The second defendant of an Old Westbury twosome accused of running a $96 million Ponzi scheme which allegedly used part of those proceeds to support the Panoramic View Resort in Montauk, pleaded guilty on Monday to conspiracy to commit securities fraud for engaging in the scheme.
According to a press release from the U.S. Attorney’s office, which charged him in August 2013, Adam J. Manson, 42, agreed to forfeit all unsold units at the Panoramic View, valued in excess of $60 million, and an additional $3.9 million in criminal proceeds. He faces up to five years in prison and the payment of approximately $96 million in restitution to his victims.
His brother-in-law, Brian Callahan, pleaded guilty on April 29 to one count of securities fraud and one count of wire fraud. Mr. Callahan faces up to 30 years in prison.
U.S. Attorney Loretta Lynch said Mr. Manson assisted his brother-in-law in orchestrating one of the largest Ponzi schemes in Long Island history.
“Today’s guilty plea, together with Callahan’s guilty plea … demonstrates this office’s dedication and commitment to aggressively pursue those who seek to defraud the investing public through lies and deceit,” she continued. “We hope that the guilty pleas provide some measure of relief and closure to the defrauded investors.”
According to the U.S. Attorney’s office, Mr. Manson and 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. They allegedly told their investors that their money would be invested in mutual funds, hedge funds and other securities, but instead they misappropriated $96 million to the large-scale Ponzi scheme, where early investors were simply paid with proceeds collected from new investors.
The Montauk Fire Department’s scholarship fund was a victim of the scheme, but Montauk Fire Department Chief Richard Schoen said last August that they had lost nothing.
Both Mr. Manson and Mr. Callahan will return to court on August 8 for their sentencing.