Founder And Managing Director Of Tax Lien Investment Firm Charged With Bank Fraud And Wire Fraud

Press Release Founder And Managing Director Of Tax Lien Investment Firm Charged With Bank Fraud And Wire Fraud Monday, December 18, 2023 Share FacebookLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. XLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. LinkedInLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. Email For Immediate Release U.S. Attorney's Office, Southern District of New York John Arthur Hanratty, a New York-Licensed Attorney, is Charged with a Fraudulent Scheme in Connection with $20 Million of Commercial Lines of Credit Damian Williams, the United States Attorney for the Southern District of New York, and James Smith, Assistant Director in Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced today the arrest of JOHN ARTHUR HANRATTY for charges in connection with a fraudulent scheme to steal money from a Federal Deposit Insurance Corporation (“FDIC”)-insured bank through lines of credit totaling $20 million granted to HANRATTY’s municipal tax lien investment firm. HANRATTY was arrested this morning and is expected to be presented today before a U.S. Magistrate Judge in the District of Puerto Rico. U.S. Attorney Damian Williams said: “John Arthur Hanratty, a New York-licensed attorney and the founder of a multi-million-dollar municipal tax lien investment firm, allegedly stole money from a bank to obtain lines of credit totaling $20 million, which he misappropriated by paying back investors who had sued his firm. Thanks to this Office’s teamwork with the FBI, Hanratty is now facing serious criminal charges for his alleged fraud.” FBI Assistant Director in Charge James Smith said: “Fraudsters are very good at what they do. They are extremely convincing and will jump at every opportunity to defraud a new pool of potential victims. John Hanratty allegedly prioritized his own greed over decency and respect for the laws of our country. The FBI and our law enforcement partners remain dedicated to investigating and holding accountable those who flagrantly disregard our laws by seeking to enrich themselves at the expense of their victims.” According to the allegations in the Complaint unsealed today in Manhattan federal Court:[1] HANRATTY was the Founder and Managing Director of Ebury Street Capital, LLC (“Ebury Street Capital”), an investment firm with a portfolio primarily comprised of municipal tax liens. At all relevant times, HANRATTY served as the Managing Director and Principal for Ebury Street Capital, which manages two different funds known as Ebury Fund 1 and Ebury Fund 2. HANRATTY has been an attorney licensed to practice law in the State of New York since 2002 and has previously held legal and compliance positions at well-known investment firms and financial institutions, including serving as the Chief Compliance Officer and General Counsel for a trading broker dealer. Between 2017 and 2021, HANRATTY participated in a fraudulent scheme to steal money from an FDIC-insured bank (“Victim Bank-1”) by drawing down on $20 million in commercial lines of credit that had been extended to Ebury Street Capital. Specifically, HANRATTY made materially false statements on spreadsheets (known as “borrowing base certificates”) submitted to Victim Bank-1 summarizing the value of the municipal tax liens that Ebury Street Capital was offering as collateral for its commercial line of credit. As a result of these false statements on Ebury Street Capital’s borrowing base certificates, Victim Bank-1 paid Ebury Street Capital large sums of money to which it was not entitled. The false statements on Ebury Street Capital’s borrowing base certificates included, among other things, listing large quantities of municipal tax liens on the borrowing base certificates that Ebury Street Capital did not actually own and double-counting municipal tax liens by listing the same liens on multiple borrowing base certificates. Additionally, although Ebury Street Capital was contractually required to use money from Victim Bank-1 either to purchase municipal tax liens or for ordinary business expenses, HANRATTY actually used portions of the money obtained from Victim Bank-1 to pay off Ebury Street Capital’s investors who were threatening to sue and who, in fact, ended up suing Ebury Street Capital and HANRATTY after Ebury Street Capital was unable to pay investors who were seeking to pull out their investments from the fund. Ebury Street Capital’s commercial line of credit has now been completely exhausted, and the entity owes over $20 million in principal and interest to Victim Bank-1. * * * HANRATTY, 49, of San Juan, Puerto Rico, is charged with one count of wire fraud affecting a financial institution and one count of bank fraud, each of which carries a maximum sentence of 30 years in prison. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. Mr. Williams praised the investigative work of the FBI. Mr. Williams also thanked the FBI Field Office in San Juan for their assistance in the investigation of this case. This case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Andrew K. Chan and Nicholas Chiuchiolo are in charge of the prosecution. The charges contained in the Indictment are merely accusations and the defendant is presumed innocent unless and until proven guilty. [1] As the introductory phrase signifies, the entirety of the text of the Complaint constitutes only allegations, and every fact described herein should be treated as an allegation. Contact Nicholas Biase (212) 637-2600 Updated December 18, 2023 Attachment U.S. v. Hanratty Complaint.pdf [PDF, 331 KB] Topic Financial Fraud Component USAO - New York, Southern Press Release Number: 23-435

Press Release Founder And Managing Director Of Tax Lien Investment Firm Charged With Bank Fraud And Wire Fraud Monday, December 18, 2023 Share FacebookLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. XLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. LinkedInLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. Email For Immediate Release U.S. Attorney's Office, Southern District of New York John Arthur Hanratty, a New York-Licensed Attorney, is Charged with a Fraudulent Scheme in Connection with $20 Million of Commercial Lines of Credit Damian Williams, the United States Attorney for the Southern District of New York, and James Smith, Assistant Director in Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced today the arrest of JOHN ARTHUR HANRATTY for charges in connection with a fraudulent scheme to steal money from a Federal Deposit Insurance Corporation (“FDIC”)-insured bank through lines of credit totaling $20 million granted to HANRATTY’s municipal tax lien investment firm. HANRATTY was arrested this morning and is expected to be presented today before a U.S. Magistrate Judge in the District of Puerto Rico. U.S. Attorney Damian Williams said: “John Arthur Hanratty, a New York-licensed attorney and the founder of a multi-million-dollar municipal tax lien investment firm, allegedly stole money from a bank to obtain lines of credit totaling $20 million, which he misappropriated by paying back investors who had sued his firm. Thanks to this Office’s teamwork with the FBI, Hanratty is now facing serious criminal charges for his alleged fraud.” FBI Assistant Director in Charge James Smith said: “Fraudsters are very good at what they do. They are extremely convincing and will jump at every opportunity to defraud a new pool of potential victims. John Hanratty allegedly prioritized his own greed over decency and respect for the laws of our country. The FBI and our law enforcement partners remain dedicated to investigating and holding accountable those who flagrantly disregard our laws by seeking to enrich themselves at the expense of their victims.” According to the allegations in the Complaint unsealed today in Manhattan federal Court:[1] HANRATTY was the Founder and Managing Director of Ebury Street Capital, LLC (“Ebury Street Capital”), an investment firm with a portfolio primarily comprised of municipal tax liens. At all relevant times, HANRATTY served as the Managing Director and Principal for Ebury Street Capital, which manages two different funds known as Ebury Fund 1 and Ebury Fund 2. HANRATTY has been an attorney licensed to practice law in the State of New York since 2002 and has previously held legal and compliance positions at well-known investment firms and financial institutions, including serving as the Chief Compliance Officer and General Counsel for a trading broker dealer. Between 2017 and 2021, HANRATTY participated in a fraudulent scheme to steal money from an FDIC-insured bank (“Victim Bank-1”) by drawing down on $20 million in commercial lines of credit that had been extended to Ebury Street Capital. Specifically, HANRATTY made materially false statements on spreadsheets (known as “borrowing base certificates”) submitted to Victim Bank-1 summarizing the value of the municipal tax liens that Ebury Street Capital was offering as collateral for its commercial line of credit. As a result of these false statements on Ebury Street Capital’s borrowing base certificates, Victim Bank-1 paid Ebury Street Capital large sums of money to which it was not entitled. The false statements on Ebury Street Capital’s borrowing base certificates included, among other things, listing large quantities of municipal tax liens on the borrowing base certificates that Ebury Street Capital did not actually own and double-counting municipal tax liens by listing the same liens on multiple borrowing base certificates. Additionally, although Ebury Street Capital was contractually required to use money from Victim Bank-1 either to purchase municipal tax liens or for ordinary business expenses, HANRATTY actually used portions of the money obtained from Victim Bank-1 to pay off Ebury Street Capital’s investors who were threatening to sue and who, in fact, ended up suing Ebury Street Capital and HANRATTY after Ebury Street Capital was unable to pay investors who were seeking to pull out their investments from the fund. Ebury Street Capital’s commercial line of credit has now been completely exhausted, and the entity owes over $20 million in principal and interest to Victim Bank-1. * * * HANRATTY, 49, of San Juan, Puerto Rico, is charged with one count of wire fraud affecting a financial institution and one count of bank fraud, each of which carries a maximum sentence of 30 years in prison. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. Mr. Williams praised the investigative work of the FBI. Mr. Williams also thanked the FBI Field Office in San Juan for their assistance in the investigation of this case. This case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Andrew K. Chan and Nicholas Chiuchiolo are in charge of the prosecution. The charges contained in the Indictment are merely accusations and the defendant is presumed innocent unless and until proven guilty. [1] As the introductory phrase signifies, the entirety of the text of the Complaint constitutes only allegations, and every fact described herein should be treated as an allegation. Contact Nicholas Biase (212) 637-2600 Updated December 18, 2023 Attachment U.S. v. Hanratty Complaint.pdf [PDF, 331 KB] Topic Financial Fraud Component USAO - New York, Southern Press Release Number: 23-435