An Old Westbury man has benn sentenced to 12 years in prison for his part in a $96 million Ponzi scheme.
Brian R. Callahan, 47, of Old Westbury was sentenced in federal court Sept. 15 to a dozen years in prison and was ordered to pay $67.6 million in restitution. Callahan pleaded guilty in April 2014 to one count each of securities fraud and wire fraud.
“For years, Brian Callahan peddled lies to unsuspecting investors, causing some to lose their life savings, and to delay their retirements,” Acting United States Attorney Rohde said in a statement. “Callahan has now been held to account for his deceit and the harm he caused.”
According to court documents, Callahan raised more than $118 million between December 2006 and February 2012 from at least 40 investors for four investment funds he managed.
Callahan diverted some of the misappropriated $96 million toward the Panoramic View Resort and Residences, a 117-unit beachfront property in Montauk bought in January 2007 for $38 million by Callahan and his brother-in-law, Adam Manson, 45, also of Old Westbury.
An estimated $12.1 million of those monies were from the investment funds, and another $17 million of investors’ money was used to make payments on acquisition and construction loans for the property.
“Brian Callahan, assisted by Adam Manson, orchestrated one of the largest Ponzi schemes in Long Island history,” U.S. Attorney Robert Capers said in a statement.
Callahan paid himself approximately $6 million, purchasing homes in Old Westbury and Westhampton while sending fake account statements to investors showing their funds were performing well.
In December 2015, U.S. Eastern District Judge Arthur D. Spatt ordered the forfeiture of $40 million in proceeds from the sale of the Panoramic View property.
“Victims of Ponzi schemes are seldom made whole, both emotionally and financially,” said IRS Special Agent-in-Charge Shantelle Kitchen said in a statement. “It is our hope, however, that the proceeds from this forfeiture bring some financial relief to the victims, along with a measure of closure.”
