SEC v. Jilbert Tahmazian, Esq., No. 2:16-CV-954, Central District of California (Feb. 11, 2016) — Complaint

COMPLAINT
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JOHN W. BERRY, Lead Counsel (Cal. Bar. No. 295760)
Email:  [email protected]

ANSU N. BANERJE (DC Bar No. 440660)
Email:  [email protected]

Attorneys for Plaintiff
U.S. Securities and Exchange Commission
444 S. Flower Street, Suite 900
Los Angeles, California 90071
Telephone:   (323) 965-3890 (Berry)
           (323) 965-3313 (Banerjee)
Facsimile:    (213) 443-1904
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
WESTERN DIVISION
UNITED STATES SECURITIES
AND EXCHANGE COMMISSION,
Plaintiff,

vs.
JILBERT TAHMAZIAN, ESQ.,
Defendant.

 Case No. 2:16-CV-954

COMPLAINT

Plaintiff United States Securities and Exchange Commission (“Commission”)
alleges:
JURISDICTION AND VENUE
1. The Court has jurisdiction over this action pursuant to Sections 20(b),
20(d)(1), and 22(a) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. §§
77t(b), 77t(d)(1), & 77v(a)], and Sections 21(d)(1), 21(d)(3)(A), 21(e), and 27(a) of
the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. §§ 78u(d)(1),
78u(d)(3)(A), 78u(e), & 78aa(a)].
2. Defendant has, directly or indirectly, made use of the means or
instrumentalities of interstate commerce, of the mails, or of the facilities of a national

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securities exchange in connection with the transactions, acts, practices and courses of
business alleged in this complaint.
3. Venue is proper in this district pursuant to Section 22(a) of the Securities
Act [15 U.S.C. § 77v(a)] and Section 27(a) of the Exchange Act [15 U.S.C. §
78aa(a)] because certain of the transactions, acts, practices, and courses of conduct
constituting violations of the federal securities laws occurred within this district.  In
addition, venue is proper in this district because Defendant resides in this district in
Glendale, California.
SUMMARY
4. From at least mid-2009 through at least December 2010, Defendant
Jilbert Tahmazian (“Defendant” or “Tahmazian”), a lawyer licensed in the state of
California, participated in a fraudulent “prime bank” scheme.  Prime bank schemes
involve the offer and sale of fictitious investment programs claiming that investors’
funds will be used to purchase and trade “prime bank” financial instruments on
clandestine overseas markets to generate huge returns in which the investor will
share.  However, neither these instruments, nor the markets on which they allegedly
trade, exist.
5. Tahmazian and his co  -schemer offered and sold bogus investment
contracts purporting to provide investors access to “a Financial Instrument issued by
a top rated financial institution/top 50 bank with a minimum face value of $100
million” and “designated toward a 40-week private placement program.”  However,
no such “financial instrument” or “private placement program” existed.  Nonetheless,
under the purported terms of the fraudulent investment contracts, investors were
promised that they would receive a return of 15% to 30% per week from their
investment or, if their money was not invested within 15 or 30 days, their funds, plus
a 2% penalty, would be returned.  Tahmazian and his co  -schemer obtained
approximately $6 million from at least four investors, who purchased these fraudulent
investment contracts.

COMPLAINT
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6. Tahmazian was an integral and knowing participant in the fraud.
Among other things, investors were directed to deposit their money in Tahmazian’s
att   orney-client trust account.  However, the investors’ funds were never applied
toward any investment.  Instead, after retaining a substantial “fee” for himself,
Tahmazian transferred the investors’ remaining money from his attorney-client trust
account to his co-schemer, who in turn misappropriated the investors’ money for their
personal use, including lavish spending at Las Vegas casinos and high-end retail
stores.  The victims of the scheme lost their entire investments, with the exception of
one investor who received a partial refund from Tahmazian of $100,000 from another
investor’s money that was being held in Tahmazian’s attorney-client trust account.
7. In 2011, one of the victims of the scheme sued Tahmazian in California
state court.  The trial court found that Tahmazian and his co-schemer had perpetrated
a “very sophisticated and financially successful fraud” and that Tahmazian’s
participation, as a licensed attorney, was “highly instrumental” to soliciting investors
by adding an air of legitimacy to the scheme.  The court ultimately found that
Tahmazian was “a knowing participant in the fraud,” adjudged him liable on multiple
claims, and ordered him to pay back all of the investor’s money – nearly $1.2 million.
The judgment against Tahmazian was subsequently affirmed on appeal.
8. The Commission brings this action seeking permanent injunctive relief
to prevent future violations of the federal securities laws, disgorgement of ill-gotten
gains with prejudgment interest, civil penalties, and any other appropriate relief.
THE DEFENDANT
9. Jilbert Tahmazian (age 55), a U.S. citizen and a resident of Glendale,
California, is an attorney licensed to practice in California since 1989.
FACTUAL ALLEGATIONS
10. Tahmazian maintains a solo, general law practice in Glendale,
California, focused primarily on representing clients in criminal matters.  In or about
June 2009, Tahmazian met an individual who leased office space near Tahmazian’s

COMPLAINT
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law practice and with whom he would eventually perpetrate the fraud underlying this
action (together with an entity owned and controlled by that individual and its
employees, Tahmazian’s “co-schemer”).  Shortly thereafter, Tahmazian began
providing general advice and other assistance to his co-schemer, and subsequently
attended business meetings and communicated with potential investors in the
fraudulent scheme.
11. Tahmazian and his co-schemer enticed investors to enter into fake
“prime bank” investment contracts on the promise of huge investment returns.  For
example, two investors entered into a so  -called “Management Agreement Contract”
(“MAC”) with an entity owned and controlled by Tahmazian’s co-schemer.  Under
the MACs, investors agreed to send a   certain sum on money to Tahmazian’s attorney-
client trust account.  The MACs provided that, within fifteen days for one investor
and within 30 days for another, the funds would be used to participate in a “private
placement” in financial instruments, which, unbeknownst to the investors, did not
exist.  One MAC claimed enormous historical average returns of 15% per week;
another claimed historical average returns of an astronomical 30% per week.  The
MACs did not describe how the purported investment would produce such huge
returns.  Investors were further promised in the MAC that if their funds were not
invested within 15 or 30 days, the funds would be returned with a 2% penalty.  On
information and belief, each investor in the fraudulent scheme entered into
substantially similar bogus investment contracts.
Investor A
12. On or about December 21, 2009, Investor A entered into one such
fraudulent investment contract and sent $2 million to Tahmazian’s attorney-client
trust account.  Upon receipt of the funds, Tahmazian disbursed $1,734,980 to his co-
schemer, kept $40,000 for his fees, and disbursed the remainder to five other
individuals.  On February 11, 2010, Investor A, through counsel, sent a letter to
Tahmazian, stating that Tahmazian had failed to respond to repeated requests to

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provide “an escrow letter or other verification that you are holding or disbursed such
escrowed funds.”  In addition, Investor A demanded a refund of its $2 million.
13. On February 19, 2010, Investor A’s counsel called Tahmazian to discuss
the status of the investment.  During that call, to placate Investor A’s concerns,
Investor A’s counsel was assured that returns on the investment would be
forthcoming.  Tahmazian, however, knew that Investor A’s money had been
dissipated in contravention of the MAC.  Specifically Tahmazian knew but concealed
that the funds had not been invested, would not generate any profits, and had not been
refunded.
Investor B
14. On January 25, 2010, another individual investor, Investor B, entered
into a “Management Agreement Contract” (“MAC”) with an entity owned and
controlled by Tahmazian’s co-schemer.  Under the MAC, Investor B agreed to send
$1 million to Tahmazian’s attorney-client trust account.  Within fifteen days, the
funds would be used to “reserve a Financial Instrument issued by a top rated financial
institution/top 50 bank with a minimum face value of $100,000,000 . . . .”  The MAC
stated that the funds were to be “designated toward a 40-week private placement
program” with historical returns averaging 15% per week, but did not describe how
the purported investment would produce such huge returns.  Investors were further
promised in the MAC that if their funds were not invested within 15 days, the funds
would be returned with a 2% penalty.  Tahmazian received and read a copy of the
MAC provided to Investor B.
15. Exhibit A to the MAC included Tahmazian’s attorney-client trust
account information as the location for the investors to deposit funds.  Investor B
believed that Tahmazian would hold the funds in his attorney-client trust account
until they were either invested or returned in accordance with the MAC.
16. In accordance with Exhibit A of the MAC, and with Tahmazian’s
knowledge and consent, Investor B wired $1,000,000 to Tahmazian’s attorney-client

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trust account in three installments on January 27 and 29, 2010.  A few days later, on
February 2, 2010, Tahmazian transferred a total of $979,940 to his co-schemer in
three wire transfers and paid wire transfer fees of $60.  Tahmazian kept the remaining
$20,000 of Investor B’s investment as a 2% “fee” paid for his services, general
corporate work, and attending meetings with investors.  Contrary to the express terms
of the MAC, no investment was purchased or made with those funds and the funds
were not returned within 15 days with the 2% penalty.
17. When Investor B    did not receive the promised return on his investment,
he attempted to contact but had experienced difficulty communicating with
Tahmazian and his co  -schemer.  Investor B eventually contacted Tahmazian and
demanded a refund of his $1 million investment with the 2% penalty set forth in the
MAC.
18. In an attempt to mollify Investor B, Tahmazian’s co-schemer sent a
letter to Investor B    and others via e-mail dated March 5, 2010 (more than a month
after all funds were sent to Tahmazian’s account), apologizing “for having to ask you
to hold on for almost 6 weeks to start your trade as agreed upon by your contract . . .
and/or pay out returns in some cases due to my serious battle with STOMACH
Cancer [emphasis in original] . . . .”  Investor A’s counsel forwarded this e-mail to
Tahmazian asking, “[c]an I safely assume that this came from [the co-schemer]?”  At
that time, Tahmazian knew that, contrary to the terms of the agreement that he had
reviewed, Investor B’s funds had not been invested in a “financial instrument” or
placed into a 40-week “private placement program” and that the amounts also had not
been returned to Investor B with a 2% penalty, as contemplated under the MAC.
19. Investor B    continued to contact Tahmazian during 2010 to request a
refund.  On October 26, 2010, Tahmazian refunded $100,000 to Investor B.
Tahmazian used money received in his attorney-client trust account from another $2
million investment made by another investor (Investor D discussed below) to fund
Investor B’s partial refund.  Nothing in the MAC permitted Tahmazian to use one

COMPLAINT
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investor’s funds to repay another investor.  Tahmazian did not disclose the source of
the refund to Investor B, and did not disclose the blatant misuse of Investor D’s funds
to Investor D.
Investors C and D
20. On or about January 12, 2010, another investor, Investor C, sent
$1,000,000 to Tahmazian’s attorney-client trust account pursuant to a similar
fraudulent investment contract.  As with Investors A and B, Tahmazian knew that
Investor C’s money would not be, and ultimately was not, invested consistent with
the investment contract and thus that it would not generate any profits and would not
be refunded.  Similar to Investors A, B and C, on October 20, 2010, another investor
– Investor D – also executed a similar fraudulent investment contract.  Investor D
wired $2 million to Tahmazian’s attorney-client trust account, having been promised
the same investment opportunity and huge short-term returns on the investment.
Again, Tahmazian knew that the funds would not be and, ultimately, were not
invested or returned to Investor D as required by the terms of the MAC.  Rather,
almost immediately upon receipt of the funds, as noted above, on October 27, 2010,
Tahmazian used part of the money to refund $100,000 to Investor A and, on
November 3, 2010, sent a check for $1.5 million to a third-party.  Tahmazian kept the
remaining $40,000, in violation of the MAC, for his “fees.”
The Fake Investment Contracts were Securities that were Offered and Sold in
Unlawful Unregistered Transactions
21. Sections 5(a) and (c) of the Securities Act prohibit the direct or indirect
offer or sale of securities through the mail or interstate commerce unless a
registration statement has been filed and is in effect.  No registration statement or
exemptive form was filed with the Commission, and no exemption was applicable,
with respect to the offer and sale of the “prime bank” investments by Tahmazian and
his co-schemer.  Additionally, Tahmazian and his co-schemer did not provide any
financial statements to investors, who were located in various states, and made no

COMPLAINT
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effort to determine whether the investors were “accredited investors” to whom an
exemption from registration might apply.  In fact, they did not obtain financial
information beyond whether investors had the ability to pay the initial fees.
Tahmazian Found Liable in State Court Suit and Ordered to Return $1.2 Million
to Investor B
22. On June 16, 2011, Investor B filed suit against Tahmazian and his co-
schemer for fraud and other claims in Los Angeles County Superior Court.  Default
judgments were entered against the co-schemer and the business entity he owned,
controlled and used, with Tahmazian, to perpetrate the fraudulent scheme.  Tahmazian
appeared and defended the lawsuit.  After a bench trial, the trial court found that
Tahmazian was “a knowing participant in the fraud” on Investor B and had converted
the $20,000 in “escrow fees.”  The trial court also rejected Tahmazian’s principal
defense, finding that “[b]ased upon the evidence, and the aforementioned lack of
credibility of Tahmazian, the Court simply does not believe that the admitted
business attorney . . . merely reviewed the Contract and found it to be legitimate”
(emphasis in original).  The trial court adjudged Tahmazian liable on multiple claims,
and a judgment was entered requiring him to return Investor B’s    money – nearly $1.2
million including interest.  The judgment was subsequently affirmed on appeal.
FIRST CLAIM FOR RELIEF
Violations of Securities Act Sections 17(a)(1) and (3)
23. Paragraphs 1 through 22 are re-alleged and incorporated by reference.
24. By reason of the conduct described above, Defendant, in connection
with the offer or sale of securities, by the use of the means or instrumentalities of
interstate commerce or of the mails, directly or indirectly, acting with the requisite
degree of knowledge or state of mind (i) employed devices, schemes, or artifices to
defraud; and (ii) engaged in acts, practices, or courses of business which operated or
would operate as a fraud or deceit upon any persons, including purchasers or sellers
of the securities.  Defendant knew, or was reckless or negligent in not knowing, that

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he employed devices, schemes and artifices to defraud and engaged in transactions,
practices or courses of conduct that operated as a fraud on the investing public by, the
conduct described in detail above, including among other things, engaging in a
fraudulent prime bank stock offering scheme.
25. By reason of the conduct described above, Defendant willfully violated,
and aided and abetted violations of, Securities Act Sections 17(a)(1) and (3) [15
U.S.C. § 77q(a)(1) and (3)].
SECOND CLAIM FOR RELIEF
Violations of Exchange Act Section 10(b) and
Subsections (a) and (c) of Rule 10b-5
26. Paragraphs 1 through 25 are re-alleged and incorporated by reference.
27. By reason of the conduct described above, Defendant, directly or
indirectly, in connection with the purchase or sale of securities, by the use of the
means or instrumentalities of interstate commerce or of the mails, or of any facility of
any national securities exchange, knowingly or recklessly, (i) employed devices,
schemes, or artifices to defraud and (ii) engaged in acts, practices, or courses of
business which operated or would operate as a fraud or deceit upon any persons,
including purchasers or sellers of the securities.  Defendant knew, or was reckless in
not knowing, that he employed devices, schemes and artifices to defraud and engaged
in transactions, practices or courses of conduct that operated as a fraud on the
investing public by the conduct described in detail above, including, among other
things, engaging in a fraudulent prime bank stock offering scheme.
28. By reason of the conduct described above, Defendant willfully violated,
and aided and abetted violations of, Exchange Act Section 10(b) [15 U.S.C. § 78j(b)]
and subsections (a) and (c) of Exchange Act Rule 10b-5 [17 C.F.R. § 240.10b-5].
THIRD CLAIM FOR RELIEF
Violations of Securities Act Sections 5(a) and 5(c)
29. Paragraphs 1 through 28 are re-alleged and incorporated by reference.

COMPLAINT
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30. By reason of the conduct described above, Defendant, directly or
indirectly, willfully violated, and aided and abetted violations of, Securities Act
Sections 5(a) and 5(c) [15 U.S.C. §§ 77e(a) and 77e(c)], by selling securities using
the means or instruments of transportation or communication in interstate commerce
or of the mails without a registration statement that has been filed and is effective and
the transaction was not effected pursuant to a valid exemption from registration.
FOURTH CLAIM FOR RELIEF
Defendant Aided and Abetted Violations of Sections 5(a), 5(c), 17(a)(1), and
17(a)(3) of the Securities Act and Section 10(b) of the Exchange Act
and subsections (a) and (c) of Rule 10b-5
31. Paragraphs 1 through 30 are re-alleged and incorporated by reference.
32. By reason of the conduct described above, Tahmazian’s co  -schemer
violated Sections 5(a), 5(c), 17(a)(1), and 17(a)(3) of the Securities Act and Section
10(b) of the Exchange Act and subsections (a) and (c) of Rule 10b-5 by knowingly
engaging in a “prime bank” fraudulent scheme to defraud unsuspecting investors of at
least $6 million.
33. By reason of the conduct described above, Defendant knowingly
provided substantial assistance to and thereby aided and abetted his co  -schemer in his
violations of Sections 5(a), 5(c), 17(a)(1), and 17(a)(3) of the Securities Act [15
U.S.C. §§ 77e(a), 77e(c), 77q(a)(1), and 77q(a)(3)] and Section 10(b) of the
Exchange Act [15 U.S.C. § 78j(b)] and subsections (a) and (c) of Rule 10b-5 [17
C.F.R. § 240.10b-5].
PRAYER FOR RELIEF
WHEREFORE, the Commission respectfully requests that the Court:
(a) Issue findings of fact and conclusions of law that Defendants committed
the alleged violations;
(b) Issue a judgment, in a form consistent with Rule 65(d) of the Federal
Rules of Civil Procedure, permanently enjoining Defendant, and his respective

COMPLAINT
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officers, agents, servants, employees and attorneys, and those persons in active
concert or participation with any of them, who receive actual notice of the order by
personal service or otherwise, and each of them, from violating, or aiding and
abetting violations of, directly or indirectly, Securities Act Sections 5(a), 5(c),
17(a)(1) and 17(a)(3) [15 U.S.C. §§ 77e(a), 77e(c), 77q(a)(1) and 77q(a)(3)],
Exchange Act Section 10(b) [15 U.S.C. § 78j(b)], and Subsections (a) and (c) of
Exchange Act Rule 10b-5 [17 C.F.R. § 240.10b-5];
(c) Order Defendant to account for and disgorge all ill-gotten gains from his
illegal conduct, together with prejudgment interest thereon;
(d) Order Defendant to pay civil penalties pursuant to Securities Act Section
20(d) [15 U.S.C. § 77t(d)] and Exchange Act Section 21(d)(3) [15 U.S.C. §
78u(d)(3)];
(e) Retain jurisdiction of this action in accordance with the principles of
equity and the Federal Rules of Civil Procedure in order to implement and carry out
the terms of all orders and decrees that may be entered, or to entertain any suitable
application or motion for additional relief within the jurisdiction of this Court; and
(d) Grant such other and further relief as the Court deems just and
appropriate.
Dated:  February 11, 2016  Respectfully submitted,

/s/ John W. Berry
John W. Berry
Ansu N. Banerjee
U.S. Securities and Exchange Commission
444 South Flower Street, Suite 900
Los Angeles, CA 90071
Tel:  (323) 965-3890 (Berry)
        (323) 965-3313 (Banerjee)

Counsel for Plaintiff U.S. Securities and
Exchange Commission

COMPLAINT 1  
 

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JOHN W. BERRY, Lead Counsel (Cal. Bar. No. 295760) 
Email:  [email protected] 
ANSU N. BANERJE (DC Bar No. 440660) 
Email:  [email protected] 
 
Attorneys for Plaintiff 
U.S. Securities and Exchange Commission 
444 S. Flower Street, Suite 900 
Los Angeles, California 90071 
Telephone:  (323) 965-3890 (Berry) 
           (323) 965-3313 (Banerjee) 
Facsimile:  (213) 443-1904 

UNITED STATES DISTRICT COURT 

CENTRAL DISTRICT OF CALIFORNIA 

WESTERN DIVISION 

UNITED STATES SECURITIES 
AND EXCHANGE COMMISSION, 

Plaintiff, 
 

vs. 

JILBERT TAHMAZIAN, ESQ., 

Defendant. 
 

 Case No. 2:16-CV-954 
 
 
COMPLAINT 
 

 
 

Plaintiff United States Securities and Exchange Commission (“Commission”) 

alleges: 

JURISDICTION AND VENUE 

1. The Court has jurisdiction over this action pursuant to Sections 20(b), 

20(d)(1), and 22(a) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. §§ 

77t(b), 77t(d)(1), & 77v(a)], and Sections 21(d)(1), 21(d)(3)(A), 21(e), and 27(a) of 

the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. §§ 78u(d)(1), 

78u(d)(3)(A), 78u(e), & 78aa(a)]. 

2. Defendant has, directly or indirectly, made use of the means or 

instrumentalities of interstate commerce, of the mails, or of the facilities of a national 

Case 2:16-cv-00954   Document 1   Filed 02/11/16   Page 1 of 11   Page ID #:1



 

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securities exchange in connection with the transactions, acts, practices and courses of 

business alleged in this complaint.  

3. Venue is proper in this district pursuant to Section 22(a) of the Securities 

Act [15 U.S.C. § 77v(a)] and Section 27(a) of the Exchange Act [15 U.S.C. § 

78aa(a)] because certain of the transactions, acts, practices, and courses of conduct 

constituting violations of the federal securities laws occurred within this district.  In 

addition, venue is proper in this district because Defendant resides in this district in 

Glendale, California. 

SUMMARY 

4. From at least mid-2009 through at least December 2010, Defendant 

Jilbert Tahmazian (“Defendant” or “Tahmazian”), a lawyer licensed in the state of 

California, participated in a fraudulent “prime bank” scheme.  Prime bank schemes 

involve the offer and sale of fictitious investment programs claiming that investors’ 

funds will be used to purchase and trade “prime bank” financial instruments on 

clandestine overseas markets to generate huge returns in which the investor will 

share.  However, neither these instruments, nor the markets on which they allegedly 

trade, exist.   

5. Tahmazian and his co-schemer offered and sold bogus investment 

contracts purporting to provide investors access to “a Financial Instrument issued by 

a top rated financial institution/top 50 bank with a minimum face value of $100 

million” and “designated toward a 40-week private placement program.”  However, 

no such “financial instrument” or “private placement program” existed.  Nonetheless, 

under the purported terms of the fraudulent investment contracts, investors were 

promised that they would receive a return of 15% to 30% per week from their 

investment or, if their money was not invested within 15 or 30 days, their funds, plus 

a 2% penalty, would be returned.  Tahmazian and his co-schemer obtained 

approximately $6 million from at least four investors, who purchased these fraudulent 

investment contracts.   

Case 2:16-cv-00954   Document 1   Filed 02/11/16   Page 2 of 11   Page ID #:2



 

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6. Tahmazian was an integral and knowing participant in the fraud.  

Among other things, investors were directed to deposit their money in Tahmazian’s 

attorney-client trust account.  However, the investors’ funds were never applied 

toward any investment.  Instead, after retaining a substantial “fee” for himself, 

Tahmazian transferred the investors’ remaining money from his attorney-client trust 

account to his co-schemer, who in turn misappropriated the investors’ money for their 

personal use, including lavish spending at Las Vegas casinos and high-end retail 

stores.  The victims of the scheme lost their entire investments, with the exception of 

one investor who received a partial refund from Tahmazian of $100,000 from another 

investor’s money that was being held in Tahmazian’s attorney-client trust account.   

7. In 2011, one of the victims of the scheme sued Tahmazian in California 

state court.  The trial court found that Tahmazian and his co-schemer had perpetrated 

a “very sophisticated and financially successful fraud” and that Tahmazian’s 

participation, as a licensed attorney, was “highly instrumental” to soliciting investors 

by adding an air of legitimacy to the scheme.  The court ultimately found that 

Tahmazian was “a knowing participant in the fraud,” adjudged him liable on multiple 

claims, and ordered him to pay back all of the investor’s money – nearly $1.2 million.  

The judgment against Tahmazian was subsequently affirmed on appeal. 

8. The Commission brings this action seeking permanent injunctive relief 

to prevent future violations of the federal securities laws, disgorgement of ill-gotten 

gains with prejudgment interest, civil penalties, and any other appropriate relief. 

THE DEFENDANT 

9. Jilbert Tahmazian (age 55), a U.S. citizen and a resident of Glendale, 

California, is an attorney licensed to practice in California since 1989. 

FACTUAL ALLEGATIONS 

10. Tahmazian maintains a solo, general law practice in Glendale, 

California, focused primarily on representing clients in criminal matters.  In or about 

June 2009, Tahmazian met an individual who leased office space near Tahmazian’s 

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law practice and with whom he would eventually perpetrate the fraud underlying this 

action (together with an entity owned and controlled by that individual and its 

employees, Tahmazian’s “co-schemer”).  Shortly thereafter, Tahmazian began 

providing general advice and other assistance to his co-schemer, and subsequently 

attended business meetings and communicated with potential investors in the 

fraudulent scheme. 

11. Tahmazian and his co-schemer enticed investors to enter into fake 

“prime bank” investment contracts on the promise of huge investment returns.  For 

example, two investors entered into a so-called “Management Agreement Contract” 

(“MAC”) with an entity owned and controlled by Tahmazian’s co-schemer.  Under 

the MACs, investors agreed to send a certain sum on money to Tahmazian’s attorney-

client trust account.  The MACs provided that, within fifteen days for one investor 

and within 30 days for another, the funds would be used to participate in a “private 

placement” in financial instruments, which, unbeknownst to the investors, did not 

exist.  One MAC claimed enormous historical average returns of 15% per week; 

another claimed historical average returns of an astronomical 30% per week.  The 

MACs did not describe how the purported investment would produce such huge 

returns.  Investors were further promised in the MAC that if their funds were not 

invested within 15 or 30 days, the funds would be returned with a 2% penalty.  On 

information and belief, each investor in the fraudulent scheme entered into 

substantially similar bogus investment contracts.   

Investor A 

12. On or about December 21, 2009, Investor A entered into one such 

fraudulent investment contract and sent $2 million to Tahmazian’s attorney-client 

trust account.  Upon receipt of the funds, Tahmazian disbursed $1,734,980 to his co-

schemer, kept $40,000 for his fees, and disbursed the remainder to five other 

individuals.  On February 11, 2010, Investor A, through counsel, sent a letter to 

Tahmazian, stating that Tahmazian had failed to respond to repeated requests to 

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provide “an escrow letter or other verification that you are holding or disbursed such 

escrowed funds.”  In addition, Investor A demanded a refund of its $2 million. 

13. On February 19, 2010, Investor A’s counsel called Tahmazian to discuss 

the status of the investment.  During that call, to placate Investor A’s concerns, 

Investor A’s counsel was assured that returns on the investment would be 

forthcoming.  Tahmazian, however, knew that Investor A’s money had been 

dissipated in contravention of the MAC.  Specifically Tahmazian knew but concealed 

that the funds had not been invested, would not generate any profits, and had not been 

refunded. 

Investor B 

14. On January 25, 2010, another individual investor, Investor B, entered 

into a “Management Agreement Contract” (“MAC”) with an entity owned and 

controlled by Tahmazian’s co-schemer.  Under the MAC, Investor B agreed to send 

$1 million to Tahmazian’s attorney-client trust account.  Within fifteen days, the 

funds would be used to “reserve a Financial Instrument issued by a top rated financial 

institution/top 50 bank with a minimum face value of $100,000,000 . . . .”  The MAC 

stated that the funds were to be “designated toward a 40-week private placement 

program” with historical returns averaging 15% per week, but did not describe how 

the purported investment would produce such huge returns.  Investors were further 

promised in the MAC that if their funds were not invested within 15 days, the funds 

would be returned with a 2% penalty.  Tahmazian received and read a copy of the 

MAC provided to Investor B.   

15. Exhibit A to the MAC included Tahmazian’s attorney-client trust 

account information as the location for the investors to deposit funds.  Investor B 

believed that Tahmazian would hold the funds in his attorney-client trust account 

until they were either invested or returned in accordance with the MAC. 

16. In accordance with Exhibit A of the MAC, and with Tahmazian’s 

knowledge and consent, Investor B wired $1,000,000 to Tahmazian’s attorney-client 

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trust account in three installments on January 27 and 29, 2010.  A few days later, on 

February 2, 2010, Tahmazian transferred a total of $979,940 to his co-schemer in 

three wire transfers and paid wire transfer fees of $60.  Tahmazian kept the remaining 

$20,000 of Investor B’s investment as a 2% “fee” paid for his services, general 

corporate work, and attending meetings with investors.  Contrary to the express terms 

of the MAC, no investment was purchased or made with those funds and the funds 

were not returned within 15 days with the 2% penalty. 

17. When Investor B did not receive the promised return on his investment, 

he attempted to contact but had experienced difficulty communicating with 

Tahmazian and his co-schemer.  Investor B eventually contacted Tahmazian and 

demanded a refund of his $1 million investment with the 2% penalty set forth in the 

MAC. 

18. In an attempt to mollify Investor B, Tahmazian’s co-schemer sent a 

letter to Investor B and others via e-mail dated March 5, 2010 (more than a month 

after all funds were sent to Tahmazian’s account), apologizing “for having to ask you 

to hold on for almost 6 weeks to start your trade as agreed upon by your contract . . . 

and/or pay out returns in some cases due to my serious battle with STOMACH 

Cancer [emphasis in original] . . . .”  Investor A’s counsel forwarded this e-mail to 

Tahmazian asking, “[c]an I safely assume that this came from [the co-schemer]?”  At 

that time, Tahmazian knew that, contrary to the terms of the agreement that he had 

reviewed, Investor B’s funds had not been invested in a “financial instrument” or 

placed into a 40-week “private placement program” and that the amounts also had not 

been returned to Investor B with a 2% penalty, as contemplated under the MAC.  

19. Investor B continued to contact Tahmazian during 2010 to request a 

refund.  On October 26, 2010, Tahmazian refunded $100,000 to Investor B.  

Tahmazian used money received in his attorney-client trust account from another $2 

million investment made by another investor (Investor D discussed below) to fund 

Investor B’s partial refund.  Nothing in the MAC permitted Tahmazian to use one 

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investor’s funds to repay another investor.  Tahmazian did not disclose the source of 

the refund to Investor B, and did not disclose the blatant misuse of Investor D’s funds 

to Investor D.  

Investors C and D 

20. On or about January 12, 2010, another investor, Investor C, sent 

$1,000,000 to Tahmazian’s attorney-client trust account pursuant to a similar 

fraudulent investment contract.  As with Investors A and B, Tahmazian knew that 

Investor C’s money would not be, and ultimately was not, invested consistent with 

the investment contract and thus that it would not generate any profits and would not 

be refunded.  Similar to Investors A, B and C, on October 20, 2010, another investor 

– Investor D – also executed a similar fraudulent investment contract.  Investor D 

wired $2 million to Tahmazian’s attorney-client trust account, having been promised 

the same investment opportunity and huge short-term returns on the investment.  

Again, Tahmazian knew that the funds would not be and, ultimately, were not  

invested or returned to Investor D as required by the terms of the MAC.  Rather, 

almost immediately upon receipt of the funds, as noted above, on October 27, 2010, 

Tahmazian used part of the money to refund $100,000 to Investor A and, on 

November 3, 2010, sent a check for $1.5 million to a third-party.  Tahmazian kept the 

remaining $40,000, in violation of the MAC, for his “fees.” 

The Fake Investment Contracts were Securities that were Offered and Sold in 

Unlawful Unregistered Transactions 

21. Sections 5(a) and (c) of the Securities Act prohibit the direct or indirect 

offer or sale of securities through the mail or interstate commerce unless a 

registration statement has been filed and is in effect.  No registration statement or 

exemptive form was filed with the Commission, and no exemption was applicable, 

with respect to the offer and sale of the “prime bank” investments by Tahmazian and 

his co-schemer.  Additionally, Tahmazian and his co-schemer did not provide any 

financial statements to investors, who were located in various states, and made no 

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effort to determine whether the investors were “accredited investors” to whom an 

exemption from registration might apply.  In fact, they did not obtain financial 

information beyond whether investors had the ability to pay the initial fees. 

Tahmazian Found Liable in State Court Suit and Ordered to Return $1.2 Million 

to Investor B 

22. On June 16, 2011, Investor B filed suit against Tahmazian and his co-

schemer for fraud and other claims in Los Angeles County Superior Court.  Default 

judgments were entered against the co-schemer and the business entity he owned, 

controlled and used, with Tahmazian, to perpetrate the fraudulent scheme.  Tahmazian 

appeared and defended the lawsuit.  After a bench trial, the trial court found that 

Tahmazian was “a knowing participant in the fraud” on Investor B and had converted 

the $20,000 in “escrow fees.”  The trial court also rejected Tahmazian’s principal 

defense, finding that “[b]ased upon the evidence, and the aforementioned lack of 

credibility of Tahmazian, the Court simply does not believe that the admitted 

business attorney . . . merely reviewed the Contract and found it to be legitimate” 

(emphasis in original).  The trial court adjudged Tahmazian liable on multiple claims, 

and a judgment was entered requiring him to return Investor B’s money – nearly $1.2 

million including interest.  The judgment was subsequently affirmed on appeal.     

FIRST CLAIM FOR RELIEF  

Violations of Securities Act Sections 17(a)(1) and (3)  

23. Paragraphs 1 through 22 are re-alleged and incorporated by reference. 

24. By reason of the conduct described above, Defendant, in connection 

with the offer or sale of securities, by the use of the means or instrumentalities of 

interstate commerce or of the mails, directly or indirectly, acting with the requisite 

degree of knowledge or state of mind (i) employed devices, schemes, or artifices to 

defraud; and (ii) engaged in acts, practices, or courses of business which operated or 

would operate as a fraud or deceit upon any persons, including purchasers or sellers 

of the securities.  Defendant knew, or was reckless or negligent in not knowing, that 

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he employed devices, schemes and artifices to defraud and engaged in transactions, 

practices or courses of conduct that operated as a fraud on the investing public by, the 

conduct described in detail above, including among other things, engaging in a 

fraudulent prime bank stock offering scheme. 

25. By reason of the conduct described above, Defendant willfully violated, 

and aided and abetted violations of, Securities Act Sections 17(a)(1) and (3) [15 

U.S.C. § 77q(a)(1) and (3)]. 

SECOND CLAIM FOR RELIEF  

Violations of Exchange Act Section 10(b) and  

Subsections (a) and (c) of Rule 10b-5  

26. Paragraphs 1 through 25 are re-alleged and incorporated by reference. 

27. By reason of the conduct described above, Defendant, directly or 

indirectly, in connection with the purchase or sale of securities, by the use of the 

means or instrumentalities of interstate commerce or of the mails, or of any facility of 

any national securities exchange, knowingly or recklessly, (i) employed devices, 

schemes, or artifices to defraud and (ii) engaged in acts, practices, or courses of 

business which operated or would operate as a fraud or deceit upon any persons, 

including purchasers or sellers of the securities.  Defendant knew, or was reckless in 

not knowing, that he employed devices, schemes and artifices to defraud and engaged 

in transactions, practices or courses of conduct that operated as a fraud on the 

investing public by the conduct described in detail above, including, among other 

things, engaging in a fraudulent prime bank stock offering scheme. 

28. By reason of the conduct described above, Defendant willfully violated, 

and aided and abetted violations of, Exchange Act Section 10(b) [15 U.S.C. § 78j(b)] 

and subsections (a) and (c) of Exchange Act Rule 10b-5 [17 C.F.R. § 240.10b-5]. 

THIRD CLAIM FOR RELIEF 

Violations of Securities Act Sections 5(a) and 5(c) 

29. Paragraphs 1 through 28 are re-alleged and incorporated by reference. 

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30. By reason of the conduct described above, Defendant, directly or 

indirectly, willfully violated, and aided and abetted violations of, Securities Act 

Sections 5(a) and 5(c) [15 U.S.C. §§ 77e(a) and 77e(c)], by selling securities using 

the means or instruments of transportation or communication in interstate commerce 

or of the mails without a registration statement that has been filed and is effective and 

the transaction was not effected pursuant to a valid exemption from registration. 

FOURTH CLAIM FOR RELIEF 

Defendant Aided and Abetted Violations of Sections 5(a), 5(c), 17(a)(1), and 

17(a)(3) of the Securities Act and Section 10(b) of the Exchange Act  

and subsections (a) and (c) of Rule 10b-5 

31. Paragraphs 1 through 30 are re-alleged and incorporated by reference. 

32. By reason of the conduct described above, Tahmazian’s co-schemer 

violated Sections 5(a), 5(c), 17(a)(1), and 17(a)(3) of the Securities Act and Section 

10(b) of the Exchange Act and subsections (a) and (c) of Rule 10b-5 by knowingly 

engaging in a “prime bank” fraudulent scheme to defraud unsuspecting investors of at 

least $6 million. 

33. By reason of the conduct described above, Defendant knowingly 

provided substantial assistance to and thereby aided and abetted his co-schemer in his 

violations of Sections 5(a), 5(c), 17(a)(1), and 17(a)(3) of the Securities Act [15 

U.S.C. §§ 77e(a), 77e(c), 77q(a)(1), and 77q(a)(3)] and Section 10(b) of the 

Exchange Act [15 U.S.C. § 78j(b)] and subsections (a) and (c) of Rule 10b-5 [17 

C.F.R. § 240.10b-5]. 

PRAYER FOR RELIEF 

WHEREFORE, the Commission respectfully requests that the Court: 

(a) Issue findings of fact and conclusions of law that Defendants committed 

the alleged violations; 

(b) Issue a judgment, in a form consistent with Rule 65(d) of the Federal 

Rules of Civil Procedure, permanently enjoining Defendant, and his respective 

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officers, agents, servants, employees and attorneys, and those persons in active 

concert or participation with any of them, who receive actual notice of the order by 

personal service or otherwise, and each of them, from violating, or aiding and 

abetting violations of, directly or indirectly, Securities Act Sections 5(a), 5(c), 

17(a)(1) and 17(a)(3) [15 U.S.C. §§ 77e(a), 77e(c), 77q(a)(1) and 77q(a)(3)], 

Exchange Act Section 10(b) [15 U.S.C. § 78j(b)], and Subsections (a) and (c) of 

Exchange Act Rule 10b-5 [17 C.F.R. § 240.10b-5]; 

(c) Order Defendant to account for and disgorge all ill-gotten gains from his 

illegal conduct, together with prejudgment interest thereon;  

(d) Order Defendant to pay civil penalties pursuant to Securities Act Section 

20(d) [15 U.S.C. § 77t(d)] and Exchange Act Section 21(d)(3) [15 U.S.C. § 

78u(d)(3)];  

(e) Retain jurisdiction of this action in accordance with the principles of 

equity and the Federal Rules of Civil Procedure in order to implement and carry out 

the terms of all orders and decrees that may be entered, or to entertain any suitable 

application or motion for additional relief within the jurisdiction of this Court; and 

(d) Grant such other and further relief as the Court deems just and 

appropriate.  
Dated:  February 11, 2016  Respectfully submitted, 
 
 

/s/ John W. Berry     
John W. Berry 
Ansu N. Banerjee  
U.S. Securities and Exchange Commission 
444 South Flower Street, Suite 900  
Los Angeles, CA 90071  
Tel:  (323) 965-3890 (Berry) 
        (323) 965-3313 (Banerjee) 
  
Counsel for Plaintiff U.S. Securities and 
Exchange Commission  

 

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