Resort Proceeds Forfeited for Fraud Restitution

(CN) - Forty million dollars from the sale of a New York beachfront resort may be used as restitution for victims of a Ponzi scheme, the Justice Department said Thursday.

U.S. District Judge Arthur Spatt ordered the forfeiture of proceeds from the sale of Panoramic View Resort & Residences, a 117-unit beachfront resort and residential development in Montauk, N.Y.

Distinctive Ventures LLC bought the property in 2007 using money from a $96 million Ponzi scheme, according to the U.S. Department of Justice.

In 2012, the government filed a civil forfeiture case against the company's shares in Panoramic View, as well as other assets traceable to owners Brian Callahan and Adam Manson.

Callahan and Manson pleaded guilty last year to securities fraud and wire fraud, and they consented to the forfeiture of Panoramic View.

Spatt directed the sale of Panoramic View shares to preserve their potential value to the government and fraud victims, according to a Justice Department press release.

The property was sold to winning bidder Panoramic Partners LLC on Dec. 7. $40.3 million was forfeited to the government pursuant to a decree issued by Spatt, securing the money's availability to repay Ponzi scheme victims.

Eastern New York U.S. Attorney Robert Capers said in a statement Thursday that law enforcement officials "were able to maximize the pool of funds potentially available for distribution to victims of this fraud."

"Brian Callahan, assisted by Adam Manson, orchestrated one of the largest Ponzi schemes in Long Island history. Today we announce the liquidation of the proceeds of that scheme," Capers said. "This unprecedented sale exemplifies the importance of using civil forfeiture to ensure that assets will be available to repay fraud victims."

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