Local Iranian-Jewish banker and leader acquitted of federal fraud charges
Family members said they watched tears of joy and relief run down the face of Shokrollah Baravarian, an 82-year-old Iranian-Jewish former banker and community activist, on Oct. 31 after a jury in a downtown Los Angeles federal court acquitted him on four charges of conspiring with his clients to defraud the Internal Revenue Service (IRS) of tax revenue.
“For the last 2 1/2 years during the investigation of this case against me and the trial, I have had no peace of mind — I’ve maintained my innocence the entire time because I never did anything illegal, and I never conspired with anyone to do something illegal,” Baravarian told the Journal. “In my case, I believe that in the end, justice prevailed.”
In April, the government’s indictment alleged that Baravarian, a former senior vice president at the Los Angeles branch of Israel-based Mizrahi Tefahot Bank, conspired with three of his Iranian-Jewish clients in the United States to conceal the existence of undeclared bank accounts in Israel. It accused him of opening new accounts for them under pseudonyms and helping them access the funds overseas through loans from the Los Angeles branch of the bank.
Baravarian’s attorney, Marc Harris, said the government’s case against his client was weak from the start because there was no evidence to show any wrongdoing by Baravarian — who has a doctorate in economics from the University of Tehran — and the bank’s clients all admitted during the trial that they never conspired with him.
“From the beginning, we maintained there were no facts to support the charges laid against Dr. Baravarian,” Harris said. “The paperwork showed, and the clients admitted, that these were legitimate loans that Dr. Baravarian’s clients needed and received to increase their lines of credit for their businesses. Several of the clients took out these ‘back-to-back’ loans secured by collateral held at the bank in Los Angeles, and most of them paid off the loans with U.S. funds, which proved that these were legitimate loans, not some mechanism or device to access hidden foreign accounts.”
Harris said federal prosecutors relied heavily on the testimony of three of Baravarian’s Iranian-Jewish former clients, to whom they had offered leniency if they testified against Baravarian and the bank. One witness had been criminally prosecuted and two others were awaiting final sentencing for tax fraud, Harris said.
“These witnesses admitted that they lied on their taxes by not disclosing their foreign accounts,” said Harris. “The government’s key witnesses agreed to plead guilty to a conspiracy charge — to implicate the bank and Dr. Baravarian in their criminal conduct — to avoid going to jail. On cross-examination, however, each of the government’s witnesses admitted that they had not conspired with Dr. Baravarian to cheat on their taxes. In fact, the government’s very first customer witness admitted that he did not believe Dr. Baravarian did anything wrong and did not think he deserved to be prosecuted.”
Officials at the U.S. Department of Justice in Los Angeles did not return calls for comment on the Baravarian case. In April, a Justice Department press release indicated that prosecutors had been investigating “the use of undeclared bank accounts globally.”
Harris said at the close of the trial, the court room was tense as everyone waited to hear the jury’s verdict and that as soon as the jury’s “not guilty” verdict was read aloud, Baravarian’s friends and supporters that had packed the courtroom burst out in loud cheers.
Baravarian said the IRS investigation broke his heart because he had established a reputation for himself as an honest individual during his career spanning more than 50 years while working in senior management positions at major banks in Iran, England and in the U.S.
“From a very young age, I was taught that honesty is the best policy, and I have never, ever gone against that belief in my work or personal life,” Baravarian said. “In my life, because of my conservative nature, I have tried never to do anything illegal, and I’ve always tried to do the right thing to help people. Therefore, it was very difficult for me to understand how this difficult situation would befall me.”
Baravarian got his start doing accounting work at the National Iranian Oil Co. at age 17 as part of a program that allowed him to study for his bachelor’s degree in accounting and work part-time simultaneously. He went on to receive a law degree and a doctorate.
At one time in Iran, Baravarian was president of a major private bank overseeing more than $1 billion in funds, he said. His multiple language skills, education, excellent reputation with clients, as well as extensive work experience in finance, became his salvation when he immigrated to the U.S. in the early 1980s. By 1983, he had gained a senior management position at Mizrahi.
“For many years, it was easier for my Iranian-Jewish clients to come to me for their loans or banking needs because I speak Farsi. They were more comfortable with my background in banking from Iran, and they were familiar with my integrity to help them get good loans for their business,” Baravarian said.
Baravarian said he worked full-time for 25 years at Mizrahi’s downtown Los Angeles branch and then two years part-time at the bank following his 2009 retirement.
A statement released to the Journal by the West Hollywood-based Iranian American Jewish Federation (IAJF) expressed the community’s long-standing support for Baravarian throughout the ordeal.
“The Iranian-Jewish community welcomes the great news of Dr. Baravarian’s acquittal,” the organization said. “He is a pillar of our community, very well-respected, and we are glad that he is now able to move beyond this.”
Many community leaders said Baravarian also has a stellar reputation among Iranian Jews in Southern California because of his extensive volunteer work within the community. Most notably, he has served on the board of the Iranian-Jewish nonprofit Magbit Foundation, which offers interest-free loans to college students, and volunteered as the president of the IAJF from 2002 to 2006.
Those who had worked with Baravarian said many in his community did not believe the allegations of fraud levied against him by the government but instead gave him encouragement to remain positive during the case.
“There was a strong feeling of surprise and disbelief that lingered in the community about these charges,” said Shahla Javdan, past president of the IAJF. “Both Dr. Baravarian and his wife have played and continue to play essential roles in our charitable organizations.”
Baravarian’s family members praised his close friends for their continued encouragement.
“I don’t know how we could have gone through this ordeal without having the full support we received from the family and friends around us,” said Baravarian’s daughter, Haleh Baravarian Shooshani.
Despite all of the difficulties he encountered with his case, Baravarian said he harbors no ill will toward his former clients who testified against him in this case or the federal prosecutors who brought the criminal charges against him.
“I have no hatred for them because I’ve learned in my life that hatred only hurts the person with the feelings of hate in his heart, and forgiveness gives a person calm and peace,” he said. “After the trial, I went over to the government’s attorneys, shook their hands and told them I had no ill feelings for them and wish them all the best in life.”
The case against Baravarian came on the heels of other criminal cases against local Iranian-Jewish businessmen who in recent years had been convicted of various federal criminal fraud charges and had defrauded community members of millions of dollars through Ponzi schemes.
In May, Shervin Neman, also known as Shervin Davatgarzadeh, a Century City Iranian-American man, was convicted in federal court of defrauding two people — one of them a former NBA and NFL executive — out of $3 million in a Ponzi scheme.
In March 2013, John Farahi, a popular Iranian-Jewish radio talk-show host and investment adviser, was sentenced by a U.S. District Court to 10 years in federal prison for operating a multimillion-dollar Ponzi scheme against local Iranian-Americans. Farahi was ordered by the court to pay more than $24 million in restitution to close to 60 victims.
Prior to that, Ezri Namvar, a longtime leading Iranian-Jewish businessman and philanthropist in Los Angeles, was sentenced in October 2011 to seven years in federal prison for stealing $21 million from four clients. Namvar also was ordered by the court to pay back $21 million in restitution to his victims, yet he allegedly bilked investors — who put money into his $2.5 billion real estate portfolio before the 2008 market crash — out of hundreds of millions of dollars.
Iranian-Jewish community leaders and victims have kept quiet about Namvar and other Iranian-Jewish investors charged in recent years with running Ponzi schemes, in keeping with a long-standing community taboo against publicly discussing potentially embarrassing incidents.