by Brian Mahany
The biggest Ponzi scheme title belongs to Bernie Madoff. The most brazen? Several could legitimately claim that dishonor. Now comes the longest running. According to the SEC, that “honor” belong to Philip Barry.
Barry was convicted in November of last year of securities and mail fraud. Last week he was sentenced in a federal courtroom in Brooklyn to 20 years in prison. According to prosecutors, he ran a $45 million dollar Ponzi scheme.
While $45 million is a big chunk of change, it is hardly newsworthy in this day and age. What makes this case remarkable is that prosecutors say that the scheme began in 1978. Rarely can a Ponzi scheme last so long without collapsing. It gets increasingly harder to generate new money to pay off old investors.
Prosecutors say that Barry promised investors above market rate of returns. He claimed to be investing in stock options. Although he initially did invest in stock options, later that would stop. The FBI says he didn’t generate profits from the options; instead he simply made up rates of return and relied on taking money from new investors to scheme afloat. At one point, Barry was offering a 21% rate of return.
Clients were typically sent quarterly statements. Prosecutors say they were fraudulent documents not based on any investments or rates of return. Instead they were prepared on a word processor and contained fictitious information.
When the economy began to get soften, Barry sent a letter to clients bragging that his company was “now entering its 25th year of providing [investors] with high yields and a 100% record of safety…” In fact, his fund was not making any profit. He also told investors that their account was insured against loss by SIPC.
Many of the investors were elderly and relying on their investments for retirement.
Ultimately, Barry was convicted and sentenced but the story doesn’t end there. At the time of his arrest, the SEC issued a press release indicating that Barry was involved in mail order pornography. Barry claims he was defamed and apparently thinks his losses are between $50 and 77 million.
How Barry will spend that, in the very unlikely event he wins, is puzzling. Barry was sentenced to spend the next 20 years in prison.
If you are the victim of a major fraud or Ponzi scheme, contact a lawyer experienced in fraud and asset recovery. The fraud recovery attorneys at Mahany & Ertl can help you recover your hard earned money. For more information and a no obligation consultation, contact attorney Brian Mahany at (414) 704-6731 or by email at
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