Former NYPD Sergeant Pleads Guilty In Manhattan Federal Court To $4.7 Million Real Estate Fraud Scheme
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., and a former sergeant in the New York City Police Department (“NYPD”), pled guilty today in Manhattan federal court to wire fraud, mail fraud, and conspiracy to commit wire and mail fraud in connection with his participation in a fraudulent real estate scheme. As part of that scheme, MONAHAN misappropriated approximately $4.7 million he obtained from investors for a real estate development project he claimed to be constructing in the Dominican Republic. The real estate project was never developed and investors lost all of their money. MONAHAN pled guilty before U.S. District Judge John G. Koeltl.
Manhattan U.S. Attorney Preet Bharara said: “Like the real estate development project he promoted, James Monahan was a phony who exploited his past association with the NYPD to woo investors, only to trade that badge of pride for a badge of fraud. There is a price to be paid for defrauding investors, and this Office will continue its work to prosecute and punish bogus professionals.”
According to the Indictment, statements made during today’s guilty plea proceeding, and a Complaint previously unsealed in Manhattan federal court:
Beginning in early 2008, MONAHAN 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 were 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 Shortly after the deposits were made, the funds were improperly withdrawn from the account by Adams without disclosure to investors.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, Monahan mailed a forged letter in May 2009 on the stationery of a major bank to investors claiming that their money was safely deposited with that bank. However, 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.
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MONAHAN, 43, of New York, New York, pled guilty to one count each of wire fraud, mail fraud, and conspiracy to commit wire and mail fraud, each of which carries a maximum potential penalty of 20 years in prison and a fine of $250,000, or twice the gross gain or loss from the offense.
MONAHAN is scheduled to be sentenced by Judge Koeltl on October 4, 2013 at 10 a.m. Adams is scheduled to go to trial starting July 8, 2013.
Mr. Bharara praised the work of the Federal Bureau of Investigation.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Mr. Bharara serves as a Co-Chair of the Securities and Commodities Fraud Working Group. The task force was established 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. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please 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.