The Canadian Press - ONLINE EDITION

2 arrested in NY in alleged $100M Ponzi scheme; authorities say money used to invest in resort

  • Print

CENTRAL ISLIP, N.Y. - A New York investment fund manager and his brother-in-law were arrested Thursday and charged with running a multimillion-dollar Ponzi scheme that siphoned investors' money in order to finance the men's interest in an eastern Long Island condominium resort.

Among the bilked investors was an unnamed volunteer fire department on Long Island, which lost $600,000, court papers said. An unidentified Maryland investor lost $11 million, according to the indictment.

Brian R. Callahan, 43, and Adam J. Manson, 41, were charged in an indictment unsealed in U.S. District Court in Central Islip with wire fraud, securities fraud and conspiracy to commit securities fraud. Callahan also faces two counts of identity theft, according to the indictment.

Attorneys for both men entered not guilty pleas at their arraignments Thursday. Callahan was released on $2 million bond after his relatives put up three of their Southington, Conn., homes as collateral. Manson was released on $1 million bond; his father put up his Old Westbury, N.Y., home as collateral.

The two men also were ordered to surrender their passports.

Magistrate Judge A. Kathleen Tomlinson made an exception to a standard order requiring the two men to stay away from each other, saying because they were related by marriage — Callahan is married to Manson's sister — they would be permitted to attend family functions while awaiting trial. Tomlinson, however, instructed both men they were not to discuss the case outside the presence of their attorneys.

Neither man spoke to reporters after the court proceeding.

Callahan, Manson and Callahan's wife, Sheri Manson Callahan, were named in a 2012 Securities and Exchange Commission complaint related to the same scheme. Manson Callahan was not named in the federal criminal indictment unsealed Thursday.

Callahan raised more than $118 million from at least 40 investors between 2006 and 2012, federal prosecutors say. Despite assuring the investors the money would be invested in mutual funds, hedge funds and other securities, Callahan "siphoned off" about $96 million, prosecutors said.

Some of the money was used to purchase the Panoramic View, described in court papers as "an unprofitable 117-unit beachfront resort and residence development in Montauk, N.Y." The resort, on the far eastern tip of Long Island, is co-owned by Manson, who is charged with lying to an auditor looking into Callahan's investment funds, allegedly providing fake documents, bogus promissory notes and doctored balance sheets.

Callahan used some proceeds from the alleged scheme to keep the Ponzi scheme afloat by making partial payments to early investors, prosecutors said. He also allegedly purchased luxury items, including expensive cars and homes in Old Westbury and Westhampton, N.Y.

He also allegedly sent fake account statements to investors claiming their investments were performing well.

If convicted, the defendants could face more than 20 years in prison and millions of dollars in fines. Prosecutors also said they intend to commence forfeiture proceedings on the Panoramic View resort, as well as Callahan's Old Westbury residence and Manson's beachfront condominium in Westhampton.

Fact Check

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories?
Please use the form below and let us know.

* Required
  • Please post the headline of the story or the title of the video with the error.

  • Please post exactly what was wrong with the story.

  • Please indicate your source for the correct information.

  • Yes

    No

  • This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.

  • Cancel

Having problems with the form?

Contact Us Directly
  • Print

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.

letters

Make text: Larger | Smaller

LATEST VIDEO

Weekend springtime weather with Doug Speirs - Apr 19

View more like this

Photo Store Gallery

  • Goslings with some size head for cover Wednesday afternoon on Commerce Drive in Tuxedo Business Park - See Bryksa 30 Goose Challenge- Day 12- May 16, 2012   (JOE BRYKSA / WINNIPEG FREE PRESS)
  • A Canada goose protects her nest full of eggs Monday on campus at the University of Manitoba- Standup photo- Apr 30, 2012   (JOE BRYKSA / WINNIPEG FREE PRESS)

View More Gallery Photos

Poll

Do you agree with the suspensions levied against three bantam hockey players for abusing game officials?

View Results

View Related Story

Ads by Google