SEC: $74 Million Fraud Tied to Montauk Resort

The Securities and Exchange Commission filed a complaint Monday alleging Old Westbury financial advisor Brian Callahan funneled his investors' cash to keep Montauk's afloat during the recent real estate slump.

Though that represented only a portion of what feds are calling a $74 million fraud.

According to a report in Long Island Business News, Callahan sent at least $21.8 million of his investors' money to support Panoramic, a project run by Great Neck-based Distinctive Ventures, which is owned by Callahan's brother-in-law, Adam Manson.

From the report:

Distinctive Ventures purchased cooperative rights to Panoramic in 2007 and had plans to convert the motel units to co-ops, sell them for a few million dollars each, payoff its bank loan and make a tidy profit, according to the complaint.

But since the real estate market downturn in 2008, Distinctive hasn’t sold many of the co-ops, the SEC said, causing the developer to fall behind on loan payments. Callahan diverted about $21.8 million of investors’ money without their knowledge from the funds to the Panoramic project between 2007 to 2012, to help avoid foreclosure and operate the property.

Click here to read the full LIBN report.