In a hard fall from white-collar respectability, New York lawyer and tax-lien fund founder John Arthur Hanratty was sentenced Tuesday in Manhattan federal court to 12 months and a day behind bars for a bank fraud scheme that prosecutors say pulled in more than $20 million and left investors nursing over $8 million in losses. U.S. District Judge Lorna G. Schofield also ordered two years of supervised release and a hefty forfeiture package, setting off what is likely to be a long and messy fight over whatever money is left.
Prosecutors' account
According to a press release from the U.S. Attorney's Office for the Southern District of New York, Hanratty ran an investment outfit called Ebury Street Capital and, between 2017 and 2021, drew down commercial lines of credit by inflating the value of municipal tax-lien collateral and inventing an “independent” custodian that did not exist. Prosecutors say Hanratty claimed to own millions of dollars in assets he did not actually control in order to secure more than $20 million in loan advances, then routed the proceeds through business accounts as part of a money-laundering scheme. The office says the fallout hit both the bank and investors hard, with losses running into the millions. U.S. Attorney’s Office, SDNY
Trial and firm background
Hanratty, who founded and managed Ebury Street Capital, was convicted in August 2025 of wire fraud, bank fraud, and money laundering after a jury trial, according to coverage that reviewed court records. The firm specialized in municipal tax liens, a niche corner of the market that turns unpaid property taxes into investment vehicles. Prosecutors say investors were misled about who actually held the collateral and how it was valued, and industry reporting notes that the scheme bled both the lender and investors as the firm unraveled. Investment Executive
Sentence, forfeiture and restitution
The court ordered Hanratty to serve 12 months and a day in federal custody, followed by two years of supervised release, and to forfeit roughly $17.7 million, with a restitution order to be determined later, according to prosecutors. The U.S. Attorney's Office credited investigative work by the Federal Bureau of Investigation and the FDIC Office of Inspector General and said the Complex Frauds and Cybercrime Unit handled the case. Assistant U.S. Attorneys Andrew Chan, Nicholas Chiuchiolo, Danielle Kudla, and Adam Sowlati are listed as the trial team. U.S. Attorney’s Office, SDNY
Broader enforcement trend
The prosecution slots into a broader run of Southern District of New York cases aimed at alleged abuses in private markets and investment funds, with particular attention on how complex financial products are valued and who actually safeguards investor assets. Recent SDNY sentencings in investor-fraud cases highlight a continuing focus on private-market misconduct and on what happens to money after it is raised, a pattern that could increase pressure on smaller funds to show real independent custody and transparent valuation controls. Federal Newswire
What’s next for investors
For investors who watched their money disappear with Ebury, the road ahead runs through the forfeiture and restitution process, which typically plays out over many months and often overlaps with civil lawsuits and potential receiverships. Reporting has noted that Ebury's collapse wiped out investor capital and that regulators and civil plaintiffs are expected to chase whatever assets can still be found as part of that cleanup effort. Investment Executive
As Hanratty serves his sentence, criminal forfeiture in the federal case, together with follow-on civil claims, will ultimately determine how much money, if any, finds its way back to creditors and investors. ABA Journal
