Long Island Investment Fund Manager Sentenced to 12 Years Imprisonment For $96 Million Ponzi Scheme

[nitpicker]

https://www.justice.gov/usao-edny/pr/long-island-investment-fund-manager-sentenced-12-years-imprisonment-96-million-ponzi

Department of Justice
U.S. Attorney’s Office
Eastern District of New York

FOR IMMEDIATE RELEASE
Friday, September 15, 2017

Long Island Investment Fund Manager Sentenced to 12 Years’ Imprisonment For $96 Million Ponzi Scheme

Brian Callahan Diverted Investor Funds to Purchase Panoramic View Beachfront Resort in Montauk and Fund Lavish Lifestyle

Earlier today, at the federal courthouse in Central Islip, New York, Senior United States District Judge Arthur D. Spatt sentenced Brian R. Callahan to 12 years’ imprisonment and three years’ supervised release, and ordered that he pay approximately $67.6 million in restitution following his April 29, 2014 guilty plea to securities fraud and wire fraud.
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According to court filings and statements made in court, between December 2006 and February 2012, Callahan raised more than $118 million from at least 40 investors in connection with four different investment funds that he managed. He had assured those investors that their money would be invested in mutual funds, hedge funds, and other securities. Instead of investing the money as he promised, Callahan misappropriated approximately $96 million and began to operate the investment funds as a large-scale Ponzi scheme. Among other things, Callahan diverted millions of dollars towards the Panoramic View, an unprofitable 117-unit beachfront resort and residence development in Montauk, New York, that he owned with his brother-in-law and co-defendant, Adam Manson. He also commingled the money from the various investment funds and used it to pay tens of millions of dollars in partial redemptions to his victim investors to keep the Ponzi scheme afloat. He paid himself approximately $6 million, which he used to purchase luxury homes in Old Westbury and Westhampton, New York, and luxury cars, including a Range Rover and a BMW, and to pay large credit card bills and dues associated with his golf club. To avoid detection and continue the scheme, Callahan sent fake account statements to investors that falsely showed that their funds were invested and performing well, and he repeatedly lied to his investors about both the nature and status of their investments. In December 2015, Judge Spatt entered a decree ordering the forfeiture of approximately $40 million in net proceeds from the sale of the Montauk property.
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