UPDATE: Montauk Fire Department Invested Fund Money With Men Accused of $96 Million Ponzi Scheme, Department Did Not Lose Money



According to the U.S. Attorney’s office, Mr. Callahan allegedly solicited a $600,000 investment from the Montauk Fire Department by promising the department’s money in mutual funds and other securities. Instead, he diverted the fire department’s funds to the Panoramic View and sent bogus account statements that showed the the funds had been invested in mutual funds. The money was the department’s scholarship fund, which underwrites the scholarships it gives to high school graduates four times a year.

Montauk Fire Department Chief Richard Schoen said on Friday morning that the department did not lose “a single penny of the scholarship fund.”

He said about six years ago the department invested with Mr. Callahan, on the recommendation of a fire department member who had been getting “great returns,” but decided to pull its money when questions arose in the membership about where all the money was being invested and if it was being put into rotating stocks. He said the fund manager couldn’t give clear answers.

“Nobody was comfortable,” he said. “I’m glad we did what we did and got out of it.”

Once the membership voted to remove all the funds, all $600,000 was returned a month later. It is now invested in bank CDs.

“We have more knowledge now than perhaps we had then,” Chief Schoen said about the department’s investment strategies. “No harm no foul, it took place six years ago.”


Two Old Westbury men were charged on Thursday in connection with a $96 million Ponzi scheme that used funds collected in the scheme to pay for Montauk’s Panoramic View Resort & Residences, according to a press release from the U.S. Attorney’s office. The government seized more than $1 million in alleged criminal proceeds and moved to forfeit the men’s interest in the resort.

Brian R. Callahan, 43, and Adam J. Manson, 41, who are brothers-in-law, were charged with conspiracy to commit securities and wire fraud for their roles in operating the scheme. Both pleaded not guilty in a Central Islip courtroom on Thursday afternoon.

According to the press release, Mr. Callahan raised more than $118 million from at least 40 investors in connection with four different investment funds that he was overseeing as an investment fund manager. He allegedly told his investors that their money would be invested in mutual funds, hedge funds and other securities, but instead $96 million was misappropriated and put into the large-scale Ponzi scheme. He was released on a $2 million bond secured by $500,0000 equity in three homes owned by his sister and father.

Mr. Manson allegedly defrauded a New York-based lending institution that had loaned him more than $45 million for his real estate development project at Panoramic View. He was released on a $1 million bond secured by $500,000 in equity in his father’s home.

If convicted, the defendants each face a maximum sentence of 20 years imprisonment on each of the charges, five years in prison on the conspiracy to commit securities fraud count, and Mr. Callahan faces two years in prison for each aggravated identity theft count. Each many be fined up to $5 million for each securities fraud counts, $250,000 for each wire fraud count and $250,000 for each aggravated identity theft count.

They are due back in court on September 30 at 10 a.m.

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