Shore War

It’s the war at the shore between older Midwest investors and two modern-day wannabe Great Gatsbys.

Adam Manson has a sprawling beachfront estate in Montauk that federal regulators charge was bought with ill-gotten cash from his brother-in-law’s Ponzi scheme, and he’s refusing to give it up, angering wronged investors.

The SEC charged the disbarred financial adviser Brian Callahan with funneling some of his clients’ $90 million into Manson’s Panoramic View property to keep it afloat.

They allege Manson created a paper trail of false promissory notes and false audits to help Callahan conceal the scheme.

The SEC alleges, “Callahan’s solicitation of investors involved material misrepresentations about the use of their money, the liquidity of their investments and the asset diversification.”

Callahan, who lives in posh Old Westbury, allegedly stole money that his clients thought was being managed by Pictet, a private Swiss bank, but ended up being laundered in Montauk, the SEC says.

A letter sent to investors by court-appointed receiver Steven Weinberg said the most recent offer for the property was $54 million by Ziel Feldman’s HFZ Capital Group, but Manson “would not sign the letter of intent, though the terms would have meant a possible recovery of $34 million for investors.

“Distinctive [Manson’s firm] has presented its own proposals of which the receiver raised questions . . . and many questions have remained unanswered. While I hope that practical minds will prevail, this has yet to be the case.”

Weinberg told investors the US attorney’s office has now filed a motion seeking court permission to sell the unsold shares of Panoramic View “to prevent the equity of the Panoramic View from being wasted and encumbered by unpaid interest.” The motion also seeks to obtain monthly accountings of incomes and expenses.

Documents filed in court on Thursday show Manson is fighting the government tooth and nail. The past due mortgage interest on Panoramic exceeded $1 million as of April 18 and continues at a rate of $4,382.14 a day.

One investor, Don Andruik, 61, who sold his oil-pipeline company and invested $740,000 with Callahan (through a Five Oceans Insurance policy in the Bahamas) said he thought his investment was secure because the money was with Pictet, but believes his investment was eventually diverted.

Andruik, who lives in Houston, now can’t afford medication he needs for MS (shots are $3,000 a month) nor a trip to visit his 97-year-old father who is in hospital.

Andruik is not confident he’ll get money back but is hoping to get some of it, “depending on how much they can sell Panoramic for.”

In a letter to the court in February, Andrew Frisch, Manson’s attorney, proposed that Distinctive Management, a company Manson operates, would purchase Panoramic for $56.2 million. That would pay off two mortgages, leaving $40 million to pay down loans made by Callahan’s brother-in-law to Distinctive.

Manson claims refinancing or sale of Panoramic won’t be difficult if the receiver agrees to the transaction.

But Weinberg said in documents that the proposal posed concerns and asked that the entity providing financing be disclosed. He said $58 million was due under the notes, and a total of $75 million was due to investors, including interest. Manson hasn’t responded.

Neither Manson nor his attorney returned calls requesting comment.