farahi’s children are
unrelated to Farahi when the allegations focus almost exclusively on Farahi’s
actions, not the relief defendants.
During this period from January 28, 2010 through March 31, 2010, despite
the massive amount of litigation and actions taking place in this case, Farahi’s lead
attorney Gary Lincenberg has billed only 62 hours of time (about seven hours per
week), attorney David Hurwitz has billed 133 hours of time (about fifteen hours per
week), and paralegal Eric Lassiter has billed 2 hours. This totals $107,619 of billed
time. These time entries are reflected in the billing records of Bird Marella. (See
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REPLY ISO MOTION TO MODIFY ASSET FREEZE ORDER
Declaration of Gary S. Lincenberg ¶ 2 filed with this reply.) Counsel have also
billed $2,351.97 of expenses, including $1,548.40 paid to a copying service. (Id.)
These amounts are reasonable given the volume and complexity of work in
this case over the past two months, including the settlement of the liability phase of
this action. See SEC v. Petters, 2009 WL 3379954 at *3 (D. Minn. Oct. 20, 2009)
(approving attorney’s fees of $360,000 for representing defendant between July 10
and August 31, 2009). The SEC relies on SEC v. Private Equity Management
Group, Inc., 2009 WL 2058247 (C.D. Cal. July 9, 2009) for the proposition that
detailed submissions are required to support the reasonableness of a fee request. But
that case is distinguishable because it involved a request for the release of $2 million
for future attorney’s fees. The Court denied the request with leave to re-file because
the defendant had not shown the fee request was reasonable under the factors
outlined in Kerr v. Screen Extras Guild, 526 F.2d 67, 70 (9th Cir. 1975). Unlike the
request in Private Equity, counsel here have already performed the work for which
they seek payment, and the reasonableness of the amount cannot be disputed by the
SEC, who caused the majority of the work to be done. Regardless, counsel’s hours
fall well within the range of reasonableness under the multi-factor test approved by
the Ninth Circuit in Kerr.3 Farahi’s counsel will submit its bills for in camera
review if the Court desires further proof of the reasonable it its time and expenses,
but the SEC has no right to review them. Private Equity, 2009 WL at *3 n. 2.
3 These factors are the (1) the time and labor required, (2) the novelty and difficulty
of the questions involved, (3) the skill requisite to perform the legal service
properly, (4) the preclusion of other employment by the attorney due to acceptance
of the case, (5) the customary fee, (6) whether the fee is fixed or contingent, (7) time
limitations imposed by the client or the circumstances, (8) the amount involved and
the results obtained, (9) the experience, reputation, and ability of the attorneys,
(10) the ‘undesirability’ of the case, (11) the nature and length of the professional
relationship with the client, and (12) awards in similar cases. Kerr, 526 F.2d at 70.
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281707.1 7
REPLY ISO MOTION TO MODIFY ASSET FREEZE ORDER
C. Farahi Has Shown Untainted Sources of Funds.
Farahi showed in his moving papers that he had several sources from which to
draw personal funds to pay for his reasonable living expenses and attorneys’ fees.
These include: (1) his interest in the Sunset Carson City Apartments limited
partnership; (2) his personal tax refund; (3) his boat and car.
First, The SEC concedes by its silence that Sunset Carson asset is untainted,
as it must. Farahi made that real estate investment before 1980, long before the
establishment of NewPoint. Farahi should be permitted to sell his interest and use
the proceeds for his expenses. The SEC does not argue this point.
Second, the SEC argues that the personal tax refund does not belong to
Farahi, although it came from the federal treasury, not NewPoint’s investors.
Although Farahi has agreed not to contest the allegations of the complaint for
settlement purposes, the SEC’s complaint and argument presents a one-sided
version of the facts that requires further explanation to understand the tax return.
Before the TRO shut down its business, NewPoint raised money by selling
debentures to investors and agreeing to pay the investors fixed rates of interest in
return. NewPoint had discretion as to how to invest the money, so long as it
fulfilled its contractual promise to pay back the investors principal and interest
pursuant to the terms of the debenture. NewPoint earned the money to pay the
principal and interest on the debentures by loaning funds to Farahi personally at a
rate of interest greater than that promised to the investors. Farahi in turn invested
the borrowed funds, along with his own personal funds, in various ways, including
substantial amounts in S&P 500 option futures trading. For many years, Farahi’s
options trading generated profits far in excess of his cost of borrowing from
NewPoint, and he was able to pay back NewPoint and NewPoint in turn was able to
pay the principal and interest on the debentures. Farahi earned substantial income
and paid substantial amounts of income tax. The investors received their promised
rate of return, and presumably paid tax on the interest income they received.
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All of that changed when the stock market crashed in late 2008. Farahi
suffered substantial losses in his options trading during this period. This included
profits he had made in past trading as well as funds he had borrowed from NewPoint
for trading. Farahi personally paid taxes when he made money in prior years’
trading, and he personally received refunds from the treasury when he reported the
losses from his trading in 2008. Over the course of 2009, he made several million
dollars in stock options trading as the market recovered and was able to pay back
substantial sums to the investors. That came to an abrupt end when the SEC filed
for the TRO and the receiver shut down his business in January 2010.
The SEC argues that Farahi somehow has concealed what happened to the
funds from his federal tax refund received in November 2009. (Opp. 6-7 n. 5.) But
this ignores what Farahi told the receiver about what use he made of these funds.
Some of these funds were deposited with lawyers in client trust accounts, including
the Banafshe Law Firm, for just this eventuality so that he could trace the funds for
legal expenses back to the tax refunds. This also includes the remaining $50,000
that Bird Marella holds in its client trust account. (Lincenberg Dec. ¶ 6.) The SEC
has not clearly stated whether it opposes our applying the remaining funds in our
trust account against our bills, which they had previously stipulated to as to the
payment of attorneys’ fees billed through January 27, 2010.4 Other amounts were
deposited in the Winners’ account or used to pay back funds previously borrowed.
The receiver and his team of attorneys and accountants have had access to Farahi’s
accounting records for three months, and have raised no questions about Farahi’s
explanation of how the funds were used. The SEC counsel’s declaration attaches
email correspondence explaining how some of the funds were used. (Smyth Dec.
4 Farahi still has funds in other law firm trust accounts which were deposited with
these firms prior to the freeze order. In this motion to modify, counsel has
intentionally sought the release only of funds from its own and one other law firm.
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281707.1 9
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Ex. 2.) The SEC cannot now pretend as if none of this had been explained.
Third, the SEC argues that Farahi did not purchase the boat and car with his
own funds, because he somehow used the funds borrowed from NewPoint to obtain
lines of credit. The SEC provides no evidence to support this argument, and the
documents it submitted with its opposition tend to disprove its own argument.
Farahi’s personal statement of financial condition as of July 31, 2008 (before the
stock market crash) shows that he had cash or cash equivalents in bank and
brokerage accounts of $23 million. (Smyth Dec. Ex. 3.) The same document states
that at the time, Farahi personally owed $5 million to NewPoint.5 (Id.) Thus, prior
to the market crash, Farahi had a substantial positive net worth over and above what
he and affiliated entities owed NewPoint and its investors. Farahi does not argue
that these amounts were not commingled, but only that he clearly had substantial
personal assets to purchase assets and to support lines of credit to purchase assets
such as the car and the boat. Farahi has already agreed to turn over the car and boat
to the receiver and is waiting on a buyer. He only requests that some portion of the
sales proceeds be set aside for living expenses if other funds are no longer available.
Finally, Farahi’s application for payment of attorneys’ fees should be
approved as a matter of equity within the Court’s exercise of its discretion. In
January 2010, when the SEC completed its pre-filing investigation and filed this
civil action, counsel had the choice whether to continue to represent Farahi and
appear as counsel of record. We informed the SEC and the receiver that our retainer
came from Farahi’s personal tax refund. (Smyth Dec. Ex. 2.) The SEC and the
receiver agreed that we could draw against those funds, and stipulated to an order
permitting us to draw against our retainer for amounts billed through January 27,
5 This does not include amounts owed by entities in which Farahi had an interest,
including Triple J.
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281707.1 10
REPLY ISO MOTION TO MODIFY ASSET FREEZE ORDER
2010. The Court entered that stipulated order. At no time did the SEC or the
receiver object to our using amounts on retainer derived from Farahi’s personal
income tax refund. To the contrary, the receiver and his counsel agreed to this and
the SEC voiced no objection.6 (Lincenberg Dec. ¶ 4.) Indeed, the SEC agreed in
our pre-filing discussions about this motion that it had no objection to the Banafshe
Law Firm transferring the funds held on retainer to our client trust account, and the
SEC did not object to that request in opposing this motion. (Id. ¶ 5.)
Now for the first time, the SEC argues that the tax return is an inappropriate
source of funds. We believe this argument is wrong as argued above, But if the
Court agrees with the SEC on this point, counsel requests that the Court grant
Farahi’s request as to the amounts billed before April 1, 2010, when the SEC first
took this position in its opposition. Counsel will then have to decide whether they
will be able to continue to represent Farahi under these changed circumstances.
III. CONCLUSION
For all of these reasons, Farahi’s motion to modify the asset freeze order
should be granted to allow payment of his reasonable living expenses and attorney’s
fees in the amounts requested.
DATED: April 8, 2010 Gary S. Lincenberg
David I. Hurwitz
BIRD, MARELLA, BOXER, WOLPERT,
NESSIM, DROOKS & LINCENBERG, P.C.
By: /s/ Gary S. Lincenberg
Gary S. Lincenberg
Attorneys for Defendant John Farahi
6 During the negotiation of the settlement, the SEC reserved its right to oppose a
request for living expenses and attorney’s fees, but the SEC never stated it intended
to argue that the tax refunds held on retainer were an inappropriate source of funds.