Crime & Safety

Feds: Westhampton Homeowner Charged in $100 Million Ponzi Scheme

Brian R. Callahan and Adam J. Manson allegedly funneled money into Montauk property they owned and to pay for their lavish lifestyles.

Brothers-in-law — one of whom has a condominium in Westhampton — were charged Thursday as part of a nearly $100 million Ponzi scheme that involved funds to buy the Panoramic View Resort & Residences in Montauk, according to the US Attorney's office.

A 24-count indictment charging Brian R. Callahan, a 43-year-old investment fund manager, and Adam J. Manson, a 41-year-old real estate developer, was unsealed in federal court in Central Islip on Thursday morning. Both men lived in Old Westbury, but Manson owned a Westhampton condo.

The defendants pleaded not guilty to conspiracy to commit securities and wire fraud. Arraigned on Thursday afternoon, Manson was released on a $1 million bond secured by $500,000 in equity in his father's home. Callahan was released on a $2 million bond secured by $500,0000 equity in three homes owned by his sister and father. 

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Over $1 million of the alleged criminal proceeds have been seized and the Eastern District of the US Attorney's office has asked that the defendants forfeit their interest in the Panoramic View.

In March 2012, the Securities and Exchange Commission filed a complaint alleging Callahan funneled his investors' cash to keep Montauk's afloat during the recent real estate slump. At the time, they presented only a portion of what the feds called a $74 million fraud.

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The results of the latest investigation revealed that Callahan raised more han $118 million from at least 40 investors for four investment funds he managed between December 2006 and February 2012.

Investigators allege that "millions of dollars" was funneled towards the Panoramic View that they called "an unprofitable 117-unit beachfront resort and residence development" that Callahan owned with his brother-in-law.

The money was also used to purchase luxury cars, houses in Old Westbury and Manson's condominium in Westhampton, the US Attorney's office said.

“As alleged, the defendants used one of Long Island’s landmarks, the Panoramic View Resort, to perpetrate a wide-ranging fraud,” US Attorney Lorretta Lynch said. “Callahan gave his word that he would invest his clients’ funds safely and responsibly in established vehicles. Instead, he simply stole the funds to prop up his partner’s failing investment. To conceal their status as business failures, the defendants employed all the tricks in the typical con man’s bag. 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 lies stop now."

The investigation also involved the FBI, the IRS, the Securities and Exchange Commission and the British Virgin Islands Financial Investigation Agency.

FBI Assistant Director-in-Charge Venizelos said, "Mr. Callahan was so indiscriminate, he even stole from a Long Island Fire Department. Today, the game is up."

Callahan allegedly took a $600,000 investment from a fire department meant for mutual funds, and instead put the money into the Panoramic View, the statement said. He reportedly created account statements to keep the scheme going. Robert Nardoza, a spokesman for the US Attorney's office, declined to name the fire department.

Manson, who managed the Panoramic View, is also accused of defrauding a New York-based lending institution that loaned him more than $45 million for the Panoramic View.

Callahan and Manson face a maximum of 20 years in prison on each of the securities fraud, wire fraud, and conspiracy to commit wire fraud counts, and five years on the conspiracy to commit securities fraud count. They also could be fined $5 million for each of the securities fraud counts, and $250,000 on other charges.

The defendants are due back in court on Sept. 13 at 10 a.m. 


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