19 September 2017

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$96 Million Ponzi Scheme Fund Manager Sentenced to 12 years Jail

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.

The sentence was announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, and William F. Sweeney Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI).

 “For years, Brian Callahan peddled lies to unsuspecting investors, causing some to lose their life savings, and to delay their retirements,” stated Acting United States Attorney Rohde.  “Callahan has now been held to account for his deceit and the harm he caused.”

Ms. Rohde expressed her grateful appreciation to the Internal Revenue Service, Securities and Exchange Commission, and the British Virgin Islands Financial Investigation Agency for their cooperation and assistance in the investigation and prosecution of this case.

“Callahan not only stole money from his investors, but their trust as well,” stated FBI Assistant Director-in-Charge Sweeney.  “It’s disheartening to think there are people out there who would deliberately take from others for their own personal gain, but today’s sentence reminds us how this game plays out in the end. May it be a message to other crooks that this type of behavior won’t be tolerated.”

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.

This prosecution was the result of efforts by the Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.

The government’s case is being handled by the Office’s Long Island Criminal Division. Assistant United States Attorneys Christopher C. Caffarone, Brian D. Morris and Karin K. Orenstein are in charge of the prosecution.

The Defendant: BRIAN R. CALLAHAN, Age: 48, Old Westbury, New York
E.D.N.Y. Docket No. 13-CR-453

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Tuesday, September 19, 2017

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rudraprayaga September 23, 2017  

Whoever is a fraud should get the punishment equal to his fraudulence.good info.