An Old Westbury man pleaded guilty on Tuesday to charges of securities fraud and wire fraud stemming from a $96 million Ponzi scheme he was found to have run by siphoning financial investments into a floundering beachfront resort he operated in Montauk.
Brian R. Callahan, 44, faces up to 40 years in prison and the repayment of up to $96 million in restitution to victims he deceived into helping fund the Panoramic View Resort & Residences, prosecutors said.
Loretta Lynch, U.S. attorney for New York’s eastern district, said Tuesday that Callahan has agreed to forfeit $67.4 million – including the proceeds from the sales of his former residences in Old Westbury and Westhampton – as part of his plea agreement.
“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,” she said in announcing his plea. “Today’s guilty plea marks the end of Callahan’s schemes and his lavish lifestyle and demonstrates this office’s steadfast commitment to protect the investing public from fraud.”
Callahan was found to have funneled the money through six offshore accounts from December 2006 and February 2012, raising more than $118 million from approximately 40 investors, prosecutors said.
Though Callahan told his business partners their money would be invested in mutual funds, hedge funds and other securities entities, prosecutors said he redirected the money into the Panoramic View Resort & Residences, which he ran with his brother-in-law and co-defendant Adam Manson.
Callahan and Manson in August were indicted on 24 counts of conspiracy to commit securities and wire fraud in addition to identity theft charges.
The money, prosecutors said, was used to pay off partial redemptions of the initial investments in addition to purchasing various luxury items, including homes in Old Westbury and Westhampton.
Prosecutors said Callahan perpetually lied about the performance of his investors’ funds, providing them with falsified account statements and other data.
