Assets in accounts at HSBC Bermuda and banks in the Caribbean have been ordered frozen as part of an investigation into an alleged $75 million fraud by a Long Island financial adviser.According to a US Securities and Exchange Commission’s complaint, Brian Raymond Callahan allegedly diverted money from at least two dozen investors in his offshore funds to help pay for his brother-in-law’s Montauk beach real estate project that was facing foreclosure.A temporary asset freeze order against accounts at HSBC Bank Bermuda Ltd, VP Bank and Trust Company (BVI) Ltd, FirstCaribbean International Bank and financial institutions in the US was issued at the US District Court for the Eastern District of New York on March 5 after an application by the US Securities and Exchange Commission..The SEC said the frozen assets of Callahan and his advisory firms total about $6.5 million - some $55 million less in assets than Callahan’s offshore funds purported to have.The SEC, which claimed that Callahan has refused to cooperate with its fraud investigation, acknowledged the assistance of the British Virgin Islands Financial Services Commission and the Bermuda Monetary Authority.A spokesperson for the BMA said yesterday: “The Authority can confirm it assisted the SEC in this matter. This is part of the Authority’s statutory ability to provide such assistance to fellow regulators as deemed appropriate, and reflects our commitment to supporting global supervisory cooperation.”HSBC Bermuda had no comment.The SEC’s asset freeze application was filed at the same time as a complaint alleging securities fraud against Callahan; Horizon Global Advisors Ltd, described as an “unregistered investment adviser” domiciled in Cayman; and Horizon Global Advisors, LLC, described as an “unregistered investment adviser” domiciled in Connecticut.“Defendants engaged in a long-running fraud in which investors were routinely misled about the nature of their investments and also were unaware of Defendants’ frequent misuse and misappropriation of their money,” it was alleged in the SEC’s complaint.“From at least 2005 to January 2012, Callahan raised over $74.9 million from at least 24 investors for at least five offshore funds that he operates through HGA Ltd and HGA LLC. Callahan’s solicitation of investors involved material misrepresentations about the use of their money, the liquidity of their investments and the asset diversification of the Callahan Funds.”In addition, the complaint said Callahan “failed to disclose to investors and prospective investors” that, in June, 2009, he was disciplined by the Financial Industry Regulatory Authority, which had accused him of fraud.A copy of the SEC complaint, obtained by The Royal Gazette, alleges Callahan misrepresented to investors that advisers to New York hedge funds Kinetics Institutional Partners and Millennium USA were sub-advisers to his Callahan funds when in fact they were unrelated and unaffiliated.The complaint alleges Callahan also represented to investors that their funds would be liquid and they could easily withdraw their funds.The SEC accused Callahan of comingling and misusing fund assets.The complaint went on to detail investors who in January of this year asked for the return of their money, but did not get it back, including a California teacher who invested $270,000, a Kentucky small business owner who invested $2.9 million and a Wisconsin investor who gave a total of $850,000 to be invested in the funds.The SEC is seeking the disgorgement of “ill-gotten gains”, civil penalties, and the appointment of a Receiver over the assets of the three defendants, Callahan’s offshore funds and other related entities, including Diversified Global Investments (BVI), LP, The Masters Global Fund LP, Fiduciary Select Income Fund, LP, Horizon Millennium Investments, LP, all domiciled in the BVI, and Pangaea Offshore High Yield Portfolio, LLC, domiciled in Nevis.