Rai Investment Company founder charged with bank fraud and wire fraud

The founder of Rye Investment Company has been charged by federal authorities with bank fraud and wire fraud, each of which could carry up to 30 years in prison. John Arthur Hanratty, 49, stole funds totaling $20 million that were granted to Eberly Street Capital, a city tax company, through a line of credit from a bank insured by the Federal Deposit Insurance Corporation (“FDIC”). He was arrested and charged in connection with the fraud scheme. Lien Investment Company.

According to authorities, Hanratty lived in Rye until around 2019. Records show Hanratty and his wife Emma bought a home at 26 Halstead Place in May 2011 and sold the property in August 2020. Eberly Street Capital was located at 16 School Street in downtown Rye, and may have also operated from 56 Locust Avenue for a year. time. After leaving Rye, Hanratty moved to San Juan, Puerto Rico.

“John Arthur Hanratty, a New York state-certified attorney and founder of a multi-million dollar municipal tax lien investment firm, stole funds from banks to obtain lines of credit totaling $20 million. He allegedly misappropriated the funds by repaying investors,” said Damian Williams, United States Attorney for the Southern District of New York. “Thanks to the teamwork between the authorities and the FBI, Mr. Hanratty now faces felony fraud charges.”

Hanratty was arrested on Monday, December 18, and appeared before a federal magistrate judge in the District of Puerto Rico.

FBI Assistant Director in Charge James Smith said: They are very persuasive and will jump at every opportunity to recruit new potential victims. John Hanratty allegedly put his own greed above common sense and respect for our nation’s laws. The FBI and our law enforcement partners remain dedicated to investigating and holding accountable those who flagrantly disregard our laws by lining their own pockets at the expense of their victims. ”

The complaint, unsealed Dec. 18 in Manhattan federal court, alleges:

• Mr. Hanratty was the founder and managing director of Ebury Street Capital, LLC (“Ebury Street Capital”), an investment company with a portfolio consisting primarily of local tax liens. Hanratty manages two different funds, known as Every Fund 1 and Every Fund 2, of Every Street Capital, where he has always served as a director and principal. Mr. Hanratty has been admitted to practice law in New York State since 2002. He has also previously held legal and compliance positions at well-known investment firms and financial institutions, including serving as chief compliance officer and general counsel for a trading broker-dealer.
• From 2017 to 2021, Hanratty participated in a fraudulent scheme to steal funds from an FDIC-insured bank (“Victim Bank-1”) by drawing down $20 million in commercial lines of credit that had been extended to Eberly Street Capital. did. Specifically, Hanratty submitted a spreadsheet submitted to Victim Bank-1 (“Loaning made a materially false statement on the basis of the certificate (also known as the “Basic Certificate”). As a result of Ebury Street Capital’s misrepresentations on the Borrowing Certificate, Victim Bank-1 paid Ebury Street Capital a large amount of money to which it was not entitled. Every Street Capital’s misrepresentations on its loan certificates include, among other things, listing on the loan certificate a large amount of local tax liens that Every Street Capital does not actually own; These included listing privileges on multiple certificates and double-counting city tax liens. I am borrowing a basic certificate.
• Additionally, while Eberly Street Capital was contractually obligated to use funds from Victim Bank-1 either to purchase city tax liens or for normal business expenses, HANRATTY actually used some of the funds obtained from Victim Bank-1 to repay the investors of Every Street Capital. He threatened to sue, and in fact ended up suing Every Street Capital and Hanratty after Every Street Capital failed to pay investors who were trying to withdraw their investments from the fund. .
• Ebury Street Capital’s commercial credit facility is now completely depleted and the company owes Victim Bank-1 more than $20 million in principal and interest.

Hanratty is charged with one count each of wire fraud affecting a financial institution and bank fraud, each of which carries a maximum sentence of 30 years in prison. It is provided for informational purposes only, as maximum possible sentences are established by Congress and a defendant’s sentence is determined by a judge.

The case is being handled by the department’s Complex Fraud and Cyber ​​Crimes Unit. Assistant U.S. Attorneys Andrew K. Chan and Nicholas Chiuciolo are in charge of the prosecution. The United States Attorney’s Office reminds readers that the charges contained in the indictment are mere accusations and that defendants are presumed innocent unless and until proven guilty.

Read the (un)sealed complaint.