N.Y. fund manager pleads guilty in $100M Ponzi case

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CENTRAL ISLIP, N.Y. (AP) — A New York investment fund
manager has admitted stealing nearly $100 million of investors’ money in
a Ponzi scheme that helped fund his interest in a Hamptons resort.
Brian
Callahan, of Old Westbury, pleaded guilty Tuesday in U.S. District
Court in Central Islip to securities fraud and wire fraud. He could face
up to 20 years in prison on each count when he is sentenced on Aug. 8.
Federal prosecutors indicted the 44-year-old Callahan and his brother-in-law, Adam J. Manson, in August.

Callahan
was accused of raising more than $118 million from at least 40
investors between 2006 and 2012. Despite assuring the investors the
money would be invested in mutual funds, hedge funds and other
securities, Callahan "siphoned off" about $96 million, prosecutors said.
Among
the victims of the scheme were the Montauk, N.Y., volunteer fire
department and a Maryland investor, who reported losing $11 million.
Prosecutors said Callahan fraudulently diverted $600,000 in fire
department’s funds to the Panoramic View.
Besides the Montauk
resort, Callahan also purchased expensive cars and homes in Old Westbury
and Westhampton, N.Y. He also sent fake account statements to investors
claiming their investments were performing well.
Some of the
money was used to purchase the Panoramic View, described in court papers
as "an unprofitable 117-unit beachfront resort and residence
development in Montauk, N.Y."
The resort, on the far eastern tip
of Long Island, is co-owned by Manson, who was charged with lying to an
auditor looking into Callahan’s investment funds, allegedly providing
fake documents, bogus promissory notes and doctored balance sheets.
"To
conceal their status as business failures, the defendants employed all
the tricks in the typical con man’s bag," U.S. Attorney Loretta Lynch
said in announcing the charges. "They created fake documents, stole a
person’s identity and engaged in forgery. The defendants allegedly lied
to the lender, they lied to the auditor, and Callahan repeatedly lied to
his investors."
The case against Manson, who has pleaded not
guilty, is pending, according to a spokesman for the U.S. Attorney’s
office. Prosecutors say he and Callahan co-owned the Montauk resort.
Manson is accused of lying to an independent auditor about where the
money for the resort came from. He is accused of providing fake
documents, including bogus promissory notes and doctored balance sheets,
to the independent auditor.
Callahan also faces millions in fines, and authorities have taken action to seize the resort and other
homes he owns.
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