An investment manager from New York who used almost $100m of client money earmarked for mutual funds to pay for his lavish life-style and fund ambitious property deals, has pleaded guilty to fraud.
Brian Callahan admitted that he had raised $96m (£57m, €69.3m) from around 40 investors, which was placed in six offshore entities to carry out, what has been described by a US attorney as, "one of the largest investment frauds in Long Island History".
Callahan pleaded guilty to securities and wire fraud, and could face up to 40 years in prison. He has also agreed to forfeit $67.4m of his takings through the scheme as well as reimburse those who lost money.
US Attorney, Loretta Lynch, said in a statement: "Through lies and deceit, he misled investors and stole investor funds, including investments from a local fire department, to support a lavish lifestyle and operate a multimillion-dollar Ponzi scheme."
Callahan, 44, used his clients' investments to keep the sprawling Panoramic View Resort and Montauk Residence afloat.
His brother-in-law, Adam Manson, who co-owns the Panoramic View Resort, which officials are moving to forfeit, was also indicted. Manson however pleaded not guilty and is expected back in court in May.
Callahan and Manson acquired the Panoramic view in 2007 in the hope that they would be able to sell off the units to individual buyers.
However, selling the units proved to be a difficult task, which led them to take money from Callahan's investment funds to help finance the resort, in classic Ponzi scheme fashion.