There's A New Ponzi Schemer Under Arrest, And He Has A Mail Order Porn Business
The smaller versions of Madoff are still out there, convincing people to hand over their savings for foolproof investments that don't actually exist, but every once in a while the authorities nab another one. This week it's Philip G. Barry, a Brooklyn-based guy who operated out of my own neighborhood and happened to run a pornography business.
Barry, who is 52, was charged with securities fraud yesterday morning. He's been accused of bilking "hundreds of investors, including many retirees, out of $40 million in what prosecutors called a 'classic Ponzi scheme' dating to the 1970s."
From the New York Times:
Mr. Barry ran a group of small companies, known collectively as the Leverage Group, out of a small storefront office in Bay Ridge, where he grew up and where he still lives, and earned the trust of investors through his local ties and unassuming nature, his clients told investigators.
He eventually collected the $40 million from 800 investors by promising consistent returns of 12 percent or higher from stock options, according to the criminal complaint. Mr. Barry generated quarterly statements detailing fictitious trades and account balances, and promised investors they could withdraw money from their accounts whenever they chose, the complaint said.
In a separate case, the Securities and Exchange Commission filed civil fraud charges against Mr. Barry on Tuesday, echoing the criminal complaint and adding the contention that Mr. Barry had funneled investors' money into a mail-order pornography business.
At some point, Barry stopped using the incoming funds to invest, and instead funneled the cash into real estate purchases and his porno venture. The NYT adds, "It was unknown whether the pornography business turned a profit." His scheme continued for 30 years, and he seems to have only been uncovered after 2007 when the number of people asking for their money back outgrew the funds he had on hand.
The maximum sentence he can expect, if he's found guilty, is 20 years.
If you're shopping around for a money manager, remember these 5 tips on how to avoid falling into a Ponzi scheme.
"Man Accused of Running Ponzi Scheme in Brooklyn " [New York Times]
"SEC busts Brooklyn money manager in $40M porno Ponzi scheme" [Investment News]
(Photo: swimparallel)
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Comments:
In volatile market, only stable investment is porn
Can't remember where I saw it, but there was a recent article stating that even porn was down in this recession.
Much better than spending money liberated from morons on absurd yachts like Madoff or pork projects and sinecures like state lotteries. But as usual the herd turns on the imaginative and productive
Blah blah blah blah blah blah PORN blah blah blah blah PORN blah blah.
What? Where do I sign up?
I think I see the problem. He forgot the chicken.
@Sudonum: I would think the porn industry was down due to all the free websites out there that show ample length videos. Why pay when you can view for free? Although it is still nice to have a video or two in your collection (you know for the times you didn't pay the cable/internet bill :-) )
This guy, much like every other Ponzi schemer, was done in by his own greed. If I had $40 million, I'd buy a small country and make myself king. I'd hire Blackwater to protect me. You can be untouchable with that kind of cash. Instead, this guy funded a mail order porno business. I know I'd be living it the hell up.
Maybe someone can get copies of the security tapes showing him and his new "friend" Bubba in the prison showers. That way, he can keep his business going.
@YOXIM:
That's just it - when it comes to greed, it's never enough. I suspect any one of us that were struck by greed would end up in the same situation. Addiction is addiction, no matter what the drug is.
@itiswhatitis: Mismanagment or a lack of good marketing can kill any business, including porn sites.
I'm bookmarking that article on how to avoid a Ponzi scheme, just in case I ever actually make any money.
I don't want to be answering the phone when I'm 75. If I live that long.
Consumerist hasn't run the news about the guy who just got busted for the same thing, but it wasn't porn he was investing in, it was electronics. When people would give him money, he would invest it a company that made jukeboxes for diners. The trick is, they would only work if you hit them in the side.
The papers are calling it a Fonzi Scheme.
There was a porn empire operating in Consumerist's backyard and Chris was unaware of it?!
*raises eye skeptically*
Hahaha... I love that his company was called the "leverage group." Might as well have called it "the racketeering club"
Complain! This happened to a buddy of mine, he also has a motion sensor camera and when the mailman tossed his $800 wedding gift that was shipped from Germany up against his porch and broke he called and complained. Got the proverbial run-around then whipped out his IPhone with said video. Needless to say the street got a new letter carrier, and he received an $800 check. Funny thing, after the mailman was moved to a new route he drove by a couple times to see if he could find the camera, which was caught on camera.
How can pornography not turn a profit? Even in the day of free porn on the web people will stay pay for skin flicks.
Gee out of this entire article that's the only thing I retained, his porn business.