Fund Manager Brian Callahan Pleads Guilty In $96 Million Ponzi Scheme
On April 29, 2014, Brian Callahan pleaded guilty to one count of securities fraud and one count of wire fraud for operating a $96 million Ponzi scheme through his various offshore investment funds. Pursuant to his plea agreement with the government, Brian Callahan agreed to the forfeiture of $67.4 million, which includes proceeds from the sale of his former residence in Old Westbury, New York and a beachfront condominium in Westhampton, New York.
According to court filings and facts presented at the plea hearing, 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, and to purchase luxury items such as expensive cars and homes in Old Westbury and Westhampton, New York. 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.
Callahan faces up to 40 years in prison and the payment of approximately $96 million in restitution to the victims of his fraud.
“Brian Callahan used six offshore entities to perpetrate one of the largest investment frauds in Long Island history. Through lies and deceit, he misled investors and stole investor funds, including investments from a local fire department, to support a lavish lifestyle and operate a multi-million dollar Ponzi scheme. Today’s guilty plea marks the end of Brian Callahan’s schemes and his lavish lifestyle and demonstrates this Office’s steadfast commitment to protect the investing public from fraud,” stated United States Attorney Lynch.
For further information about ponzi schemes, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real South, Suite 202 North, Boca Raton, FL, (561) 416-8956, or by email at email@example.com. This information is provided as a general or informational service to clients and friends of Hamilton & Associates Law Group, P.A. and should not be construed as, and does not constitute legal advice on any specific matter, nor does this message create an attorney-client relationship. Please note that prior results discussed herein do not guarantee similar outcomes.
Hamilton & Associates | Securities Lawyers
Brenda Hamilton, Going Public Attorney
101 Plaza Real South, Suite 202 North
Boca Raton, Florida 33432
Telephone: (561) 416-8956
Facsimile: (561) 416-2855