April 25, 2024
Investment

Founder of Rye Investment Firm Charged with Bank & Wire Fraud


(PHOTO: Hanratty operated his firm Ebury Street Capital from 16 School Street in downtown Rye. On December 18, 2023, he was charged by Federal authorities with bank and wire fraud and faces a sentence of up to 30 years in prison for each charge.)
(PHOTO: Hanratty operated his firm Ebury Street Capital from 16 School Street in downtown Rye. On December 18, 2023, he was charged by Federal authorities with bank and wire fraud and faces a sentence of up to 30 years in prison for each charge.)

The founder of a Rye investment firm has been charged by Federal authorities with bank and wire fraud and faces a sentence of up to 30 years in prison for each charge. John Arthur Hanratty, age 49, was arrested and charged 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 Ebury Street Capital, his municipal tax lien investment firm.

Hanratty lived in Rye until in or around 2019 according to authorities. Records show Hanratty and his wife Emma purchased a home at 26 Halsted Place in May of 2011 and sold the property in August of 2020. Ebury Street Capital was located at 16 School Street in downtown Rye, and may have also operated from 56 Locust Avenue for a time. Hanratty relocated to San Juan, Puerto Rico after leaving Rye.

“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,” said Damian Williams, the United States Attorney for the Southern District of New York. “Thanks to this Office’s teamwork with the FBI, Hanratty is now facing serious criminal charges for his alleged fraud.”

Hanratty was arrested on Monday, December 18th and the presented before a U.S. Magistrate Judge in the District of Puerto Rico.

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 on December 18th in Manhattan federal Court:

  • 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 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 for informational purposes only, as any sentencing of the defendant will be determined by the judge.

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 United States Attorney’s Office reminds readers the charges contained in the Indictment are merely accusations and the defendant is presumed innocent unless and until proven guilty.

Read the (un) sealed complaint.



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