CENTRAL ISLIP, N.Y. (AP) — A New York investment fund manager and his brother-in-law, a real estate developer, were arrested Thursday on charges they ran a multimillion-dollar Ponzi scheme that siphoned investors' money in order to finance the men's interest in an eastern Long Island resort, prosecutors said.
Among the bilked investors was an unnamed volunteer fire department on Long Island, which lost $600,000, court papers said.
Brian R. Callahan, 43, and Adam J. Manson, were arrested Thursday at their homes, according to an FBI spokeswoman. The men were charged in a 24-count indictment unsealed in U.S. District Court in Central Islip with wire fraud, securities fraud and conspiracy to commit securities fraud. They were scheduled to be arraigned later Thursday. Their attorneys' names were not immediately available.
Callahan, Manson and Callahan's wife, Sheri Manson Callahan, were named in a 2012 Securities and Exchange Commission complaint related to the same scheme. Sheri Manson Callahan was not named in the federal criminal indictment unsealed Thursday.
Callahan raised more than $118 million from at least 40 investors between 2006 and 2012, federal prosecutors say. Despite assuring the investors the money would be invested in mutual funds, hedge funds and other securities, Callahan "siphoned off" about $96 million, prosecutors said.