Long Island Business News is reporting that an investor has been charged with a $74M fraud that allegedly diverted money from investors to help pay the mortgage on his brother-in-law's project, The Panoramic View Oceanfront Residences. The SEC recently filed a complaint that Raymond Callahan, head of Horizon Global Advisors, used inflated promissory notes for five off-shore funds to hide his below-board financial maneuvering.
Curbed readers might recall that Distinctive Ventures?the company run by Mr. Callahan's B-I-L, Adam Manson?purchased the cooperative rights to Panoramic View back in 2007 with the intention of converting the motel into high-end co-ops. However, according to the SEC filling, not many of the listings have sold since the real estate bubble burst. Distinctive Ventures fell behind on their mortgage and Mr. Callahan "diverted about $21.8 million of investors’ money without their knowledge from the funds to the Panoramic project between 2007 to 2012."
The SEC also alleges that Mr. Callahan commingled investor funds, gave false assurances to his investors that no laws had been broken when announcing the investigation and failed to disclose that the "Financial Regulatory Industry Authority barred him from associating with any FINRA member."
When a court froze Callahan and his advisory firms' $6.5M in assets, the SEC noted that they were more than $50M short of what Mr. Callahan had on the books.
· Long Island financial adviser charged in $74M fraud [Long Island Business News]