A Century City resident was recently arrested by FBI special agents after he was charged with running a Ponzi scheme and defrauding a victim of millions of dollars that he used to pay back earlier victims.

Shervin Neman, who also goes by the name Shervin Davatgarzadeh, 31, was arrested pursuant to a three-count fraud indictment that alleges he caused victims to suffer losses of more than $3 million. The indictment alleges that Neman claimed to be a successful investor who made significant profits, but actually operated a Ponzi scheme from summer 2010 through last June by soliciting funds from investors with false claims that their money would be used to purchase foreclosed real estate and stocks. Instead of using investor funds to make investments, the indictment alleges that Neman was spending most of the victims’ investment funds on personal expenditures, and to repay other victims.

The federal Securities and Exchange Commission filed a civil complaint against Neman and his company, Century City-based Neman Financial, Inc., on April 11, 2012. The lawsuit alleged that Neman was operating a multi-million dollar Ponzi scheme that was targeting primarily members of the Persian-Jewish community in Los Angeles. Subsequently, a federal judge issued orders prohibiting Neman from engaging in further financial transactions related to the scheme.

The month after the SEC filed its lawsuit, Neman solicited $2 million from an unidentified victim with false promises that he could obtain pre-IPO shares in Facebook. Neman allegedly used the funds to pay earlier victims and the law firm representing him in the SEC action. The defendant is currently charged with two counts of wire fraud and one count of mail fraud.