[ by Melanie Gretchen ]

A former Nixon Peabody partner was found guilty for his involvement in a Ponzi scheme.  David Tamman, a Los Angeles attorney, faces up to 190 years in federal prison for his role, though the prosecutor said he is likely to receive a lighter sentence.

Federal Findings and Allegations. The charges began with a securities fraud case brought by the SEC against John Farahi, an investment manager for NewPoint Financial Services.  Farahi promoted NewPoint to the Iranian-American community in Los Angeles via a local Farsi language radio station.  The pitch: the firm made conservative investments in low-risk assets like certificates of deposit.

However rather than making the investments on behalf of his clients, he used the money for personal use, to make payments to earlier investors and engage in high-risk options trading, losing more than $20 million of investor money in the process.  Farahi pled guilty in June to using several million dollars of investor money for personal use, including the construction of a home in Beverly Hills.

In December 2011, Tamman was indicted by a grand jury for helping cover up Farahi's scheme.  During the week-long trial in Los Angeles, he unsuccessfully argued:

• he altered the documents to remove material under attorney-client privilege
• he would have no reason to cover up his client's Ponzi scheme because Farahi accounted for a small fraction of his business as a corporate lawyer

Almost a year later, on Tuesday, Tamman was found guilty on Tuesday of helping his onetime client.  The 10 criminal counts include: (i) altering documents, and (ii) obstructing justice during a 2009 investigation by the SEC into NewPoint.  Following the ruling, Judge Philip Gutierrez of U.S. District Court for the Central District of California gave the lawyer home detention until his sentencing on 2/11/13.

For his own part, Tamman sued his firm at the time, Nixon Peabody, of breach of fiduciary duty for failing to provide him with defense counsel once the SEC began looking into allegations against his NewPoint client.  Their response: the firm fired him, and have since disowned him.

"David Tamman was solely responsible for the actions that led to today's guilty verdict.  He betrayed our trust, and failed to live up to the ethical standards our firm demands." -- Allison McClain, Nixon Peabody spokeswoman, in a statement. 

For further details, go to [Reuters, 11/13/12].