Brooklyn Money Manager Indicted In 30-Year Ponzi Scheme

   By Chad Bray 
   Of DOW JONES NEWSWIRES 
 

NEW YORK -(Dow Jones)- A money manager based in the Bay Ridge section of Brooklyn, N.Y., has been indicted in a Ponzi scheme that prosecutors say operated for three decades and involved more than $40 million.

Philip Barry, who ran a group of companies collectively known as Leverage Group, was charged Thursday in an indictment with securities fraud and 20 counts of mail fraud.

Barry, 52 years old, was originally arrested and charged in the matter in September.

A lawyer for Barry didn't immediately respond to a request for comment.

Prosecutors from the U.S. Attorney's Office in Brooklyn alleged that Barry began accepting client money in 1978 when he created Leverage Option Management Co. Inc., representing that he was investing only in stock options.

However, he didn't limit his investments to stock options and eventually stopped investing in stock options altogether, prosecutors said. Instead, he invested in real estate and used investor money to pay personal expenses and expenses of Barry Publications.

The U.S. Securities and Exchange Commission, which has separately brought civil charges in the matter, has alleged that Barry Publications was a mail-order business that sold pornographic materials.

Barry allegedly ran Leverage Group until February 2009 as a Ponzi scheme, paying returns to earlier investors from money received from other, newer investors, prosecutors said.

Prosecutors previously said that Barry approached them in August 2008, allegedly admitting that in the past he made payments to Leverage Group investors in part by using new investor money. The investigation has been ongoing since then.

Barry sought bankruptcy protection in October 2008. Prosecutors previously said Barry, in December as part of the bankruptcy proceeding, estimated that Leverage Group's liability to investors was $60 million.

-By Chad Bray, Dow Jones Newswires; 212-227-2017; chad.bray@dowjones.com

(END) Dow Jones Newswires

December 11, 2009 13:55 ET (18:55 GMT)

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