Former NYPD Sergeant Who Participated in $4.7 Million Real Estate Fraud Sentenced to 58 Months in Prison
Preet Bharara, the United States Attorney for the Southern District of New York announced that JAMES MONAHAN, the owner of a real estate investment company called Panam Management Group, Inc., was sentenced to 58 months in prison. MONAHAN previously pled guilty on May 29, 2013, to one count each of wire fraud, mail fraud and conspiracy to commit wire and mail fraud for operating a fraudulent real estate scheme. In connection with the scheme, MONAHAN obtained approximately $4.7 million from investors for a real estate development project he claimed to be constructing in the Dominican Republic and then misappropriated those funds. The real estate project was never developed and investors lost all of their money. He was sentenced today by U.S. District Judge John G. Koeltl.
According to the Indictment, statements made during MONAHAN’s guilty plea proceeding, and a Complaint previously unsealed in Manhattan federal court:
Beginning in early 2008, MONAHAN, a former sergeant in the New York City Police Department (“NYPD”), negotiated with another real estate investment company to solicit investors for a project he claimed to be constructing in the Dominican Republic. During the negotiations, MONAHAN repeatedly touted his prior service with the NYPD as proof of his trustworthiness and as a reason to invest in the project.
In connection with the project, MONAHAN and a co-conspirator, EDWARD ADAMS, who was a New York based attorney, executed agreements that required investor funds to be deposited into escrow accounts that were to be managed by ADAMS. The agreements required that the majority of the funds be deposited in an account to which the defendants would not have access. From October 2008 through February 2009, approximately $4.7 million in investor funds was deposited into the escrow accounts. Shortly after the deposits were made, the funds were improperly withdrawn from the account by ADAMS without disclosure to investors.
In an effort to hide the fact that the funds had been removed from the escrow account, in May 2009, MONAHAN mailed a forged letter on the stationary of a major bank to investors claiming that their money was safely deposited with that bank. In fact, by June 2009, all of the investor funds had been taken from the escrow accounts. At that point, almost no work had been performed on the purported project in the Dominican Republic and no money was returned to investors.
In addition to the prison term, Judge Koeltl sentenced MONAHAN, 44, of New York, New York, to three years of supervised release. MONAHAN was also ordered to forfeit $4.7 million.
Mr. Bharara praised the work of the Federal Bureau of Investigation and the Securities and Exchange Commission.
This case is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Since the inception of FFETF in November 2009, the Justice Department has filed more than 12,841 financial fraud cases against nearly 18,737 defendants including nearly 3,500 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney John T. Zach is in charge of the prosecution.