Founder And Managing Director Convicted Of Fraud And Money Laundering

John Hanratty, 50, a New York‑lawyer and the founder of Ebury Street Capital – a tax lien investment firm – has been convicted by a federal jury in the Southern District of New York for orchestrating a fraudulent scheme that defrauded both a bank and investors of more than USD 20 million, finding Hanratty guilty of one count of wire fraud, one count of bank fraud and two counts of money laundering.  

Key Details of the Case:

• Timeframe of Fraud: 2017 to 2021.
• Nature of Scheme: Hanratty falsely inflated the value of municipal tax lien collateral to secure commercial lines of credit from an FDIC-insured bank (identified as Victim Bank-1).
• Misrepresentations:
• Claimed to own millions in tax lien collateral that Ebury Street Capital did not possess.
• Falsely stated that an independent third-party custodian managed the collateral.
• Use of Funds: Instead of using the borrowed funds for legitimate business purposes, Hanratty diverted portions to pay off investors who were attempting to withdraw their investments.
• Charges: One count of wire fraud, one count of bank fraud, and two counts of money laundering.
• Conviction Date: August 4, 2025.
• Sentencing Date: Scheduled for January 20, 2026[1].

This case underscores the risks associated with opaque investment structures and the importance of due diligence, especially in niche markets like municipal tax liens.

References

Southern District of New York | Founder And Managing Director of Tax ... https://www.justice.gov/usao-sdny/pr/founder-and-managing-director-tax-lien-investment-firm-convicted-fraud-and-money

Long read

The prosecution, led by Assistant US Attorney Andrew Chan, revealed to the court that Hanratty’s fraudulent actions spanned from 2017 until 2021 and involved the misuse of USD 20 million in commercial lines of credit issued by a Federal Deposit Insurance Corporation (FDIC) - insured bank to Ebury Street Capital.

According to the prosecution, Hanratty made materially false statements on "borrowing base certificates" – spreadsheets summarising tax lien collateral that Ebury purported to own – to inflate its asset base by millions of dollars. The inflated valuations enabled him to draw down funds that far exceeded what the firm legitimately controlled, with the false statements listing liens Ebury did not own and sometimes even double-counting the same liens across multiple certificates.

In addition to defrauding the bank (anonymised in court documents as ‘Victim Bank-1’), prosecutors showed that Hanratty diverted portions of the USD 20 million for purposes including repaying investors who had sued or threatened litigation rather than using the funds to purchase tax liens or cover ordinary business expenses, as contractually required.

The bank’s credit facility has since been fully exhausted, and Ebury Street Capital now owes the principal and accrued interest to the lender.

Hanratty, a lawyer licensed in New York since 2002 who formerly held compliance and legal roles at a trading broker-dealer, became the managing director and principal of Ebury Street in 2010, overseeing two investment funds that focused on municipal tax liens. In official statements, Sean Buckley, acting US attorney, noted that Hanratty "lied to investors and stole money from a bank by falsely claiming to own millions of dollars of tax lien collateral to obtain more than USD 20 million in loan advances".

Federal Bureau of Investigation (FBI) Assistant Director in Charge James Smith likewise condemned Hanratty’s actions, warning that fraudsters will exploit every opportunity "to defraud a new pool of potential victims" and accused him of prioritising "his greed over decency and respect for the laws".

Sentencing has been deferred until 20 January 2026, and the next five months are likely to prove uncomfortable for Hanratty: the maximum penalties available to the court are up to 20 years for wire fraud, 30 years for bank fraud and 10 years for each count of money laundering.

Hanratty, who relocated to San Juan, Puerto Rico, while Ebury Street Capital was based in Rye, New York, was arrested in Puerto Rico on 18 December 2023 and charged that same month. He posted a USD 2 million bond and remained free pending his trial, and faced asset transfer restrictions under a post-indictment restraining order. His conviction provides yet another example of the serious consequences of financial fraud, particularly involving the misrepresentation of collateral to obtain credit, the misallocation of investor funds and migration across jurisdictions to evade scrutiny. And while the case will serve as a cautionary tale for professionals in the tax lien and investment industries, history shows that some people, already boasting considerable wealth, will not hesitate to break the law to accrue yet more riches if they believe they will not get caught.

Sources

https://www.justice.gov/usao-sdny/pr/founder-and-managing-director-tax-lien-investment-firm-convicted-fraud-and-money

https://iclg.com/news/22925-investment-firm-boss-convicted-by-new-york-jury