James Monahan, 44, New York, New York, owner of real estate investment company Panam Management Group, Inc., and a former sergeant in the New York City Police Department, was sentenced to 58 months in prison for obtaining approximately $4.7 million from investors for a real estate development project he claimed to be constructing and then misappropriated those funds. The real estate project was never developed and investors lost all of their money.
He was sentenced by U.S. District Judge John G. Koeltl.
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.
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 Shortly after the deposits were made, the funds were improperly withdrawn from the account by Adams without disclosure to investors.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 to 3 years of supervised release. Monahan was also ordered to forfeit $4.7 million.
Preet Bharara, the United States Attorney for the Southern District of New York announced the prison term.
Mr. Bharara praised the work of the Federal Bureau of Investigation and the Securities and Exchange Commission.
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.