Bloomberg the Company & Products

Bloomberg Anywhere Login


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Brooklyn Money Manager Gets 20 Years for Ponzi Scheme

Don't Miss Out —
Follow us on:

June 17 (Bloomberg) -- Philip Barry, a money manager from Brooklyn, New York, was sentenced to 20 years in prison for running a $45 million Ponzi scheme that defrauded hundreds of investors over three decades.

Barry, 53, was sentenced today by U.S. District Judge Raymond J. Dearie in Brooklyn. After a one-week trial in November, a jury convicted him on all the counts he faced -- one of securities fraud and 33 of mail fraud.

“I hurt a lot of people,” Barry told Dearie before being sentenced. “I do not wish to hide how bad it was.”

Barry, a resident of the Bay Ridge section of Brooklyn, began accepting money in 1978 from investors, guaranteeing fictional annual profits, according to prosecutors in the office of U.S. Attorney Loretta Lynch. Instead, he used new investors’ money to pay earlier ones, prosecutors said. His fraud is believed to be the longest-lasting Ponzi scheme in U.S. history, they said.

In a separate action, the U.S. Securities and Exchange Commission said Barry diverted some of the investor money to a mail-order pornography business. In April, the SEC asked the court to dismiss a libel suit Barry brought over the accusation.

One of Barry’s lawyers, Michael D. Weil, declined to comment on the sentence.

No Lavish Lifestyle

Lisa Hoyes, another lawyer for Barry, argued in court that her client should get the 15-year sentence recommended by the Department of Probation, in part because he never used the money for a lavish lifestyle.

Assistant U.S. Attorney Jeffrey A. Goldberg asked Dearie to impose a sentence between 27 and 34 years, which is what federal guidelines called for.

Goldberg noted that Bay Ridge, where Barry worked out of a storefront, isn’t a wealthy neighborhood and most of his victims were working class -- mechanics, police officers, teachers and nurses.

“Phil Barry is a thief,” one victim, Frances Monteleone, a registered nurse, told Dearie. “Phil Barry stole my money and he also stole my future.”

Monteleone said she invested $215,000 of her divorce settlement with Barry.

“No one plans to get lost in the woods, it just happens one step at a time,” Barry said before he was sentenced. “I will lawfully and diligently resume work to make restitution to my victims on the first day that this court will allow.”

800 Investors

Barry was accused of luring more than 800 investors into his Leverage Group, which claimed to be investing in stock options. His reported ending balance of more than $45 million far exceeded assets actually held, producing “substantial losses” for many investors, according to prosecutors.

Each December, Barry would figure a “guaranteed” rate of return for the following year, ranging from 12.55 percent to 16 percent, prosecutors said. When investors tried to withdraw money from their accounts, checks would often be returned due to insufficient funds or, in some cases, Barry ignored their requests altogether, prosecutors said.

“Philip Barry began lying to his clients and betraying their trust almost right away,” Goldberg, the prosecutor, said in court today.

In August 2008, Barry went to federal prosecutors and told them he was invested only in land rather than options and that he couldn’t get approvals to develop the property, according to court papers. After an investigation, he was arrested in September 2009.

Auctioned Land

The land, which prosecutors said Barry bought for himself, was auctioned off for $6.6 million in 2009 after he declared bankruptcy the previous year, according to the government.

“It is a sad story of predatory conduct that is almost unimaginable,” Dearie said in sentencing Barry.

The criminal case is U.S. v. Barry, 09-cr-0833, the SEC case is Securities and Exchange Commission v. Barry, 09-cv-3860, and Barry’s suit against the SEC is Barry v. SEC, 10-cv-4071, U.S. District Court, Eastern District of New York (Brooklyn).

To contact the reporter on this story: Thom Weidlich in Brooklyn, New York, federal court at

To contact the editor responsible for this story: Michael Hytha at

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.