The Securities and Exchange Commission (SEC) Tuesday charged a New York-based investment advisor with defrauding investors in five offshore funds and diverting millions to keep his brother-in-law's Long Island beach resort project from facing foreclosure and to buy himself a multi-million dollar co-op unit there.

The SEC alleges that Brian Raymond Callahan of Old Westbury, N.Y., raised more than $74.9 million from more than 24 investors since 2005, promising to invest their money in liquid assets. Instead, Callahan diverted investor money to his brother-in-law Adam Manson's beach resort project that was facing foreclosure, and in return received unsecured, illiquid promissory notes. Callahan also used investor funds to pay other investors and make a down payment on a $3.35 million co-op unit he purchased at his brother-in-law's real estate project.

The court froze Callahan's assets on a motion by the SEC.

The SEC alleges Callahan was operating five offshore funds and had told clients their investments were with New York-based hedge funds, according to its complaint. Some of the money was invested with hedge funds, the SEC said. According to its complaint filed in federal court in Islip, N.Y., the SEC claims Callahan operated the five funds, the Callahan Funds, through his investment advisory firms Horizon Global Advisors Ltd. and Horizon Global Advisors LLC.

The SEC claims Callahan 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. In 2011, Callahan received $14.5 million in promissory notes in exchange for only $3.3 million he provided to his brother-in-law. The inflated promissory notes allowed Callahan to overstate the amount of assets he was managing and inflate his management fees by 800 percent or more.

"Callahan misled investors in his funds with false promises, and enriched himself at their expense when he diverted fund assets for his personal use and pocketed inflated management fees," said Antonia Chion, associate director in the SEC's division of enforcement.

SEC officials said Callahan also refused to testify for their investigation, and claimed he had recently informed his investors about the investigation, but gave false assurances that no laws had been broken. Callahan also misled investors by not disclosing that in 2009, the Financial Regulatory Industry Authority (Finra) barred him from associating with any Finra member.

The SEC, which charges Callahan and his advisory firms with violating federal anti-fraud laws, is seeking preliminary and permanent injunctions against Callahan and his firms, the return of any ill-gotten investor monies with interest, and financial penalties.

-Jim McConville