[ by Melanie Gretchen ] The SEC obtained an asset freeze against a New York investment adviser charged with defrauding investors in 5 offshore funds and using some of the investors' money on a multi-million dollar beach resort property on Long Island. SEC Findings and Allegations. Brian Callahan of Old Westbury, NY, operating through his investment advisory firms Horizon Global Advisors Ltd. and Horizon Global Advisors LLC raised over $74 million from at least 2 dozen investors since 2005.  Investors were told their money would be invested in liquid assets.  Callahan, however, diverted those funds to his brother-in-law’s beach resort project that faced foreclosure and, in return, he received unsecured, illiquid promissory notes.  Investor funds were also diverted to pay other investors and to make a down payment on a $3.4 million vacation unit at his brother-in-law’s real estate project. Promissory Notes. Callahan operated the 5 funds through his 2 investment firms, and used the promissory notes to hide his misuse of investor funds.  The promissory notes overstated the amount of money diverted to the real estate project.  For example, in 2011, Callahan received $14.5 million in promissory notes in exchange for only $3.3 million in loans provided to his brother-in-law.  The inflated value of the notes enabled Callahan to overstate the amount of assets he was managing, which inflated his management fees by 800% or more. SEC Investigation. Callahan refused to testify in the SEC's investigation and recently informed investors about the investigation, but gave false assurances that no laws had been broken.  Callahan also misled investors by not disclosing that in 2009, FINRA barred him from associating with any FINRA member. Restraining Order. At the SEC's request, following a court hearing, the court granted a temporary restraining order freezing the assets of Callahan and his advisory firms, enjoining them from violating the antifraud provisions, and granting other emergency relief.  Going forward, the SEC is seeking preliminary and permanent injunctions against Callahan and his firms, return of ill-gotten gains with interest, and financial penalties. Looks like no more beaches on his horizon. SEC Enforcement Staff Credits. Investigation by Holly Pal, Linda French, Osman Handoo, Ann Rosenfield, Natalie Lentz, and Lisa Deitch.  Litigation is being led by Dean Conway. For further details, go to the [SEC complaint] and [SEC PR 12-38, 3/6/12].