Investment Manager Sentenced to 20 Years of Imprisonment for Operating 30-year Ponzi Scheme
Brooklyn-Based Defendant Induced Hundreds of Individuals Throughout the United States to Invest More than $40 Million
Philip Barry, a former investment manager who was based in Bay Ridge, New York, was sentenced today to 20 years of imprisonment by United States District Judge Raymond J. Dearie at the federal courthouse in Brooklyn. In November 2010, Barry was convicted after trial on all counts of a 34-count indictment charging securities fraud and mail fraud for operating a long-standing and large-scale Ponzi scheme. As part of the sentencing, Judge Dearie ordered Barry to pay restitution of $24,146,540.
The sentencing was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York.
Barry began accepting money in the late 1970s from individuals seeking a return on investment, and he eventually called his business “the Leverage Group.” Barry told potential investors that the Leverage Group invested in stock options. To induce investments and discourage withdrawals, Barry, among other things, guaranteed specified positive rates of return, issued account statements that showed growing account balances, represented that investing in the Leverage Group was safe, and promised that withdrawals could be made easily.
The evidence at trial established that Barry actually was running a Ponzi scheme, paying returns to Leverage Group investors not from any profits earned on investments, but rather from existing investors’ deposits or money paid by new investors. Barry never produced or earned the rates of return that he advertised and cited in clients’ account statements. Rather, the positive rates of return were simply pre-determined interest rates made up by Barry.
In announcing the sentencing, United States Attorney Lynch expressed her grateful appreciation to the Federal Bureau of Investigation, the agency responsible for leading the government’s investigation, and thanked United States Securities & Exchange Commission for its assistance.
The government’s case was prosecuted by Assistant United States Attorneys Jeffrey A. Goldberg and John P. Nowak.
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