The feds say that Bay Ridge had its own Bernie Madoff — though one of his biggest victims says she has already forgiven him.
One day after federal prosecutors arrested Philip Barry and charged him with running a 31-year-long Ponzi scheme that bilked hundreds of clients out of at least $20 million, 68-year-old victim Barbara Grebin told The Brooklyn Paper that she not only lost hundreds of thousands of dollars to Barry, but she had also lost her anger.
“I can’t spend the rest of my life being angry,” she said, showing off the fake statements that Barry had sent her promising large returns, even as he allegedly scammed her out of close to $400,000 over 28 years. “Sure, I was depressed, but at some point, I just decided that I can’t let anger consume the rest of my life.”
Like Madoff, Barry’s alleged crimes came to light only when the economic downturn bankrupted him last year. And just as with Madoff’s fund, some clients made a profit, though the vast majority lost their investments, prosecutors said.
“He convinced hundreds of individuals to hand over their savings,” said U.S. Attorney Benton Campbell, the federal prosecutor for the district that includes Brooklyn. “In reality, the defendant’s investment fund was nothing more than a classic Ponzi scheme.”
Barry and his unregistered companies, Leverage Group and North American Financial Services, issued fraudulent statements that showed he was investing in stock options and earning his neighborhood clients solid returns.
But court papers say that he stopped making any investments in 1999 and was using the $40 million that he had “conned” out of his clients since 1978 to speculate on real estate and on an unrelated mail-order porn business, hiding the scheme under boasts of hefty profits.
“These purportedly guaranteed rates of return were simply numbers arbitrarily selected by Barry,” the SEC said in a statement.
A magistrate ordered Barry held without bond Tuesday at his arraignment in Brooklyn federal court. His court-appointed lawyer could not immediately be reached.
The court papers were filled with stories of how Barry not only pulled off the crime, but kept it going.
At one point, the criminal complaint charges, Barry even duped a woman in a nursing home “not to withdraw her money from Leverage, as she sought to do.”
“Shortly before her death,” the court papers state, “Barry knowingly made false representations to that investor claiming that she had approximately $700,000 in her Leverage account. Barry has refused to return that money to that investor’s heirs, despite demands from the heirs to close the account.”
Grebin said that Barry did pay her a few thousand dollars per year between 2000 and 2006, when the scheme started unraveling.
“In December, 2006, the first check bounced — and suddenly my phone started ringing from all the people I’d recommended Philip to,” she said. “Some of my friends were banging themselves over the head and calling themselves stupid jerks. No. We just trusted him because we knew him personally.”
Investigators said they learned of the scheme when Barry turned up at the U.S. Attorney’s office in Manhattan last August and asked to speak to a prosecutor. They said Barry acknowledged that, for years, he had been paying off his guaranteed profits by taking money from some customers to cover withdrawals made by others.
Barry, whose $20-million scam is tiny in comparison to Madoff’s $65-billion scheme, filed for bankruptcy last fall, evidence that his phony pyramid had unraveled.
At the time, he told the Daily News that he was no thief and just needed more time for his investments to pay off.
“It’s all in real estate,” said Barry. “I’m going to keep on working to make sure everyone gets the profit they are entitled to.”
For now, Grebin isn’t worried about that. She’s most concerned about Barry’s side business.
“I don’t mind that he was selling porn,” she said. “But if it turns out to be kiddie porn, I can’t forgive that. I’ll go crazy if it was child pornography. That I can’t forgive.”