New York-based Brian Callahan has pleaded guilty of managing a Ponzi scheme worth $96 million. He used the money to purchase luxury cars and homes. According to prosecutors, Mr. Callahan also bought a 117-unit resort at the eastern side of Long Island.
Mr. Callahan, 44, had made a guilty plea for wire and securities fraud. According to the office of the US Attorney located in Brooklyn, if convicted, he can be prosecuted for a prison term that could last 40 years.
Loretta Lynch, the US Attorney in Brooklyn of New York, published a statement that Callahan, a resident of Old Westbury in New York, had collected an excess of $118 million. He managed to do it by collating the deposits of about 40 investors. They were told by Mr. Callahan that the money will be invested in mutual funds and hedge funds. Ms. Lynch, underlining the severity of the crimes, mentioned that Mr. Callahan employed deceit and lies, and also misled investors. He also accepted investments given by the local fire office to fund his lavish lifestyle. He funded a resort on the beach in Montauk locality of New York. His brother in law, Adam Manson, was the joint owner of the resort.
Officials are taking action to seize the historic Panoramic View Resort and Residence. It is situated on a 10-acre area overlooking the sea. Adam Manson is also a resident of Old Westbury and similar charges were brought against him due to the same Ponzi scheme. Manson has mentioned in his plea that he is not guilty. He will appear in front of a judge in May.
According to the indictment, Callahan and Manson bought Panoramic View in 2007. Their plan was to sell the units to buyers in the form of co-ops. Since the unit sales were not as per expectations, they began to move towards investment funds so that the resort could stay financially afloat. The main cause of the units not being taken by anyone were the high prices. The most expensive options in the resort were available at $6.5 million.
Robert Knuts, Callahan’s lawyer, did not immediately respond to media calls made to his office. The case in question US. v. Callahan, is currently being held in the US District Court, in New York’s Eastern District.
Robert Anello, the attorney of Manson did not comment to Callahan’s plea. He mentioned that Manson is working in a diligent manner so that the resort remains open.