Former New York police department sergeant James Monahan, owner of a real estate investment company called Panam Management Group, who used his prior police service as a badge of trustworthiness and reason to invest with him, was sentenced to 58 months in prison, according to a release from Preet Bharara, the United States Attorney for the Southern District of New York.
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, according to the release. He was sentenced by U.S. District Judge John G. Koeltl.
Here is what happened according to the indictment, statements made during the 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, he 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 Shortly after the deposits were made, the funds were improperly withdrawn from the account by Adams without disclosure to investors, according to the release.
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.
You can read the full release from the U.S. Attorney here.
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