The Madoff of Beverly Hills

People trusted Ezri Namvar -- even after their money disappeared.

July 21, 2011

In the quiet of a Beverly Hills synagogue, a man shouts in Farsi. Something about a bankruptcy that never should have happened.

As a security guard escorts him out, he switches to English: “I have not done anything,” he says, suddenly calm. “This is a free country. Tell the rabbi to come.”

From the pulpit, a group of attorneys has been trying for an hour to placate a crowd of people angry over the bankruptcy. Each person in the pews has lost a lot of money — perhaps everything they have — and many are beyond calming.

“When I came to this country, I had a lot of respect for the government,” a man shouts. “My respect is zero now. It is no different than Iran or Iraq!”

A woman cries out: “Nobody can take their money back from the gangster!”

The gangster in question is Ezri Namvar — better known as the “Bernie Madoff of Beverly Hills.” When he was forced into bankruptcy three years ago, he left a trail of ruin and more than $1 billion in claims.

Namvar had built his business on the tight-knit relationships within the Persian Jewish community, and his collapse shattered that trust. With Namvar's affairs in shambles, his creditors have turned on each other — and even on their rabbis. By failing to condemn Namvar in the strongest terms, many say the rabbis have been complicit.

Until Namvar was forced out in disgrace, he served on the board of directors of the Nessah Synagogue. Outside the sanctuary, there is a plaque on the wall: “The dedication of the Hakham Yedidia Shofet Sanctuary was possible by the donation of [the] Namvar Family.”

The recent meeting at the synagogue was intended to update creditors on the progress of the unwinding of the Namvar estate. There has been little progress. They want to know why.

One of the attorneys, Skip Koenig, tried to answer: “People have asked, 'GM got resolved in 30 days. Why is this taking two years?'

“The answer is: It's a lot more complicated than GM.”

A few miles to the west, in the hills of Brentwood, Namvar is under house arrest. He's living in an $8 million mansion while he awaits sentencing for wire fraud. The mansion has been foreclosed and the bank is trying to evict him. There is a dispute over the water bill, and the lawn has turned to weeds.

Namvar is allowed to attend Saturday services at a Chabad temple near his house. He also can go to his lawyer's office, as well as see his doctor and his therapist. Otherwise, he must stay at home.

Speaking publicly for the first time, he gave his side of the story to L.A. Weekly:

“We got into trouble like everybody else — Lehman Brothers, Fannie Mae, everybody,” Namvar says. “We would have paid everybody off if it wasn't for the bankruptcy.”

He says his credit cards have been cut off. His situation is so dire that he relies on his brothers to buy him groceries. He used to have a $230,000 Mercedes. Now he drives his mother's Prius.

Standing on the front doorstep, he pulls up his pant leg to reveal his ankle monitor. It's made of hard, black plastic. He sleeps with it. He showers with it. The only thing he can't do is go into the pool.

The Namvar bankruptcy is a tangled mess of competing factions, with hidden agendas and allegations of secret payoffs. But it is also quite simple, says Dan Schechter, a professor of bankruptcy at Loyola Law School.

“At bottom, it's just a busted Ponzi scheme,” Schechter says. “The pieces are all over the floor and the victims are scrambling around trying to get something.”

Try as Namvar might to shed the Madoff label, it has stuck. It serves a useful parallel, up to a point. Like Madoff, Namvar's clients were largely drawn from the local Jewish community. Like Madoff, he built an unquestioned reputation for financial acumen over 30 years, which prompted many to trust him with their life savings. And like Madoff, the collapse of his financial empire has sown sorrow and destruction.

But there are many differences. For one thing, Namvar still has defenders. Surprisingly, many of them are his creditors.

They continue to believe, not because they are necessarily so fond of Namvar but because the consequences of losing faith in him are so severe. It would mean giving up hope that somehow, someday, he will pay them back.

“Let it go,” Schechter advises. “That ship has sailed. He's a crook.”

Also unlike Madoff, Namvar himself remains defiant. In May, he was convicted of four federal wire fraud charges for taking $21 million from depositors in his financial exchange. Yet he continues to maintain his innocence.

“This is not a Madoff,” says Namvar's brother Mousa Namvar, also speaking to the press for the first time. “This is not a con man. This is not a fraud. This is a guy who got caught in a big storm. He was trying to save the ship and everyone in the ship. And a couple of people were drilling holes.”

The scale of the destruction is hard to grasp. Four hundred people have lost their retirement savings, college funds, bar mitzvah money. Realistically, they have little chance of getting more than a fraction of it back.

The tragedy has not only engulfed Namvar. It also has touched prominent rabbis, who have seemed to give Namvar every benefit of the doubt. And it has been a moment for deep reflection among Iranian Jews, both victims and bystanders alike. The community known as Tehrangeles may never be the same.

“We are, today, a wounded and perplexed community,” novelist Gina Nahai wrote in a column for The Jewish Journal. “For us, the question is no longer what a Jew will and will not do; it's what we, as a community, will and won't tolerate. It's whether our increasingly Orthodox rabbis will take a public stand against larceny in our own midst, or choose to look away.”

The story of Ezri Namvar begins three decades ago with his father, Eilel Namvar, a well-to-do real estate speculator and moneylender in Iran. In the wake of the 1979 Iranian Revolution, his property was seized and he fled to the United States. His son, Ezri, had already gone to school at UCLA and settled in Los Angeles. In time, some 70 Namvar relatives took up residence in L.A.

The Namvar name was an important asset in a Tehrangeles community that runs on family connections that can stretch back more than a century. Added to that, Ezri was seen as a brilliant young man with a remarkable ability to keep the intricate details of real estate transactions in his head.

“This guy Ezri is probably one of the great geniuses in business,” says Avi Hakim, a real estate investor and Namvar ally. “He would have a thousand deals, and he would remember details on every single deal.”

Like his father, Ezri was a “hard money” lender. He made riskier loans than traditional banks offer, typically to real estate investors. He charged a higher rate of interest — perhaps 10 percent or 11 percent. In turn, he offered his lenders a higher yield than banks would give, something like 7 percent to 8 percent.

According to a source who asked not to be named due to the sensitivity of the case, Namvar got into financial difficulties when he was just starting out. He was saved by a wealthy Iranian businessman who stood up in front of his peers and — with a theatrical flourish — wrote Namvar a blank check. Open an account, he told the young man, and put in whatever you want. The wealthiest members of the Iranian community were persuaded to trust him with their funds.

In an email exchange with the Weekly, Namvar says many investors helped build the business through word of mouth. He attributed his success to “luck and G-d's blessing.”

He was also a workaholic, putting in 18-hour days, says his brother Mousa.

“Work becomes a game,” Mousa says. “His nature is he wants to achieve, higher and higher. I'm not like that. I want a more quiet life.”

According to a trustees' report in the bankruptcy case, the business ran smoothly until 1997, when Namvar changed course and started investing in real estate. In 2002, with credit becoming looser, Namvar “launched into a real estate buying frenzy,” according to the report.

His acquisitions included hotels: the Hotel Angeleno, the downtown Marriott, the Cal Neva Resort in Lake Tahoe. He bought office buildings, including the Wilshire Bundy building. His company, Namco Capital Group, occupied the entire 14th floor there, with a commanding view of West L.A. He also bought apartment buildings, vacant land in rural areas, an equestrian center and a pistachio farm.

Many of these properties generated no revenue, and were not expected to pay off for years.

“The pistachio is a seven-year deal,” says Mousa, who was responsible for that acquisition. “It's a long-term investment. My investors had the stomach to weather it.”

According to the trustees' report, which Namvar vehemently disputes, purchases were made “with a wanton disregard for the underlying economics and financial viability of the project.”

According to Bradley Sharp, the trustee of the Namco bankruptcy, the company never had more than six employees — hardly enough to manage such a vast and growing enterprise. Namvar used the most rudimentary accounting methods, recording transactions in a simple ledger.

“I have told him I don't have much respect for his business practices,” Sharp says.

After two years, Sharp says he still isn't clear on whether Namvar was just sloppy, or whether he was more nefarious. He did routinely transfer assets to limited-liability companies controlled by his relatives.

“It does make me uncomfortable that the company that borrowed this money doesn't own the assets,” Sharp says.

(Namvar and his relatives say they have already turned over whatever was owed to the trustee.)

In 2008, the market turned. Namvar never saw it coming. According to the trustee, instead of selling off properties and limiting losses, he continued on “his visionary pathway to riches.” He was “delusional.”

He was heavily leveraged — though, Namvar says, no more so than many others. According to Mousa, in the back of his mind, Namvar believed if he ever got into trouble, he could access a line of credit worth several hundred million dollars. But credit dried up and Namvar ran out of money. He stopped making interest payments, and his office lobby filled up with people trying to get their money back.

“It was a real rush to the bank,” recalls George Haroonian, a creditor who witnessed the scene. “People didn't know what to do. I heard stories of screaming and fighting.”

In a desperate scramble to stay afloat, Namvar paid off some of his most demanding investors with money from others. He “borrowed” from the financial exchange — where deposits were supposed to be secure, no matter what — then couldn't pay it back. He told different things to different people, and many say they were recruited to invest while Namvar knew he was floundering.

Michael Eshmoili, a fabric wholesaler who had lent Namvar $1 million, recalls being in the waiting area of Namvar's office around this time. Another investor, an elderly woman, asked if Eshmoili was there to get his money. He said he was. She said she was, too. She was owed $20,000.

Eshmoili figured that amount was so small that Namvar would just pull out his checkbook.

A while later, the woman came out of Namvar's office with a check for just $1,000.

Eshmoili says that's when the depth of the crisis hit him.

“How am I gonna ask for $1 million?” he wondered.

By November 2008, the lenders were growing even more frightened and anxious. Some had filed suit. Namvar called a meeting at the downtown Marriott to plead for time. Drop the lawsuits, he urged, and he would figure a way to pay everybody. It would take a while — maybe a few years. But everyone would be repaid.

Some creditors were angry. There was yelling. Then Eshmoili rose to speak.

“All of us gave this money to Namvar because of his name,” he said. “We trusted his name and his father's name. If you trusted him then, you should trust him now. He will get us the money.”

Many were persuaded. But not all.

Namvar's most formidable and dogged opponent has been Abraham Assil, a wealthy real estate investor who had parked $6 million with Namvar. When Assil heard the rumors of difficulty, he went to see Namvar.

“He played with my head,” Assil says. “He sent me looking for a needle in a haystack.”

Assil says Namvar promised to secure his loan with an interest in a penthouse in Israel. So Assil went to Israel to check it out. He says he later found out the penthouse was already being used as collateral for someone else. Assil says he concluded that Namvar had been transferring assets to his relatives and friends.

“Ezri is about misinformation and derailment,” Assil says. “Finally it clicked. He was just buying time. I had to move quickly.”

Assil gathered up a handful of other creditors and, in December 2008, forced Namvar into involuntary bankruptcy.

Meeting a reporter for coffee recently in the courtyard of the Montage Beverly Hills, the luxury hotel where Dodgers owner Frank McCourt has lived since separating from his wife, Assil shows up impeccably dressed and exuding old-world charm.

“What's your name?” he asks the waitress.

“Cassie,” she says.

“My first girlfriend's name was Cassie.”

He wastes no time getting down to business: “I'd rather get robbed off the street by someone who puts a gun to my head. When someone does what they did, it's different. They steal your trust. They steal your honor. They never apologized.”

When the goat cheese arrives, he asks if it's kosher, then continues.

“A kid who steals a loaf of bread — he gets charged. But what about the guy who commits the biggest fraud in the history of L.A.? He gets only five to seven years?” Assil says, speculating about Namvar's coming prison sentence. “And they let him enjoy what he stole?”

Assil has harsh words for federal investigators, who, he says, barely scratched the surface of Namvar's crimes. He also is unsparing with the leaders of the Orthodox community. He believes they should have spoken out more forcefully and compelled the Namvar family to repay creditors.

“The religious authorities have an obligation to protect those who cannot defend themselves,” he says. “Their silence speaks volumes.”

Assil had hoped to be semiretired by now, but without the $6 million he lost to Namvar, he must keep working. Still, he acknowledges that he remains comfortable.

He is still following the money with grim determination. He believes “suitcases full of cash” went to Israel. Some may be in Turkey.

“He misjudged me,” Assil says. “He miscalculated my abilities and my perseverance. This is not over yet. This is just the beginning.”

When Michael Eshmoili spoke up in support of Namvar at the Marriott hotel, he had never met the man.

Eshmoili owns a fabric wholesaling business. It's downtown, and it used to be across the street from a branch of Security Pacific Bank, which Namvar owned, and which has since been seized by the Federal Deposit Insurance Corporation. Eshmoili kept a checking account there, and when he would go in to make deposits he would talk to a bank employee who urged him to invest his savings with Namvar. He would earn a high rate of return — 7.25 percent.

Eshmoili was told his money would be safe.

“He has hotels,” he remembers being told. “They made it sound like an empire.”

Eventually, he agreed to transfer his entire life savings — just over $1 million — to Namvar.

Eshmoili, who is 55, has suffered more than his share of tragedy. Eight years ago, his wife died of cancer. She was 34. He was left to raise their 6-year-old daughter on his own.

He was engaged to be remarried when he transferred his savings to Namvar. Shortly after, he made an offer on a three-bedroom house in Brentwood, where he planned to move with his fiancée. To make the down payment, he went to Namco. He was told the money wasn't there — he would have to wait. After repeated entreaties, one of Namvar's brothers gave him $60,000.

It wasn't nearly enough, and the escrow fell through. Eshmoili's business suffered a setback, and he couldn't draw on his savings to pay living expenses. So he fell behind on the payments on his small condominium and went into default. His credit score — once perfect — plummeted.

He is still living without a cushion, and without health insurance. The bankruptcy trustee is suing him to recover the $60,000, so it can be distributed evenly to the other creditors. He doesn't have it.

Despite all he has been through, Eshmoili continued to believe in Namvar until only a few months ago. Losing his belief meant admitting he had been duped. But he still hasn't given up hope that he will recover his savings.

“I will never forget my money,” he says. “Until the day I die, I will be after my money.”

Amid the collapse, Eshmoili's engagement fell through. He would prefer not to say too much about it, except that he is certain he would be married today if he had been able to buy the house in Brentwood.

Instead, he is still living in the condo in the Fairfax area with his daughter, now 14.

“She knows what I have lost,” he says. “She refuses to spend money. Even on the smallest thing, even $5. That is sad. She asks, 'Daddy, are we poor?' I say, 'No, we are not. As long as I have you, I am a very rich man.'”

The creditors continue to fight over whether Assil was correct to force the bankruptcy. To some, he was extremely brave. If he had not done what he did, Namvar might have been allowed to dissipate whatever was left of the estate. Thanks to him, the creditors will at least get something — maybe between 5 percent and 15 percent of what they lost.

But many others believe Assil made a mistake by tying Namvar's hands. The bankruptcy trustees have consumed more than $20 million in fees for attorneys and forensic accountants. Many believe the trustees have sold off properties at fire-sale prices. So far, the creditors have not received anything.

If he had been given more time, they believe, Namvar would have found a way to pay.

“Ezri is not an angel. He's a terrible person,” says Alex Hakakian, one of the creditors who has been most critical of Assil. “At the same time, he was trying to work something out. I think this would have been resolved by now if that was allowed to happen.”

Namvar has encouraged this view.

“I was not allowed to participate in the handling of this big ship, or at least the navigating of it,” he tells the Weekly by email. “The only people who are benefiting from the bankruptcy are the trustees and their teams of lawyers, accountants and staff. … I warned the creditors that this would happen if I was put into bankruptcy — that the 'professionals' would devour all the assets, leaving the creditors with nothing. I am afraid that this is what is happening.”

Brad Sharp, the trustee in charge of Namco Capital Group, rejects that out of hand. The bankruptcy would not cost so much, he says, if the parties involved were not fighting at every turn in court. They have taken untenable positions, and lost, and then appealed. They have demanded extensive discovery.

Much of the Namvar estate was lost to foreclosure. But the trustees have filed some 250 lawsuits to recover whatever assets are still out there. They have sued Namvar's wife, Ilana, to recover a $390,000 diamond. Another suit alleges that $200,000 was spent on Namvar's younger brother's wedding. The trustees have sued the Namvar brothers and other relatives for $300 million.

Mousa says they are chasing phantoms.

“This is bullshit,” he says. “I swear to that. I bring the Torah. I put my blood on the line. … There is no money. Do you think anybody can hide $300 million without a trace?”

A trial is still more than a year away. All of this costs money. Sharp says the trustees have had to hire professionals to run the estate, research the transactions and do the legwork that Namvar never did.

“When you build that infrastructure, you have to build it with professionals who charge by the hour,” Sharp says.

The trustees are spending something like $800,000 per month. Unlike the creditors, they will get paid in full.

It's not unreasonable to wonder whether some of this could have been avoided. But that is the system we have, Sharp says.

“It is really tragic,” he says. “There are a lot of people who believe that without the bankruptcy, they would have had their money back already. I can say categorically that is not true.”

From the beginning, some creditors have urged religious authorities to intervene. Iranian rabbis have no legal power, but they do hold a moral authority in the community.

Rabbi David Shofet, the leader of Nessah Synagogue, and Rabbi David Zargary have been urged repeatedly to publicly require Ezri Namvar's brothers to repay his debts. They have demurred, leading many to conclude that they are in the pocket of the Namvars.

Last fall, Shofet and Zargary issued a letter saying they lacked expertise in this area and recommending that the case be referred to a Jewish court known as a Beit Din. The letter also criticized “the aggressive route of forced bankruptcy.”

In language that seemed to give more weight to Namvar's view of events, the rabbis attributed his downfall to “rumors and panic coupled with plummeting real estate prices, as well as mistakes and lapse of judgment committed by Mr. Ezri Namvar.”

For many, that wasn't good enough. Chief among them was Benjamin Hakakha, who launched a blog denouncing the Namvars and the rabbis.

“Here's the problem with the rabbis,” Hakakha says. “They're not some sort of outside, uninvolved, disassociated entity. They're actually beneficiaries of funds given to them by the Namvars for many years. The same funds that were the clients' moneys fed those guys for years.”

Hakakha accused the rabbis of “backstabbing” the community.

“They need to be put on the microscope and come to answer for what they've done,” he says.

Zargary referred questions to Shofet. Reached by cellphone, Shofet declined to comment.

“Sir, I have nothing to tell you,” he said. “Thank you very much. Bye-bye.”

Many creditors have called for a Beit Din. That is how it would be handled back in Iran, where Persian Jews preferred, where possible, to settle matters among themselves rather than through the Islamic court system.

In the United States, Beit Din is the equivalent of an arbitration. A panel of three rabbis hears testimony, makes inquiries and issues a ruling in accord with Talmudic law. The affected parties — typically, though not always, Orthodox Jews — agree to be bound by the ruling.

“This is a court system that is almost three and a half thousand years old,” says Rabbi Abraham Union, who serves on a Beit Din at the Rabbinical Council of California. “The law is rooted in the same lawgiver that gave us the Ten Commandments.”

In the early going, Ezri Namvar himself suggested the case be handled by a Beit Din. Given the complexity of the case, however, it would have been a daunting challenge for three rabbis who are not lawyers or specialists in bankruptcy.

“It would have been much more efficient and cheaper,” Namvar says. “But I do not think we can get a unified creditor force behind this.”

Indeed, such cases work only when everyone agrees to be bound by the court's ruling. In a bankruptcy with 400 creditors, that would have been nearly impossible.

“We're very, very limited,” Union says. “We're not going to take on a case where we don't have the ability to make legal rulings that will solve the case.”

The issue with the rabbis has introduced one more point of conflict into an already labyrinthine case. Like Namvar, the rabbis do not lack for defenders. One of them, Isaac Khanzadeh, addressed an open letter to Hakakha, calling him “deranged” and “dim-witted trash.”

“Spineless rodents like you are a plague upon our community,” he wrote. He said he was “revolted by your lack of tact, absence of logic, guttural personality, vitriolic demeanor, dark aura and your absolute disregard for facts and truth.”

In closing, though, Khanzadeh wished him “inner peace.”

There also is a brewing fight between the trustees and the creditors' committees over how to manage the bankruptcy, which promises to be every bit as nasty.

If there is one person who has managed to find some “inner peace” in this, it is Fariborz David Diaan. He is an actor and comedian who had a part in The Stoning of Soraya M. He also lost $1.2 million in the Namvar bankruptcy.

He was — and in some ways, still is — quite bitter about it. Diaan was in the middle of a home renovation when his money went missing. He had to tell the contractors to stop work.

Early on, he began to see the humor in it. In some meetings, he says, he saw community elders behaving foolishly.

“It's as if they were little boys, including Ezri,” he says. “The conversations were extremely comedic if you could detach from the misery.”

Slowly, Diaan's concept of money began to shift.

“I realized that money and greed is something that can easily take over our minds and make us do irrational and stupid things, no matter how accomplished we think we are,” he says. “If I can lose millions of dollars in the blink of an eye, then how important do I want to make that money?”

His thoughts turned into a script for a play. His character loses everything in a Ponzi scheme, then dies of a heart attack. The play, titled Death: A Very Serious Comedy, becomes a critique of Persian materialism.

“It's all about columns and swimming pools,” Diaan says. “Iranians like houses with tennis courts, so they can throw big parties on their tennis court. If you search the entire house, you won't find a racket.”

In heaven, his character hears of a rabbi who went to hell for stealing cable. He gets to see his own funeral, and notices that the “Beverly Hills Madoff” is in the audience.

“He's not here to mourn my death but to celebrate one less creditor to worry about,” he says.

After the play debuted, he saw Namvar at the gym.

“I heard you wrote a play about me,” Namvar said.

“Yes,” Diaan replied: “If I do 1,000 more performances, I can get back the money I lost.”

Although he has learned something from the loss, that does not mean he is going to let it go.

“I know they took the fucking money,” he says. “I know they have the money. I know they're trying to get away with it.”

On a recent weekend, Namvar invited Diaan up to his house so he could explain everything. Diaan was told it would take four hours.

Diaan went and concluded that Namvar's defense amounted to “a lot of justification — nothing concrete, nothing clear.”

But he was impressed by the atmosphere.

“His phone is ringing off the wall,” Diaan says. “He's got a lot of friends and fans. His family loves him. If he's got 800 enemies, he's got 200 friends.”

Namvar is small, maybe 5 feet 1, with an ebullient mien. He is putting on weight because he can't leave the house. His lawyers have asked for a new trial, arguing that he intended to pay his depositors back but was prevented from doing so by the bankruptcy.

Namvar's a compulsive guy, and he continues to make real estate deals over the phone. He has asked for permission to work for an investment company, but the U.S. Attorney has objected, saying a convicted “fraudster” should not be entrusted with other people's money.

He still hopes he will not go to prison, and says he feels sorrow for the creditors.

“I feel tremendous sadness for all these people and feel very handicapped since I have no control, in order to help them more,” he says in an email. “It is obvious that my life has turned around tremendously. … I believe that G-d has a grander plan than what shows on the surface, but unfortunately it has been very difficult on the entire family.”

He also expressed gratitude for the support he continues to enjoy.

“May G-d give me strength to weather the storm and show my appreciation.”