$96 Million Ponzi Scheme Supported Failing Montauk Resort

Investment fund manager Brian R. Callahan and real estate developer Adam J. Manson are in federal court in Central Islip, New York, for misappropriating $96 million of $118 million raised between 2006 and 2012 to support their extravagant lifestyles and fund the struggling Panoramic View Resort & Residences in Montauk, New York.

The Panoramic View is an unprofitable property co-owned by Callahan and Manson with 117 units in Montauk, New York. He initially borrowed $45 million from a lending institution to develop the ten acres the resort stands on. The units featured beachfront views, concierge service, porters, housekeeping, pool and beach attendants, heated pool, cabanas, fitness center, and private balconies. Brian R. Callahan diverted much of the $96 million to this property as the project struggled.

In one case, Callahan took $600,000 from a Long Island fire department and provided false papers indicating that the money was invested in mutual funds. As Callahan brought in more money, he also used it to pay back previous investors in an attempt to hide fraud. There is also evidence that in addition to funding the failing New York real estate project, the two men purchased luxury goods for themselves including cars and homes in Old Westbury and Westhampton, New York. 

The fate of the men and the Panoramic View is still uncertain, but Callahan and Manson will return to court on September 13. Of the 24 charges brought against them, they potentially face 20 years in prison, a $5,000,000 fine for each of their security fraud counts, and $250,000 for aggravated identity theft counts. The prosecution is also trying to have Callahan and Manson relinquish their Panoramic View Cooperative units, home in Old Westbury, and beachfront condo in Westhampton.