Weather Alert  

HIGH RIP CURRENT RISK REMAINS IN EFFECT THROUGH THIS EVENING ...High Rip Current Risk through this Evening... * LOCATIONS...Southern Nassau, Southern Queens, Kings (Brooklyn), Southeastern Suffolk and Southwestern Suffolk. * TIMING...Through this evening. * SURF ZONE IMPACTS...Very strong rip currents will be dangerous to anyone who enters the surf.

Two Old Westbury Residents Arrested for Alleged Ponzi Scheme

LongIsland.com

The two brother-in-laws, Brian Callahan and Adam Manson, ran their Ponzi scheme to the ground and were arrested by the Feds on Thursday.

Print Email
Two Old Westbury brother-in-law’s $96 million Ponzi scheme came to an end Thursday. Brian Callahan, 43, an investment fund manager and Adam Manson, 41, a real estate developer, were arrested at their homes by FBI agents and charged with conspiracy to commit securities and wire fraud.
 
Callahan promised more than 40 investors their money would be invested in mutual funds, hedge funds, and low-risk securities. What he really did with their money was  run the Ponzi scheme with Manson. They bought expensive cars and lived in homes in Long Island’s ritziest areas like Old Westbury and Westhampton. Callahan and Manson's main investment was the Panoramic View Beachfront Resort and Residence Development. Their co-ownership of the Panoramic View  in Montauk was a flop though as it was utterly unprofitable.
 
“As alleged, the defendants used one of Long Island’s landmarks, the Panoramic View Resort, to perpetrate a wide-ranging fraud,” said United States Attorney Loretta E. Lynch. “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.”
 
When things started to go south and investors needed to be paid partial redemptions, Callahan took money from other investments and used that money to pay off the investors. He also sent out fake account statements to investors that showed their funds were indeed invested and doing well. Manson managed the Panoramic View and tried covering Callahan’s back by providing an independent auditor fake documents, promissory notes, and doctored balance sheets. Despite constantly losing money and covering their tracks they still continued to use other people's money as if it were their own. 
 
The two took from anybody who was willing to listen and give them money. In one instance they took $600,000 from a Long Island fire department. Those six figures Callahan and Manson took from the fire department went to the failing resort. Like many of the other investors, he sent them false documents stating their money was being invested in mutual funds. On another occasion Callahan also accepted $11 million from a Maryland resident and promised to put their money in securities. 
 
Callahan and Manson face up to twenty years in prison on the allegations of Security Fraud, Wire Fraud, and Conspiracy to Commit Securities Fraud.  Callahan also faces two more years of prison time for each aggravated identity theft count. Federal investigators are looking to forfeit the Panoramic View resort and their homes in Old Westbury and Westhampton.
 
[Source: FBI, Wall Street Journal]